Cold Staking and PoS Staking Comparison

Introduction

Blockchain is undoubtedly an ingenious technology, which is clearly emphasized by the elegance of the idea and the scale of its use. Isn't it ingenious to link together the distributed ledger technology, a blocks sequence of information linked to each other, and the ability to generate internal accounting units that can be freely transferred to blockchain addresses?

But human thought usually does not stop at the achieved milestones and new ideas appear, for example, to stimulate the accumulation and freeze of funds at a certain address for additional benefits. In this case, we are talking about staking.

We will not talk about income issues, as these values can vary greatly depending on various factors. In this article, we will highlight the technical and practical aspects of using Cold Staking and PoS staking, and touch on their differences.

Coins and tokens

Briefly and in general terms, we will describe what coins and tokens exist, and what they are used for.

Coins are the internal currency of the networks using blockchain. In addition to the usual sending from address to address, coins can be used to maintain the operation of the network, for example, to pay transaction fees, monitor and account, verify the legality of actions, and on-chain governance.

Tokens are assets that are often issued on top of the existing blockchain. This is clearly seen in the example of Ethereum, Ethereum Classic and Callisto Network, as well as the Tron blockchain. In the presence of the main coin of the network, tokens of various standards, interchangeable and non-interchangeable, are also issued on these blockchains. Such tokens can be used to convey the value, and the most striking examples are the USDT tokens and various NFTs, which led to a real boom and the ability to confirm ownership rights, for example, to any painting.

However, not everything is so clear. There are companies that have developed and launched their own blockchains, where the internal currency is called tokens, for example, a government token and an action token.

Differences between Cold Staking and PoS Staking

Let's talk a little about the differences between Cold Staking and PoS staking from a technical point of view and usability. When designing Cold Staking, the Callisto Network team wanted to create a service that can be obtained without complications in three steps: send funds to the smart contract address; wait for the end of staking; receive funds. Cold Staking is funded because of deductions from the reward for the blocks created by manners. Cold Staking users receive their income in CLO coin. Everything is simple enough. This approach allows miners to simultaneously produce new coins because of mining, which is necessary for Proof of Work, and to restrain the supply of coins in the market.