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Ripple CTO Clears Up Critical AMM Misconception
In a recent statement, Tomiwabold Olajide, Ripple’s Chief Technology Officer (CTO), took to social media platforms to dispel a crucial misunderstanding surrounding the concept of staking. The clarification is essential for users and investors alike to grasp the fundamental difference between traditional stock dividends and cryptocurrency staking.
Olajide responded by elucidating the critical distinction between the two:
“When you get dividends from stocks, someone else created/earned them and transferred them to you. With crypto staking, you create the property you receive. Staking is creating property, not receiving it from someone else who earned/created it.”
To put it simply, cryptocurrency staking enables token holders to act as validators in a proof-of-stake (PoS) consensus mechanism by locking their tokens into a staking contract. In return, they receive rewards, typically in the form of additional cryptocurrency. Staking allows crypto users to place their digital assets to work and earn passive income without selling them.
As the Ripple CTO’s clarification makes clear, it is essential for investors to understand that staking does not involve receiving dividends from someone else who created or earned the property; rather, they are creating the asset themselves through participation in the consensus mechanism.
Source: u.today
