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Ripple CTO Clears Up Critical AMM Misconception
In a recent statement, Ripple’s Chief Technology Officer (CTO), Tomiwabold Olajide Schwartz, has provided crucial clarification on the concept of staking in the crypto space. In his response, he aimed to dispel a critical misconception surrounding the idea.
The key distinction between staking and dividends lies in the fact that dividend payments are received from another party’s earnings or creation, whereas staking allows token holders to generate rewards by creating their own property. To illustrate this difference, Schwartz emphasized that when you receive dividends from stocks, someone else has created/earned those dividends and transferred them to you. On the other hand, with crypto staking, users create the property they receive.
Staking serves as a crucial component of proof-of-stake (PoS) consensus mechanisms, enabling token holders to act as validators by locking their tokens into a staking contract. In return for this service, participants are rewarded in the form of additional cryptocurrency. This innovative mechanism empowers users to utilize their digital assets to generate passive income without necessarily selling them.
In summary, crypto staking enables the creation of property rather than its receipt from someone else who earned or created it.
Source: u.today
