Staking is essential to the Proof of Stake consensus mechanism used on the STRAX Blockchain. Blocks are verified and mined by network participants who are willing to set aside a portion of their tokens, effectively freezing them so they cannot be spent. In return, these participants are granted the right to verify transactions and earn bonuses paid in tokens. The larger the number of tokens a participant is willing to stake, the greater the chance they will be selected to mine the next block and earn the associated reward.
While tokens are being staked, they are frozen in a wallet. If the wallet is connected to the blockchain network, it is referred to as a hot wallet. Such an arrangement incurs a level of risk as the wallet is effectively exposed to the internet and therefore susceptible to attack. Conversely, if the wallet stores tokens offline (as is possible in the Stratis wallet, a hardware wallet, or even a paper wallet), it is known as a cold wallet and the staking process is referred to as “Cold Staking”. Cold Staking is inherently safer than staking in a hot wallet since tokens are not susceptible to online attacks while held in an offline wallet.
To produce blocks on the Stratis network, a miner must be online with a node running and have their wallet open. The chances of earning a reward for staking increases linearly with the number of tokens staked, which means the most successful miners are likely to have large numbers of tokens frozen in their wallets. This represents a risk if the tokens are held in a hot wallet which is compromised. For this reason, Stratis permits Cold Staking where the miner still needs to be online with a node running and their hot wallet open, but the tokens used for staking can be safely stored offline in cold storage. Their hot wallet need not hold any significant number of tokens or may be empty.
Stratis cold storage is implemented on the node, with the connected wallet only using the node’s interfaces. The hot wallet should be an HD (Hierarchical Deterministic) Wallet and, initially, this must be the Stratis wallet which comprises a GUI for controlling the Cold Staking process. Also, a Cold Staking user needs to have an offline cold wallet to store the staked tokens.
Guides contained within this section will relate to how Cold-Staking can be configured within Stratis Wallets and also in a headless manner.
- STRAX Wallet Cold-Staking
- Headless Cold-Staking
- Docker Example