Who can use this feature?
Staking is currently only available to Luno customers in Malaysia and South Africa.
Staking is a way of earning extra cryptocurrency by helping to verify crypto transactions. You can stake crypto in projects that use a proof of stake consensus protocol to process transactions.
Proof of stake consensus protocols require people to put their crypto to work to help secure the crypto network. To participate in staking and get rewarded with rewards, volunteers can either put up a set amount of crypto to become a new validator, or they can contribute to an existing staking validator to verify transactions.
How are transactions validated?
Every cryptocurrency has a database that stores transactions, known as a blockchain. A blockchain must safely and chronologically keep track of, and record, all transactions made using the cryptocurrency. This can only happen when network participants agree that each block of transactions is valid.
Staking acts as a deposit to ensure that the right transactions are being validated. If a validator confirms transactions correctly, they get rewarded. If they validate bad or fraudulent data, they can be penalised by losing some of the crypto they’ve staked. This discourages bad behaviour and awards those who approve transactions correctly, essentially ensuring that the integrity of the blockchain remains secure.
How does staking with Luno work?
Luno has set up all the technical infrastructure needed to connect to a staking service provider that we’ve chosen after careful review. If you decide you’d like to participate in staking, you can quickly and easily transfer some crypto into your Staking Wallet.
Behind the scenes, the crypto you’ve added to your Staking Wallet is moved into a special blockchain address, known as a validator node, that’s dedicated to verifying transactions. It can take some time (up to several days) for your crypto to become active on the node, and then it’ll start to earn rewards.
At regular intervals, we’ll send you the rewards your crypto has earned from staking. Your rewards will be added to your Staking Wallet, increasing the total amount of crypto you have staked.
You can also choose to top up your Staking Wallet by adding more crypto to it, or you can move funds out of your Staking Wallet by unstaking crypto at any time. Both of these actions could take some time, as the change would need to be implemented with the validator node at the blockchain level. The time delay depends on how that blockchain was set up, which is outside of Luno’s control.
What are the benefits of staking?
As a Luno customer, you can stake your crypto over a long period of time to earn rewards on the amount staked. You’re also helping the crypto industry secure its blockchains, making them less vulnerable to attacks.
Could I stake crypto without Luno?
Yes, you could stake by yourself. Cryptocurrency is designed to be a decentralised system, open for any individual to participate in without relying on an organisation like a bank or a crypto exchange.
However, there are some potential barriers to overcome. If you’re not using a third party to facilitate your staking, and depending on what coin you’re staking, you might need to:
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Set up a validator node on a computer that’s kept online 24/7,
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Look after your own private keys,
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Manage crypto transfers to and from the node,
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Create a separate wallet to receive rewards, and
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Have the minimum required amount to become a validator (for example, Ethereum's minimum is 32 ETH).
Luno’s role is to eliminate these barriers for you so that you can stake any amount of crypto with the tap of a few buttons.