You have probably heard of “staking” in the context of cryptocurrencies. In short, staking is a way to earn rewards by holding certain kinds of cryptocurrencies. The staked cryptocurrency is usually placed in a “staking pool” and used to verify and secure transactions. In return, the holder receives a percentage rate reward over time. You can think of it as a kind of interest-bearing savings account. But how can staking be incorporated into video games? Some innovative games on the forefront of De-Fi gaming have introduced staking mechanisms for NFTs to generate in-game tokens.
In this article, we will discuss what staking is and discuss its place in the Play-to-Earn gaming world.
To understand staking, we need to first explain how cryptocurrency works on a very basic level. Cryptocurrencies are decentralized, meaning there is no central authority keeping track of transactions like a bank or a credit card company. So how does the network ensure the validity of transactions?
The answer is through what is known as a consensus mechanism. Simpler cryptocurrencies like Bitcoin and Etherium 1.0 use a consensus mechanism called Proof of Work. The process involves throwing processing power at solving math problems such as validating transactions of cryptocurrency. Crypto “miners”, computers competing to solve these problems, add the verified transactions onto the chain and gain some cryptocurrency in return. For a simple blockchain like Bitcoin, this solution is enough, but for more complicated ones like Ethereum, Proof of Work can be too much activity, resulting in longer transaction times and higher fees.
“Proof of Stake” circumvents this process by delegating the task of verifying transactions to someone invested in the blockchain. Instead of tasking an army of miners to churn through the same math problem, staking reduces redundancy by selecting a network participant to add transactions to the blockchain and earn crypto in return. The staked tokens are a guarantee of the legitimacy of new transactions added to the blockchain.
There are some important benefits to staking; firstly, it is a way for crypto investors to generate value from their assets instead of hoarding them in a crypto wallet. Second, staking also contributes to strengthening the blockchain that the holder is invested in. through staking, investors can improve the security, efficiency, and resilience of the crypto in question.
Some disruptors in the gaming world have introduced staking mechanisms to blockchain gaming. Project Hive, an upcoming Play-to-Earn PvP-oriented turn-based game has introduced a non-custodial staking pool that allows holders of NFTs to generate in-game tokens based on the quality and number of their staked NFTs. The developing team has streamlined the staking process as much as possible. All a player has to do is transfer their NFTs to a personal Solana-based wallet, hold them there, and claim their rewards at the end of staking. The NFTs range in quality from poor to artifact, and generate daily gains accordingly.
In the meantime, investors can check on the state of their progress on the game’s website. Investors can see all of the participants in the staking process, sort by NFT quality, and even check the total and daily gain of each participating crypto wallet. Staking is a great way to generate passive income from NFTs while contributing to the success of the projects a holder is invested in. You can see how simple staking is on Project Hive’s platform here. We are excited to see it incorporated into Play-to-Earn gaming and look forward to what new developments such as exciting games like Project Hive can bring to DeFi gaming.