Staking is to keep the main cryptocurrency belonging to that network by locking it for a certain period to support the operations of a blockchain in its network. You get a certain amount of rewards from this crypto money you lock during the time you lock it.
Staking is a concept that has come to cryptocurrencies with the Proof of Stake (POS) mechanism. His biggest contribution to the operation; Avoiding wasting large amounts of processing power. Staking is also useful for supply and demand balance as it limits the amount of cryptocurrencies in circulation. The less money there is in circulation in the staking crypto money chain, the more probability its price will increase will increase in direct proportion. In other words, the more the staking coin, the less likely the price will fall; because they do not circulate.
What is Proof of Stake?
Proof of Stake is basically the system that allows a cryptocurrency mining to be done at the rate of the locked cryptocurrency.
Proof of Stake was created as an alternative to the Proof of Work mining method. Proof of Work mining is done with high electricity consumption with special mining equipment. Large facilities and high electrical power are needed to gain profit.
Proof of Stake allocates the mathematical problems required for crypto money transfers according to the crypto currency you have, not the device and electrical power as in Proof of Work mining.
Is Staking Means Interest?
Interest is used in two senses in economics. In the first sense, interest is the rate of income generated from the sale of a loan agreement. In the second sense, it is the income ratio of capital used as input for production. These two meanings are not economically different from each other and are considered by economists as interest.
Stake is the rewards you receive for supporting operations in a network (security, sustainability, etc.).
The money you lock in staking is not borrowed and not given to another user for repayment by determining an extra percentage. Hence, interest and staking are not the same thing.
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