Centralized vs. Decentralized Hydra staking: how Changex ticks all the boxes
If you’ve been in crypto for a long time, you know that at one point everything comes down to this — centralization vs. decentralization. Today we explore the eternal dilemma from a HYDRA staker’s point of view — how centralized and decentralized staking are different and why Hydra delegated staking in Changex is simply the way to go.
Centralized staking — the pros and cons
Centralized staking can be enticing, there’s no doubt about that. Providers of these types of services are usually centralized exchanges — you hand over your tokens and the CEX stakes them for you. It’s quite easy to get started with and it basically requires no knowledge of the intricacies of DeFi, blockchain, and staking operations. Don’t know what “standard deviation” is? You’re in luck — you don’t need to know. You just need to get your tokens where you need them, and then press “Stake” — that’s it. Quick, easy, trouble-free. Or is it?
The biggest downside to CeFi staking is that you relinquish control of the “private” keys for your staking wallet. Private keys are what allow you and only you to access your wallet and make transactions in the first place — it’s the key to the vault, so to speak. Except it’s not your vault. The centralized entity that stakes for you is effectively the owner of your funds and the manager of your tokens.
Your wallet is not yours. Your tokens are not exactly yours as well, and control is an illusion — you can theoretically access your wallet at all times, except when the CEX decides otherwise.
What’s more, single-point-of-failure risk is very real — the likelihood of your coins being stolen or exposed to hackers is infinitely larger due to the centralized way in which data is being held. In an industry as volatile and young as crypto, no one knows what will happen next, and the risk of your coins being mismanaged, stolen, lost, or frozen is all too real. And definitely not worth it for what it offers.
Lat but not least, with a CEX, you never actually know what’s going on behind the scenes, and FTX was just another reminder of this. Who manages your assets, and how? This is all based on trust, but do you really want trust to be a factor when it comes to money?
This all changes with true decentralized staking, where code and smart contracts handle everything, eliminating the human factor and the vulnerabilities of centralization. Here’s how.
Decentralized staking — DIY or do it the smart way
There are two ways to go about staking in a decentralized way: one is to set it up by yourself, becoming your own node, the other — delegating the entire thing to a superstaker who does it for you.
Set up your own node — yes or no? You decide:
- You need to build (or rent) and maintain a staking computer — this requires time, money, and energy: three things that we never seem to have enough of.
- The computer needs to be connected to the internet 24/7 AND you need to maintain your own server. But what if there’s a power outage? Buy a generator?
- You need some computer knowledge to maintain everything in working order.
- You need blockchain knowledge of UTXOs (I’m sorry, UTX-whats now?).
- You need to know how the Hydra Desktop Staking Client works.
- The chances of winning rewards are in the hands of Lady Luck — there is no guarantee that you will mine a block, therefore no guarantee of rewards. This probability (or lack thereof) of winning a block is further affected by server downtimes, server time synchronization, and other factors
- Corrupt software, insufficient RAM (just download more, right?), and insufficient storage space are also things to consider
Delegated staking solves all this while keeping the benefits.
Delegated staking in Changex
Also known as offline staking, delegation is a method for staking HYDRA without the need for a continuous internet connection, and without the need for a dedicated staking computer.
Changex offers delegated staking at the tap of a button. With delegation, you:
- Don’t waste time on servers and don’t worry about your PC’s software or hardware, time synchronization, or having an uninterrupted internet connection
- Pay a 5% fee of your staking rewards for a streamlined, worry-free, risk-free staking experience
- Get Lady Luck on your side — you no longer rely on the sole probability that you yourself will mine a block, but increase the chances dramatically: the “luck factor” is now shared, and therefore magnified between all delegated stakers. Everybody in the pool wins.
- Earn always — all HYDRA generated from delegated staking is pooled together, and all stakers receive their fair share of accumulated rewards;
- Have your HYDRA right at home in the Changex wallet, where they can be traded for other HRC20 coins;
- Stay safe — your coins never leave your wallet and are never not yours;
That’s right — your coins never leave your wallet.
Your entire wallet full of HYDRA is staked, but the coins are never physically transferred to another address — that’s the beauty of it. And because you choose to stake via Changex, which is fully non-custodial, the coins and ownership of the wallet remain in your hands at all times, while still reaping all the benefits of the HydraChain economy.
Thus, if you delegate 1000 HYDRA, there is zero risk of losing your coins, because they stay in your wallet. The only risk to delegated staking, and a negligible one, is related to your earnings, because Changex acts as a superstaker, i.e. collects all staking rewards and distributes them to everyone in the pool.
However, there is a point to this model — this allows even the minimum staked amount required to still earn you its fair share of the rewards from the collective pool, regardless if you’ve mined a block. It makes staking much more accessible and user-friendly, as it reduces the luck factor in relation to mining a block to a negligible level.
As such, the Changex delegated staking mechanism takes the best sides of CeFi and DeFi:
- Staking is decentralized — everyone stakes in their own separate wallets, so there is no changing hands of funds
- Income distribution is centralized — all staking income from all stakers in the system is pooled together in one staking pool, and then distributed proportionately
In order to qualify for delegated staking in Changex you need a minimum balance of 100 HYDRA coins. The delegated staking transaction must be done in one go — 100 HYDRA minimum all at once. This way all the coins that you have can be combined in the most effective way. Also, the 100 or more HYDRA must mature for 2000 blocks (~18 hours) in order to start earning you rewards!
Because this is a special staking operation as opposed to a regular one, the fees for delegating your wallet can be somewhat higher. Currently, the cost is around 5 HYDRA. The blockchain may deduct a higher HYDRA amount once the transaction goes through, but will refund the excess. 5 HYDRA — a small price to pay for peace of mind and simplicity.
Staking rewards distribution in Changex
Rewards for staking HYDRA in Changex are sent to your wallet automatically once they reach 5 HYDRA or more. This can only happen once every 24 hours. If, for example, you have earned 7 HYDRA for 24 hours, then you will receive 7 HYDRA. If you earn 2.6 HYDRA per day, then you will be receiving a transaction of 5.2 HYDRA every 2 days.
Staking HYDRA on a CEX:
❌ You don’t own your wallet and coins
❌ The potential of getting hacked or the CEX going bust cannot be underestimated
Becoming your own HYDRA node:
❌ Requires knowledge and is time consuming
❌ Mining a block is based on luck
❌ It’s an investment to build your own dedicated staking PC
❌ You need a 24/7 internet connection, among other inconveniences
Delegated HYDRA staking in the Changex wallet:
✔️ Your wallet and coins are always yours
✔️ Infinitely more secure
✔️ The rewards are higher AND guaranteed
✔️ You don’t waste time on a setup — just tap a button and start earning.
Thank you for reading,
The Changex team