DFINITY Staking Overview
DFINITY is a blockchain project that aims to create a decentralized platform for web applications and services. Its native token is ICP, which can be staked to earn rewards and vote on network proposals. To stake ICP tokens, users need to create an Internet Identity, an NNS account, create a neuron, and lock up their tokens for a specified period of time. Staking DFINITY is a way to support the network and earn passive income, but it also involves some risks and responsibilities. Stake your DFINITY investments today and start earning rewards! Follow our tutorial for a step-by-step guide on how to stake dfinity.
How to Stake DFINITY
To stake DFINITY, users need to follow the given steps:
Step 1 – Create an Internet Identity
Step 2 – Create an Account in the Network Nervous System (NNS) dapp
Step 3 – Transfer ICP Utility Tokens to Your NNS Account
Step 4 – Stake ICP Utility Tokens in a Neuron
Step 1 - Create an Internet Identity
To create an Internet Identity, go to the official website of the Internet Identity dapp and click on “Create Anchor”. Enter a device name, allow the dapp to access your device’s authentication method or security key, solve a captcha, and confirm adding your device. You will receive a unique anchor number, which you can use to log in to other dapps.
Step 2 - Create an Account in the Network Nervous System (NNS) dapp
The NNS dapp governs the Internet Computer Protocol and allows you to stake ICP tokens in neurons, vote on proposals, and earn rewards. To create an account, go to the official website of Network Nervous System and sign in with your Internet Identity anchor number. Authorize the action through your device or security key, and you can view your wallet address and ICP balance.
Step 3 - Transfer ICP Utility Tokens to Your NNS Account
To stake ICP utility tokens in a neuron, you need at least 1 ICP in your NNS account, which you can transfer from other wallets or exchanges. Copy your wallet address from the NNS dapp and initiate a transfer from your wallet or exchange by pasting your wallet address as the recipient and entering the amount of ICP you want to transfer. Confirm the transaction and wait for it to be processed by the network. You can buy ICP utility tokens from various exchanges such as Coinbase, Binance, Kraken
Step 4 - Stake ICP Utility Tokens in a Neuron
A neuron is a smart contract that represents your stake in the network, with a dissolve delay and maturity. To stake ICP utility tokens in a neuron, go to the My Neuron Staking tab on the NNS dapp, click on Stake Neurons, and enter the amount of tokens you want to stake. Review your transaction and click on Execute to create your neuron, which can take up to a minute. A longer dissolve delay leads to a higher maturity rate.
Also read: How to Buy DFINITY
Popular Video Guides on Staking DFINITY
Best Places to Stake DFINITY
There are several alternatives for staking DFINITY, each with its own advantages and disadvantages. The following are some of the platforms where you can stake your DFINITY:
Option 1: Network Nervous System
The Network Nervous System (NNS) is the autonomous software that governs the Internet Computer blockchain and its protocols. It operates on a liquid democracy model, where anyone can participate in governance by staking ICP tokens in neurons. Staking DFINITY on The Network Nervous System (NNS) allows you to contribute to the governance of the Internet Computer and earn rewards by locking up ICP tokens in neurons for a designated period of time, ranging from 6 months to 8 years.
Pros
- Passive income can be earned through voting rewards based on the stake and dissolve delay.
- Governance of the Internet Computer can be influenced and network security can be enhanced through voting on proposals.
- Canister smart contracts and cycles can be created.
- ICP tokens can be managed in a non-custodial way through the NNS front-end dapp acting as a wallet.
Cons
- ICP tokens are locked up in neurons for a long period, which may not be suitable for those who need liquidity or want to trade frequently.
- Unstaking ICP tokens requires dissolving neurons, which can take time and delay access to funds.
- Trust in the NNS and its software is necessary for effective participation in governance and receiving rewards.
- There is a risk of losing access to ICP tokens if Internet Identity or device authentication is lost, so proper security measures must be taken.
Option 2: Fleek
Fleek is a decentralized hosting solution that allows users to deploy websites and applications on the Internet Computer. Fleek's Plug Wallet browser extension provides easy access to ICP tokens, cycles, and other tokens and NFTs, and enables users to log into Internet Computer dapps with just one click. Fleek also offers to stake for DFINITY, which allows users to support the network and earn passive income.
Pros
- Fleek offers a decentralized hosting solution that simplifies the process of deploying websites and applications on the Internet Computer, without the need for managing canisters.
- The user-friendly Plug Wallet browser extension enables easy access to ICP tokens, cycles, and other tokens and NFTs, and allows users to log into Internet Computer dapps with one click.
- Fleek provides an open-source gateway to the Internet Computer, which allows anyone to access canisters and their data freely via HTTP.
- Staking on Fleek is a secure and reliable way to support the network, with Fleek’s infrastructure providing high availability and redundancy, and their team offering technical support and expertise.
Cons
- Fleek is an experimental and early product that is built on top of the Internet Computer’s alpha/testnet, so it may not be fully stable or reliable yet.
- Fleek may charge fees or gas costs for some of its services, such as hosting, storage, or domain name, and these costs may vary depending on network conditions or demand for the services.
- Fleek may not support all the features or functionalities that are available on the Internet Computer network, such as smart contracts, back-end infrastructure, or advanced governance options.
Option 3: Dank
Dank is a canister-based service that runs on the Internet Computer and allows users to hold a balance of cycles associated with their principal identifier. As cycles are the fuel for computation on the Internet Computer network, Dank enables users to use their ICP tokens to convert into cycles and stake them in neurons. By staking DFINITY on Dank, users can benefit from a reliable and secure staking service that simplifies the process of converting ICP tokens into cycles and staking them in neurons.
Pros
- Hold and trade cycles easily with just a Principal ID.
- Use cycles for development, funding canisters in DFX, or calling XTC Token Canister’s methods.
- No need to deploy a canister as Dank offers the necessary canister and cycle management infrastructure.
- Enable better composability on user/developer experiences that require cycles.
- Access easy-to-use tools for cycle use cases such as trading and development.
Cons
- Some users have reported issues when minting XTC, the token that wraps cycles.
- You may have less control over your cycle balance, as Dank manages the distribution and ownership of cycles on your behalf.
- There may be security risks associated with using a third-party service like Dank, as it may be vulnerable to attacks or bugs.
Also read: DFINITY Price Prediction
Benefits of Staking DFINITY
- Participate in network governance and influence the future of the Internet Computer ecosystem.
- Earn proportional rewards for voting on proposals by staking ICP and locking them up for a designated period of time.
- Help to secure and improve the performance of the Internet Computer blockchain, making it more resilient and efficient.
- Potentially benefit from the growth of the ICP utility token value, driven by DFINITY’s consensus mechanism that reduces transaction fees and enables fast transactions.
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Frequently Asked Questions
What is staking DFINITY?
Staking cryptocurrency involves locking up some of your crypto assets for a specific period of time to support the operation of a blockchain network that uses a proof of stake (PoS) consensus mechanism. This helps to validate and secure transactions on the blockchain, and you earn rewards in return. Staking DFINITY is a similar process, but it involves locking up your ICP tokens to create a voting neuron within the Network Nervous System (NNS), which governs the Internet Computer blockchain network.
How much can I earn by staking DFINITY?
Staking Dfinity depends on various factors, including the amount of ICP you stake, the dissolve delay you choose, the voting power you have, and the network’s economics. Rewards are proportional to the amount of ICP staked and the lock-up period, and you can also earn rewards for voting on proposals submitted to the Network Nervous System. However, the specific amount you can earn cannot be determined as it varies based on these factors.
What are the risks of staking DFINITY?
Staking DFINITY involves risks such as the volatility of the staked tokens, and a possibility of loss due to market risk. Some staking platforms may have low liquidity, making it difficult to sell or convert tokens. Staked tokens are subject to a dissolve delay, ranging from 6 months to 8 years, which may result in liquidity risk. There is also a technical risk of hacking, malfunctioning, or misuse of smart contracts and decentralized applications that may result in the loss of staked tokens and rewards.
How can I unstake or withdraw my DFINITY?
To withdraw your staked DFINITY, you must first dissolve your neurons by reducing their dissolve delay to zero. You can initiate the dissolve process by clicking the Dissolve button on the neuron page of the NNS dapp, and the time it takes to dissolve will depend on the initial dissolve delay you selected when you staked your tokens. Once your neurons are fully dissolved, you can withdraw your staked ICP or SNS tokens by clicking on the Withdraw button on the neuron page of the NNS dapp. You can also claim your staking rewards by clicking on the Spawn Neuron button on the same page. After withdrawing your tokens, you can transfer them to other wallets or exchanges as desired.
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