Month: July 2022

What Is an NFT? Everything You Need To Know

Many people are perplexed, but also captivated, by the blockchain and NFTs. Over the last couple of years, it has been blowing up as a subject and investment vehicle. As tne thing that comes up constantly in conversations, NFTs are still the talk of the town. According to news reports, people are selling their NFTs for millions of dollars, no wonder these assets are so compelling.

So, what is an NFT? And how does it all work? This guide will be all about what an NFT is. For this we will take a deep dive into the nitty-gritty of it all. Let’s get started.

What Are NFTs?

NFT is an abbreviation. It stands for non-fungible tokens. But that does not tell you much. The non-fungible part means that it cannot be duplicated. So, a single NFT is unique.

They exist on the blockchain and have unique metadata that makes each one uniquely definable. Thats a lot of terms that need further elaboration, but first: what gives it value? Well, there is a huge conversation that can be had just on that topic alone.

But in a more general sense, since they are non-fungible, NFTs are a great way of protecting digital assets in a censorship-resistent and immutable way. An NFT can be anything digital. It can be a piece of artwork or even a tweet. Yes, a tweet!

Jack Dorsey, the founder of Twitter, sold his very first tweet as an NFT. For how much, you ask? A cool $2.9 million.

The more popular form of NFTs in recent times has been more digital art than anything else. Artists are earning millions by creating NFTs and then selling them. Now let’s dive a bit deeper.

How Does It All Work?

Well, you already know the basics. It is on the blockchain. To be more precise, NFTs are most often on the Ethereum blockchain. However, other blockchains use their own version of NFTs.

The blockchain will keep track of who is holding a particular NFT and who is selling it to whom. Digital marketplaces like OpenSea facilitate the buying and selling of NFTs. You pay a gas fee for transactions, which basically means you need a crypto token to pay a small fee to buy and sell. And the platform will often charge as well.

Where Does The Value Come From?

As we mentioned before, this topic is a whole other can of worms. In essence, the value comes from the collectability and scarcity aspect of a particular digital asset. A digital asset such as an NFT can be anything really, it does not have to be an image (audio and video can be NFTs too!). Often they are collections, meaning a range of different pieces that together fall under one name, while each individual piece has a serial number.

As long as it exists in a digital world, it can be an NFT. Popular NFTs like CryptoPunks and Bored Ape Yacht Club are desirable because they are seen as collectible. There is also the fact of ownership and exclusivity.

Since NFTs by nature are non-fungible, it is unique and nobody can completely copy the NFT you own, making it scarce. Some of the value also comes from opportunities for a future sale, as the NFT markets are much more liquid than the original art markets buying and selling is often very quick. 

Some NFT prices can be quite out there. Here is a jaw-dropping example, Everyday – The First 5000 Days artwork sold for $69.3 million through an auction house in 2021. It was created by the artist named Beeple.

You might argue that the value is inflated. Since you can create multiple copies of NFTs. There is a catch to it. Those copies are not technically the real deal, due to the serial number and smart contract address stored on the blockchain that make it non-fungible. This makes it differ from the art market as well.

There will only be one definitive version. You can ‘right click and save’ an NFT. But that does not make it the original thing. So, the person that owns an NFT does own it themselves. And they and only they can choose to sell it or not.

Why Do NFTs Exist?

There are a lot of angles from which you can look at this. For an artist, it gives them a way of monetizing their digital artwork. NFTs can open up opportunities for creatives to earn a living from them, similar to the art market but with fewer middle-man and a more global audience due to the social nature.

On the other hand, for buyers, it can mean multiple things. One reason could be that they just want to support their favorite artists and they love their work. So, they would buy an NFT. Often this NFT is an access card to a forum or group chat of fellow fans, adding extra utility to owning it.

Not to mention, it does come with some bragging rights as well. And they would be able to use it as a profile picture on social media for instance. Twitter allows users to verify that their NFT is original and shows your followers this. It can also become a collectible. The future value of a particular NFT can rise quite a lot, and the buyer can sell it on the open market without any risk of theft or counterfits.

Here is another interesting one – video games. Yep, those good old video games. Many video games will let you own digital assets. Digital game items like character and gun skins can be NFTs. Which will give ownership rights to a single player and allow that player to even trade outside of the game.

In the next few decades with the rise of the metaverse, this will most likely be big. And since the video game industry is on the rise constantly, you do not want to miss the boom on this front. Cutting-edge video game studios like us at Metaverse Games Studios *wink wink* are already creating games for the metaverse.

And the possibilities are endless there. NFTs can be sold and bought in a video game in the metaverse. Take a look at a popular tactical FPS shooter like CounterStrike: Global Offensive. Also known as CS: GO. Skins are a massive money generator for the game. And people have made a career out of buying and selling in-game skins. The market is huge for this collectibles economy model. So is the potential for NFTs in the same fashion.

What Do You Need to Create NFTs?

If you want to create an NFT for yourself, you can. But there is something you will need though. NFTs are supported on a specific blockchain. And the Ethereum blockchain is the most popular.

Marketplaces like OpenSea are a very popular hub where people can buy and sell NFTS. Here are the things you need to create your own NFTs:

  1. A cryptocurrency wallet that has cryptocurrency in it. And since Ethereum is the most popular, you need to have Ethereum tokens.
  2. You can list and create your NFTs on sites like OpenSea to sell your collection. The first sale is called a “mint”, which OpenSea supports. Simply connect your wallet there, click on profile, then on My Collections and lastly on the Create button.

Wrapping Up

Well, there you have it. This guide answers the question of what an NFT is. NFTs are not just hype. And when the metaverse is all up and running, game studios like Metaverse Games Studio, are the ones that will stay ahead of the competition. Making games for the metaverse with its own NFT collections have the potential to be the big next thing.

Make an appointment today to learn how we can help build your ideas into reality.

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Qualities of A Good Game Studio

There are countless game-development studios. All of them are ready to reach you with lucrative offers and promise clients the world. But not all of them are the same. There are good game studios, and there are lousy ones. So, people new to game development should learn what things they should look for before investing in or working with a game studio. Especially if the game studio works in web 3.

And if you are someone looking to make your own game, then this article is definitely for you. Here we will be talking about 5 signs that you should look for when partnering with a game development studio. So, without further ado, let’s get started.

5 Signs of A Good Game Studio

Different game studios have different features, but that doesn’t mean one is bad or good. Both can be good and unique. However, there are some common signs of a good game studio. Here are five features of a great game development studio you should look for:

1. Developers Who Love to Play Games

If you take something as a chore, you will do it anyway, considering that’s your job, that’s what you get paid for. But when you take work as your passion, that’s when you achieve excellence. That’s the difference between good and top-tier. Many game development studios hire teammembers with beefy resumes, but they don’t love their work.

The result is satisfactory but average work. Developers who are equally enthusiastic about playing video games as their customers, can deliver just what the fans want. That’s what defines a good studio. You will see similar things in all aspects of life, like players becoming coaches, etc.

If the developer team is full of people who love what they are doing and playing the game they are creating; surely the end product will be much better than the studio which takes their job as just a job.

2. Small Teams

We all know the saying, “too many cooks spoil the broth.” While it’s true in most cases, it mostly applies to video game developer teams. Lots of people work on game development projects. People are appointed to different tasks like programming, character designing, AI, optimization, etc.

The most important thing for all of them is to stay on the same page. Coordination among the small groups is of utmost importance. Bigger teams often lack coordination due to being, well, too big. The result often does not come out as satisfactory. Throwing more devs at a problem is never the solution.

On the other hand, smaller developer teams have a more efficient working team. They can easily communicate, discuss various problems and work out a solution. The coordination and teamwork are much more precise in compact groups. So, it is more likely that you will get the desired product, just the way you wanted.

3. Knows And Respects the Player Base

Players are the only customers of a video game. They keep the studio and game alive. If players like a game, it’s a hit. If the player base rejects it, it doesn’t take long for the game to sink into oblivion. That’s the case in almost everything; movies, books, significant events, movie stars, etc. It all depends on the consumers.

A cardinal sign of a good game studio is that they know what the players want, what the players like, and how to deliver what the player base desires. Many studios know exactly what the players want, but they ignore it anyway. It’s the case mainly with big studios that work on AAA projects, this is due to shareholder interest as they want to squeeze out every penny.

A studio that can read the fans and work accordingly is more likely to make great games. Simple studies and statistics can determine the player’s demand, which isn’t much of an issue. But it takes serious dedication and perseverance towards the fans to give them what they want. Although it might seem unyielding initially, that makes a game studio great in the long run.

4. Freedom to Make Decisions

One of the biggest reasons games flop is continuous interference from the authorities. You don’t need to know anything about automobiles to own a car company, or you don’t need any knowledge about movies to own a production house. You need subordinates who know the ins and outs of the staff your company represents. If you interfere in their work, your company will likely end up in ashes.

That’s why many game studios fail. Because of the owning party’s needless interference, the developer team who are doing their job can’t have enough freedom to show their creativity in their work. The result is mediocre games, and often the developers take the backlash.

That’s the telltale sign of failed game studios. A great studio gives its developers enough freedom to make their own decisions and has total agency on the strategy they employ.

5. Experience and Reputation

Making video games isn’t a cakewalk. It takes years of experience and practice to establish a game studio. You might have master developers who previously worked in mega video game projects, but that doesn’t mean hiring them will give your studio overnight success. Experience matters for a reason, and reputation comes with experience.

If you continue providing suitable work to your customers, you will gradually gain a reputation and soon have more clients. Experience and reputation show how long a studio has been in the market and how well they are doing. As a beginner, a studio won’t have these two attributes but with perseverance, achieving reputation and experience is just a matter of time.

Why Choose Metaverse Game Studios?

We at the Metaverse Game Studio know and love our job. We know what the fans want and what our clients want. And we are always prepared to give our best. Our teams do not take anything lightly, and as a result, we have been able to provide some of the best titles, especially in web 3 in recent times, such as Bit Hotel.

We are growing gradually from a small team. Everyone here is serious about their jobs, and we always work in a fashion that satisfies both our direct clients and the player base. If you want to develop a game, feel free to contact us. Oh and we also play video games in our breaks and after work, for fun and to stay up to date!

Wrapping it up

Many people in recent times are looking to make video games because they love them and because a successful game can be extremely profitable. When approaching a game studio, things start to go sideways because it’s difficult for a beginner in game development to tell a great game studio from an average one.

If you can keep the aforementioned features in mind, you are pretty much guaranteed to find a good game development studio. Make an appointment today to learn how we can help build your ideas into reality.


Get in Contact with one of our Developers:

An Introduction To Game Development

The video game market has expanded significantly in recent years. The opportunity for individuals to develop games at a low cost or possibly even for free is becoming more and more accessible. If you are interested in learning about game development, you’ve come to the right place!

Game development is the process of creating a game from idea generation, design, and concept, to testing and releasing it. It is a very complex process and requires a developer with specific skills.

The purpose of game development is to create games that are fun and challenge players. Let us have a look at the game development process step by step.

How does Game Development Works?

Game development is a complex and lengthy process. Here’s how the whole game development process works.

Idea Generation

Idea generation is an essential part of the process of creation and promotion of video games. An idea generator is someone who is in charge of everything from design to development. If you want to create a good video game, you should have a clear idea about how it will be developed.

Game Design Phase

In this phase, the main task of a game designer is to determine how the player will enjoy it and how to make him happy. For this purpose, there should be defined goals and rules that the player must follow to achieve those goals. All these points are important because they will make or break your game, it is the foundational structure upon which the developers start building. There are multiple ways to structure this but most commonly a Game Design Document is used. Read more about this step here.

Concept Development

After the game designer has the basic idea, he can define the type of video game that will be developed. The concept is the most important thing because it has to meet the user’s expectations and preferences. If it doesn’t, there is little chance of a good rating.

The concept of a video game is essential for the development of the gameplay and needs to be present in the final product. This includes lore, character building, art style and more.

Prototyping Phase

The next step is to develop concept prototypes, which is an important aspect to have a good quality video game. The most important thing about game prototyping is that you can test ideas with your friends or family to see if they are working properly.

You can also make changes to your idea before investing a lot of money into it. The final step of this phase is to create a playable game or a template for testing with players.

Testing gameplay

Playtesting is done to test the product and find any problems that may be present in the final product. This process is done by the targeted audience, usually gamers. Oftentimes in a private small-scale setting before any beta version is released.

They give their opinions about what optimizations need to be made in order to improve the video game’s quality. Finding a good balance between the action, objectives and other components is important for developing a good game.

Releasing

After that testing is done on the test stand, it will be brought to all the other people who play video games. These people can give their opinions about how it works and if they are satisfied with the final product.

In addition, you can find other useful things for your video game by asking more professionals and collectors. A video game is a complex product that people and experts need to test several times to make sure that everything is perfect.

How NFTs are Integrated Into Games

NFT integration in games are a new way to play and make games. They can be used as an alternative to the traditional way of collecting and investing in NFTs due to the game’s unque utility. That means storing, sending, receiving, and trading them on the blockchain. If you want to play with NFTs but don’t know how or where to begin, there are two ways you could take a stab at this.

Build It Yourself

The best way to learn how to add NFTs to your game is by first learning about it yourself. In this case, you will have complete control over which assets and how you want them to work in your game. There are quite some technical challenges you will face, but it definitely allows you the most control.

Integration with help of a Partner

You can integrate NFTs into your game yourself with the right know-how, but it is prone to a range of issues. What we recommend is to get a technical partner on-board that knows how to write blockchain based code, such as Solidity or Rust. It’s much more forthcoming this way and will give you more time to focus on making your game the best it can be. Scroll down to get in touch if this is the route for you.

Benefits Of NFT Integration

Unlike building your own web2 game, you have access to a variety of different NFTs that you can use in a web3 game. That means you will be able to build a lot more game assets faster than in other ways. You can add as many NFTs as you want, and they are all yours to issue, use and distribute. You also don’t need to worry about copyright or trademark infringements or any legal issues.

Another significant advantage of integration is that you can develop your game with a much larger audience. With NFTs, it’s easier to get funding for your project and some people will back you up if you have problems with the NFTs themselves or the blockchain.

How Metaverse Studio Can Help You Develop Your Game?

Metaverse Games Studio is a specialized web 3 game studio. We develop games with digital-first design and marketing principles in mind. Our goal is to build digital games that stick with you, impact your life and make a difference in the world, all while developing an amazing team environment and delivering them on time and within budget.

We have a special approach to smart contracts, marketplaces, vesting, and staking dashboards. that allows no-code end-use as well as customizability We offer secure automated transactions without any delays or additional costs. We can also deliver NFTs and any functions required to develop your project. 

Conclusion

The video game industry is one of the most profitable and fastest-growing industries, making it a promising investment or pursuit for entrepreneurs who like and and have ideas around video games. However, to make money from developing video games requires a complex set of skills as well, which is a topic for another conversation.

Now that you are done reading this article, I hope now you have a basic but valuable understanding of game development. Thanks for stopping by!

Make an appointment today to learn how we can help build your ideas into reality.

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Everything You Need to Know About the OpenSea NFT Marketplace

If you have not been living under a rock, then you have probably heard of NFTs. They are all the rage right now. The majority of people are aware of what they are. But how do you buy or sell them? Well, this guide will be all about that.

Enter OpenSea, an open and popular NFT marketplace. This guide will be all about everything you need to know about the OpenSea NFT marketplace.

What Is OpenSea?

For those who do not know, OpenSea might sound like a shipping company or service. Well, we would not fault you for thinking that. But it has nothing to do with sailing. OpenSea is a marketplace. Just like the Facebook marketplace, you can buy and sell there.

But the only difference is that you buy and sell NFTs. 67,155 NFTs were sold a day before the time of writing alone. And it was worth about $15 million. Quite a large sum of money!

It started in 2017. Founders Alex Atallah and Devin Finzer run the business from the Big Apple, New York. And you can call them the pioneers in this space of public NFT trading as they were very early. So, they know what they are doing. OpenSea has taken off quite a lot in 2021 with billions of dollars of trading volume, making platform fees substantial.

And there are no signs of slowing down either. It is now valued at a staggering $13.3 billion. Let’s check out how the marketplace works.

How OpenSea Works

The basic functionality of OpenSea, like any marketplace, is buying and selling. Users will need to log in with an account. Then they can buy and sell digital assets with cryptocurrency or, soon, even fiat currency. It is pretty versatile in that regard.

NFTs are non-fungible tokens. They are essentially digital assets on the Ethereum blockchain (OpenSea only Supports Ethereum and it’s side-chains such as Polygon). Thanks to the nature of the technology, they cannot be replicated. So, what you have is unique to you. Pretty cool.

You can buy and sell anything on OpenSea. Anything that is an NFT and, more importantly, any kind of digital asset can become an NFT. However, we have seen digital drawings and imagery become some of the most highly bid upon and most commonly sold.

Your NFT will use a smart contract system that will essentially bind its ownership to you. This means that the blockchain uses an open-source ledger to make sure all ownershgip rights are stored forever and immutable. The platform uses high-end security standards for further safety to make sure no bad actors can steal any listed items.

Since it is on the Ethereum blockchain, you will need it to buy and sell it. Think of it as the currency on OpenSea. You can buy and sell by connecting your crypto wallets.

Is OpenSea Worth It?

Anybody with an internet connection can check out other NFT marketplaces. But what makes OpenSea special? The platform has boomed for a couple of reasons. One is, of course, because of the control users get over their NFTs as well as the no-code trading.

If you own an NFT, it will be stored on the Ethereum wallet. So, you have full control over your NFTs. You are not just handing your assets over to someone.

Plus, it is all anonymous. You can just connect your crypto wallet and boom! You are good to go. There is no fuss or muss. The whole process is pretty smooth and streamlined.

Buyers and sellers with a wide taste can also rejoice. OpenSea has many genres of NFTs. Starting from domain names to trading cards. Just name it, and chances are you can buy and sell those NFTs on OpenSea. Due to its first mover advantage it now has around 80% of the trading volume which makes the market quite liquid, meaning you can buy and sell quickly.

So, technically you can have a digital asset for a game and be sure that you are the sole owner but still trade your assets outside of the game! Speaking of games, our team here at metaverse games studio are changing game development for good using blockchain technology.

Click on this link to know more about all the supported wallets on OpenSea.

What Are The Fees?

This is one area where OpenSea outshines the rest. The fees are relatively low. And that is a good thing. It makes it accessible for others to enter the field and start buying and selling. Fees are the business model OpenSea uses.

You would assume that the fees would be quite high. Not really. The platform charges only 2.5%. That is 2.5% of all transactions that happen on its platform. Plus, there is an option as an artist to set a royalty on secondary sales on the platform, which is distributed with code.  But you do not have to pay anything to explore the platform.

Checking it out and using it is completely free. It only charges an amount when a sale happens. And we think that is completely fair. There are plenty of payment options too! There are a whopping 200 payment options to buy or first NFT.

Oh yes, you read that right. So, pick and choose whatever payment option suits you the best. However, since it is on the Ethereum blockchain, naturally, Ether is the most popular payment option. Transaction and gas fees are made with Ether.

OpenSea Quick Facts

Alright, before wrapping up, we wanted to give you a quick overview of some facts about OpenSea. These will be rapid-fire-style facts.

So, buckle up. Some of the facts here are pretty interesting, to say the least. One of the most exciting ones is quite interesting.

  • There are a large number of collectibles. With over 20 million registered user assets, choice is never a problem.
  • CryptoPunks is one of the most popular NFTs. Along with the Bored Ape Yacht Club.
  • It also has a mobile app that is responsive and easy to use.
  • While OpenSea is safe for the most part, it still encourages users to do their research. And that is good practice. But millions of dollars in transactions are happening. It is pretty safe.
  • It has an active community of passionate users and asset owners.
  • The platform recently started its 0-gas fee program. So, now is the best time to get started.

Wrapping Up

OpenSea has potential. Hopefully, with this guide, everything you need to know about the OpenSea NFT Marketplace is crystal clear. And with digital assets becoming more and more valuable and common, working with us at Metaverse Games Studio can create a large impact on your business, the NFT market as a whole and the metaverse in the future.

Make an appointment today to learn how we can help build your ideas into reality.

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Principles Of Game Design

Games have become mainstream now, thanks to the advent of the internet. The days of considering gaming as a mere pastime or something only tech-savvy individuals would enjoy are long gone.

Video games are now a multi-billion-dollar industry. Developers all over the world are coming up with new games almost every passing hour. Creating a hit game is not that easy though. There are a few core principles. This guide will be all about the principles of game design.

6 Core Principles Of Game Design

Whether you are a console gamer, a PC gamer, a mobile gamer, or looking for the future of game development, you should know one thing. Ultimately, a game should be engaging and fun. It should feel like a game.

There is a fine line between something being fun and being tedious. Games that aim for realism need to tread a thin line. They should be fun to play but also give an immersive experience. No matter what platform you are building a game on, or for which audience, there are 6 principles of game design.

1. The Core Mechanic

One advantage of the digital world is its limitless possibilities. You can build practically anything, and in this case, any type of game can allow you to do anything. However, you need to take a more focused and grounded approach.

That is why the first principle of game design is to base your game around a core mechanic. Take any popular game, and you will see that they all have a core mechanic. For example, Tetris asks you to fit shapes into a confined space.

In Apex Legends, a very popular online battle royale, the core mechanic is shooting enemies – running, gunning, and looting. A core mechanic is something that will repeat multiple times during gameplay. It will make your game more focused.

There is a caveat, though. You need to ensure that the core mechanic is fun and immersive. Otherwise, you would end up with something that is mind-numbingly boring. And players will lose interest — the opposite of what you are trying to achieve.

2. Balanced Gameplay

A focused core mechanic is not enough. You need to have balanced gameplay. Now, what does that mean? Well, it is basically giving players options. These options will allow players to tackle challenges in the game based on their skills and play style.

For example, in a racing game, you may allow players to modify their vehicle. Some mods may increase the top speed but reduce the acceleration. Other mods may increase acceleration but reduce tire grip.

All these ifs and buts bring consequences. Players can choose how they want to tackle a challenge. Your game should not feel unfair. That is what balanced gameplay is all about. There might be a challenge to it, but with the right skills and decisions, it can be overcome.

3. Easy To Learn, But Difficult To Master

Speaking of challenges, a game that players can breeze through will probably bore most of them. Games are supposed to be fun, yes. While this is very true, a challenge can really get players excited.

A win in a game that is too easy might feel hollow. And players might not feel like they have achieved something in the game. Hence matching players with others of equal skill often brings a fair challenge and more fun.

They will feel motivated to grind and get better at it if the game gets progressively difficult. The idea here is that the basics of the gameplay are easy to learn. But mastering it will take some time, energy, and skill. Something players can work towards and look forward to.

4. Proper Main Missions

Main missions can look vastly different from game to game. In Tetris, one of our previous examples, the main goal is simple. We all know what you need to do with it.

If you have an open-world game in a metaverse where the plot line is that the human race is fighting an alien invasion, now that is exciting.

The possibilities are endless. Regardless of what the core mechanics of the game are, the core or main missions need to be meaningful and well-designed.

The whole concept of level design and story writing comes into play here. These topics can be single in-depth articles on their own. However, the main idea is that the story and the main missions should be cohesive. They should make sense.

And not to mention, they should also feel immersive. Otherwise, it may leave the players feeling lost or disengaged.

5. Is It fun?

At its core, a video game should be fun to play. It should give the player a sense of euphoria and get them excited. It is easier said than done though.

That is why you need to have a talented game development studio. There are whole departments in game studios that test a game to see whether they are fun or not.

This is aptly called playtesting. A game that is not fun ultimately fails. The thing is, you cannot strictly define what ‘fun’ is for a game. It can vary vastly depending on the game, the gameplay, and also the genre.

Microsoft’s Flight Simulator is a very realistic game. You actually have to follow all the tedious little details of flying an aircraft. But guess what? It does not feel tedious. In fact, players who love the game, love it for its realism.

On the other hand, The Last of Us, is an epic award-winning action video game. Things are not that realistic in this game, but it’s gameplay makes it fun!

But there are still some elements that are designed in a way that makes you buy into the whole world. Both are fun though. That is what it is all about. You need to find the perfect balance here.

6. Reward And Feedback

A lot of gamers love the reward and feedback mechanics of well-designed games. It gives us a dopamine hit and keeps us coming back for more. The last thing you want is for a player to play your game once and then forget about it.

You need to keep them engaged. You need to have them revisit your game more. And for that, a proper reward and feedback mechanism is essential. Tell them how they are doing in the game.

How much have they progressed? If it is a multi-player game, tell them how they compare with other players on the server. Rewards are awesome too! They get players excited and keep them motivated.

Wrapping Up

The principles of game design allows game developers to create a game that will feel like a game. It will create a game that is not only fun to play but is immersive and gets players coming back for more.

Studios like us at Metaverse Games Studio understand this fact. That is why we are taking the principle of game development and adapting it for the next revolution – the metaverse.

Make an appointment today to learn how we can help build your ideas into reality.

Get in Contact with one of our Developers:

What Is Staking?

Staking is just yet another aspect of crypto that might appear to be a bit complicated initially. Yes, it’s a bit confusing, but knowing the ins and outs can be highly beneficial for crypto investors.

Staking is similar to depositing your money in a financial institution, like a bank, in a fixed deposit or savings account. The bank uses your money for their business and gives you a fraction of their profit. You get a profit without risking your money, well sort of. Staking is more or less the same, although it functions differently.

What Is Staking In Cryptocurrency?

Staking works like putting money in a bank account. You gain interest from your money without risking it. When you deposit your money, there are rules provided by the bank that you must abide by. The same goes for cryptocurrency staking.

Blockchains themselves often use staking to give participants voting rights on what the blockchain will improve, this is a consensus mechanism called proof-of-stake. The first step for a user is to put the native cryptocurrency of that chain into the protocol. The protocol selects validators among those participants to verify blocks of transactions. It is more probable that you will be selected as a validator if you commit more coins.

As each block is added to the blockchain, it creates new coins and those are given to the block’s validator in the form of stake rewards. Most of the time, payouts are made in the same cryptocurrency that was staked; however, certain blockchains give out incentives in different coins.

If you wish to stake crypto, you must hold a supported cryptocurrency of the staking platform. After that, it’s up to you to decide how much money you’d like to put into play. When you stake your coins, you are still the owner of them, similarly to how your bank account is connected to your identity, a staked amount is connected to your wallet.

If you wish to exchange your staked coins, you can do so at any time without losing them. You won’t get your coins back immediately in all cases, since specific cryptocurrencies need you to stake them for a certain length of time before you can get them back. Similar to a depository account at a bank. But this locking period is often very clearly stated on the website you can stake on.

The majority of cryptocurrencies do not support staking. This feature is only available for cryptocurrencies that use staking mechanisms like PoS and have built a staking dashboard or use an external staking platform. Here’s an example of how this could look.

What Does Proof Of Stake (PoS) Mean?

Proof of Stake, a more recent consensus process, aims to improve speed and efficiency while decreasing transaction fees on a blockchain. It is less energy-intensive without requiring all the miners, which is one way Proof of stake helps save expenses for the protocol.

As a result of staking, blockchain transactions are verified by those who are invested in them. There are different methods to accomplish this, but the gist is that users put their tokens to work in return for the opportunity to add a block or a proposal to the blockchain.

Staking tokens ensure the validity of each new transaction they submit to the blockchain. When the network selects its validators, it does so based on the size and duration of each participant’s stake in the network.

In this way, those who put in the most significant time and effort get the prize. There are times when new block transactions are found invalid, resulting in what is known as a “slashing event” for the network. Which means somebody’s reward for supporting the network gets reduced.

What Cryptocurrencies Can You Stake?

As we have already mentioned, staking is not possible with all cryptocurrencies. It is only possible with currencies that have a staking dashboard or use a PoS mechanism. Here are some large market-cap cryptocurrencies that support staking:

  • Ethereum (ETH)
  • Solana (SOL)
  • Luna (LUNA)
  • Avalanche (AVAX)
  • Polkadot (DOT)
  • Bit Hotel Token (BTH)

Why Can't All Cryptocurrencies Be Staked?

Let’s explain why:

Managing a coin frequently lacks a central authority, which is why they’re known as decentralized. Without a central authority figure, computers use a consensus mechanism to solve problems.

There is a consensus process known as “Proof of Work” that is used by several cryptocurrencies, such as Bitcoin and Ethereum (until 2022). By proof of work, the network distributes problems to be solved among miners worldwide.

The miners compete to solve cryptographic puzzles, and the winner gets the reward in the form of cryptocurrencies. Proof of Work is a scalable method for a more straightforward blockchain like Bitcoin’s. A bottleneck could occur if Proof of Work is used for a more complex system like Ethereum, which includes a variety of programs running on top of the blockchain.

As a result, fees and transaction times may be prolonged. That’s why not all cryptocurrencies can use proof of work; hence they use PoS or proof of stake protocol which makes them suitable for staking.

Next to the PoS application there are also more centralized entities that allow users to stake cryptocurrency, these institutions often are more centralized and lend out the cryptocurrency to other users for interest, similar to a bank would. So that it can pay you your saving (staking) interest for depositing your crypto.

Advantages Of Staking

Crypto staking has lots of advantages. Since it’s relatively new, many are unaware of them. Here are some advantages of cryptocurrency staking:

  • Easy profit on your existing cryptocurrency. You don’t have to put your cryptocurrencies at risk, although prices can be volatile.
  • You won’t require any hardware or extra investment for crypto staking.
  • By staking crypto, not only are you gaining profit, but also you are contributing to maintaining the security and efficiency of a blockchain.
  • Greener than crypto mining. Mining requires a lot of energy; staking does not.

Disadvantages Of staking

Just like anything, staking has some downsides too. Here are the risks of cryptocurrency staking:

  • Cryptocurrency prices change quickly. If you have a large amount of cryptocurrency staked and the price suddenly goes down, the expected return might not be able to compensate for the loss.
  • Staking requires a specific period. During that period, you cannot use your coins even if you want to. If the price goes high, you might miss the chances to make a profit by selling them.
  • Staking and unstaking can be bothersome on some protocols.

Conclusion

Cryptocurrency mining has been a lucrative hype for a long time, but staking is changing that. It’s a unique process equally beneficial for all parties while requiring much fewer assets. Like anything, staking has some pros and cons. But it’s safe to assume that staking is profitable for long-term investors if they diversify and don’t bite off more than they can chew.

There are many factors, like commissions, APY’s (interest-rate’s), track records such as changes to the APYs, etc., that you need to take into account before staking. Once you become a long-term player in this game, you will gradually learn what to do and what not to.

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