Unlock The Potential Of Filecoin Staking: A Step-By-Step Guide
Recently, Filecoin staking has gained a massive amount of attention in less span of time. As Filecoin has begun to expand, a lot of people are considering one of the mediums to generate passive income. If you are one of those people and want to learn more about Filecoin staking then you are at the right place. In this blog, we will discuss how Filecoin works, how it is similar to IPFS and the most important question is how you can generate a passive income.
We will try to explain each and every bit related to Filecoin staking so you can start without any hindrance. So let’s start with some basic questions.
What Is FileCoin?
Filecoin is a decentralized storage network that allows users to store data by trading storage space in the open market using the native cryptocurrency called Filecoin.
The foundation of Filecoin is built on the top of IPFS ( A decentralized storage protocol) that allows anyone to store data in a distributed format without any centralized authority.
Filecoin was developed to conquer some of the shortcomings of the traditional database systems that we use. It solves problems like lack of control, vulnerability, censorship, data breaches, and most importantly, high costs.
Filecoin network offers a new approach to storing and accessing data with the most cost-effective infrastructure, unlike several traditional solutions. As the Filecoin ecosystem keeps on expanding, soon it is going to bring a revolution.
The Importance Of Staking:
Staking in the web3 world is the most prominent word when it comes to generating passive income. A lot of protocols use the consensus algorithm such as Proof of Stake, where Staking is the critical component for such Protocols as Filecoin.
Staking in the Proof of stake consensus algorithm helps the stakeholders of protocol to ensure there is integrity and security maintained by the network offering financial incentives to the people contributing to it as a staker.
If any contributor tries to act maliciously then they have a good amount of chances for losing all their stacked coins which can be a big financial penalty.
Along with the security, Staking helps protocols to ensure that they have got sufficient resources to function as expected.
When users stake in a protocol, they lock a certain number of tokens which makes them committed to providing storage space and other computational resources to the Filecoin network.
Also, this ensures that the network has enough resources that can meet the demand for storage among the stakeholders of the protocol.
Staking plays a major role in the governance of the file coin network. Stakers who have staked tokens can participate in decision-making processes and vote on proposals for the betterment of the Filecoin Network.
How To Stake Tokens In Filecoin?
Now that you have understood the importance of staking in Filecoin, let’s discuss step by step how, to begin with, Filecoin staking.
Buy some FIL(Filecoin) Tokens
The very first step to begin Filecoin staking is to get some FIlecoin tokens. You can easily get them from both centralized and decentralized exchanges such as Binance or the coinbase. Also, there are some ways like offering storage space on Filecoin networks that can help you to earn FIL tokens.
Choose the staking platform
After you have acquired some of the Filecoin tokens, you can choose the staking platform that offers the services for staking on the Filecoin network. A lot of staking platforms are available such as
- Figment Network- Offers staking facility, wallet management, real-time reporting, and customer support.
- Staked – Another popular platform that is also known for its best security measures.
- ChainGaurdian- Offers staking facility with risk tolerance and risk management.
- Hashed – Different tiers are available based on which you can stake your Filecoin tokens.
Stake your Filecoin tokens
Once you have chosen the best Filecoin staking platform for your needs then you can begin the staking process. This basically involves certain steps like transferring the Filecoin tokens to the wallet based on the contract with the stacking platform. Most staking platforms request their customers to go under the KYC process and maintain a minimum number of tokens.
Participate in the Network
After you have staked tokens, you can participate in a number of activities on the Filecoin Network. For example, you can begin by offering resources such as storage space to other network participants and vote on governance proposals.
Generate some passive income. To know your returns you can simply check on the staker’s dashboard provided by the platform or use Filecoin Native tools such as Filecoin Explorer.
It is quite essential to note that Filecoin staking does involve a certain amount of risk, as the value of tokens you have staked might fluctuate and you can lose all of your tokens if you fail to meet basic requirements as a staker. Hence it is quite essential to consider all potential risks and then make a decision about Filecoin staking.
Important Things To Consider For Filecoin Staking
- Choose the staking platform based on your reputation and performance track record.
- Most of the staking platform charges a basic fee or commission on top of the tokens you stake. Hence compare the fees and commission structure before choosing one.
- Do not stake tokens on a platform that is not trusted and does not have any reputation. You might end up losing your money.
- Always consider doing Filecoin staking where you are getting regular support, educational material, and more importantly real-time reports.
In summary, staking tokens in the Filecoin network can be rewarding and at the same time, there is risk associated with it.
Filecoin staking is a great way to earn some rewards and participate in the other activities of the network like contribution to security, storage network, and much more.
By choosing the correct stacking platform, you can make a number of contributions toward the success of the file coin network.
However, it is always important to consider all the risks and rewards of taking a firm decision about Filecoin staking.