Token staking vs token locking: what’s the difference?

While staking and locking may seem interchangeable, there are important differences between the two. Today, we’re going to tell you more!

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Token staking

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Token staking refers to the act of holding a certain amount of crypto in a wallet or on an exchange in order to validate transactions and secure the network. In exchange for staking their tokens, users can earn rewards, typically in the form of more crypto.

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Staking is typically done through a consensus algorithm such as Proof of Stake, which enables users to participate in the validation of transactions without the need for expensive and energy-consuming mining equipment.

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PoS is a more environmentally-friendly alternative to Proof of Work, which requires miners to solve complex mathematical equations to validate transactions and secure the network.

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Token locking

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Token locking means the act of holding a certain amount of crypto in a wallet or on an exchange for a specified period of time. During that time, the tokens cannot be used, moved, or withdrawn.

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Similarities

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- They both involve holding cryptocurrency for a certain period of time.

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- They both result in earning rewards in the form of additional cryptocurrency.

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Differences

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- Staking is typically done to validate transactions and secure the network, while token locking is often done as a way to prevent users from selling their tokens.

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- Staking requires the user to participate in the network's consensus algorithm, while locking simply requires the user to hold the tokens for a specific period of time.

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Bottom line

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In conclusion, while both staking and locking involve holding crypto for a certain period of time and can result in earning rewards, they have important differences.

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Understanding the differences between the two can help users make informed decisions about how they want to participate in the crypto-ecosystem.

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