FAQ about Staking
Staking is the process of holding and locking up a certain amount of crypto assets in a blockchain network to participate in validating transactions and thereby earn rewards.
It works by having token holders commit their tokens to the network as collateral to validate transactions and thereby guarantee the security and consensus of the blockchain network.
The purpose of staking is to secure a blockchain network and validate transactions by having network participants locking crypto assets as collateral.
By staking, participants help ensure network stability and security while earning rewards for successful transaction validation.
However, penalties are incurred for any attempt to post false transactions or failure to validate transactions correctly.
All assets that use Proof-of-Stake (PoS) as the mechanism to reach consensus on the state of the network can be staked.
At Northstake, we provide staking opportunities for both top-tier PoS assets and new-to-market PoS assets.
Staking and mining are both methods for validating transactions in a decentralized blockchain network. Staking is used in proof-of-stake networks, whereas mining is used in proof-of-work networks.
Mining is the process of using computer hardware to solve complex mathematical problems, which allows a miner to add a new block of transactions to the blockchain and earn a reward. This process requires significant computational power and energy consumption.
Staking, on the other hand, involves holding a certain amount of crypto assets in a wallet and 'staking' it on the network to participate in the validation of transactions. Stakers don't need specialized hardware like miners do, and staking generally requires much less energy consumption than mining.
The type of staking rewards that token holders can receive from staking their assets differ among different blockchain networks. However, staking rewards will generally be constituted by network inflation, ie. newly minted tokens and transaction fees.
The newly minted tokens are generated by the network itself and distributed as an incentive to participate in the staking process.
The transaction fees, on the other hand, are paid by users who want their transactions to be processed and added to the blockchain.
Both the newly minted tokens and transaction fees are collected by the validator who successfully adds a new block to the blockchain.
The amount you can earn from staking depends on several factors such as which crypto asset you are staking, the network's reward structure, and the amount of staked assets in the network. Generally, the more crypto assets you stake, the higher your potential rewards.
The two important risks to consider when staking is price and liquidity risk.
Price risk refers to the risk that the value of the crypto asset being staked can be volatile and subject to rapid fluctuations. This means that even if a staker earns a high percentage yield in staking rewards, the value of the staked tokens may decrease in fiat terms, potentially resulting in a net loss.
Liquidity risk is another important consideration for stakers, as many staked tokens are subject to a lockup period that can range from a few days to several weeks.
If you wish to hear more about staking and get started, reach out to us at [email protected] or schedule a call with one of our experts.
FAQ about Structured Products
Staking is the process of holding and locking up a certain amount of crypto assets in a blockchain network to participate in validating transactions and thereby earn rewards.
It works by having token holders commit their tokens to the network as collateral to guarantee the security and consensus of the blockchain network.
The purpose of staking is to secure a blockchain network and validate transactions by network participants locking crypto assets as collateral.
By staking, participants help ensure network stability and security while earning rewards for successful transaction validation.
However, penalties are incurred for any attempt to post false transactions or failure to validate transactions correctly.
Staking products are structured products that consist of a single or a combination of yield-bearing crypto assets for traditional financial rails.
Staking products allow investors to gain exposure to staked crypto assets through a financial instrument they are familiar with.
With staking products, investors do not have to worry about having a crypto asset on the balance sheet. Instead, they invest in a known financial vehicle that represents ownership in a single or a combination of crypto assets.
There are no counterparty risks as investments are 100% physically replicated (full collateralization). Since the assets are ring-fenced from Northstake's balance sheet the investor does not face any Northstake bankruptcy risk.
Investing directly in crypto can present a number of challenges, such as safeguarding one's private keys, securing assets, and counterparty assessing exchanges and custodians.
At Northstake, we enable investors to participate in the crypto space by offering easy access to crypto assets. Our staking products are physically replicated, segregated, and secured with Fireblocks multi-party computation infrastructure technology with hardware isolation.
With our platform, investors can invest in crypto assets directly using their existing custody account and without having to worry about managing or securing the underlying assets themselves.
FAQ about Trading
We have established strong partnerships with a wide network of liquidity providers and trading desks, enabling us to offer robust liquidity solutions to our clients. This network helps us maintain healthy order books and provide competitive pricing, ensuring that our clients have access to the best trading opportunities.
Algorithmic trading is an automated method of buying and selling crypto using software that follows predefined strategies, such as iceberg, TWAP, and VWAP strategies. This approach minimizes the impact of large trades on the market, allowing our clients, such as VCs and large token holders, to execute their transactions in a cost-effective and orderly way. We can serve any token listed on our supported exchanges, offering greater flexibility and convenience for our clients.
In our custodial market-making service, Web3 projects deposit funds with us, and we manage them across multiple crypto exchanges.
We use algorithmic trading software to maintain a healthy order book, supporting token liquidity. Unlike the loan-based model, our service aligns our incentives with those of the project, reducing the risk of price manipulation and ensuring continued liquidity support even during declines in price.
Furthermore, any upside generated in this model belongs to the project, making it an attractive option for Web3 projects.
We prioritize the security of our clients' funds by constantly monitoring the operations of the exchanges we work with. Additionally, we are in the process of integrating mirroring technologies that allow clients to use our accounts for trading on exchanges without having the exchange custodize the assets. This approach limits exposure to exchange default risks while ensuring a secure trading environment.
OTC (Over-the-Counter) spot trading is a service where clients can directly trade crypto assets with us, outside of the public exchange order book. This method is ideal for large transactions, as it minimises market impact and provides better pricing.
To request a quote, simply reach out to our trading team.
Our on-/off-ramp service allows clients to seamlessly exchange their crypto for fiat currencies (USD, EUR, GBP, DKK) and vice versa.
This service enables you to easily convert your funds without the need for multiple platforms or lengthy processes, making it convenient and efficient. We pride ourselves on offering bank wire services that are widely accepted by banks, ensuring a smooth and hassle-free experience for our clients, which sets us apart from many other providers.
We have established strong partnerships with a wide network of liquidity providers and trading desks, enabling us to offer robust liquidity solutions to our clients. This network helps us maintain healthy order books and provide competitive pricing, ensuring that our clients have access to the best trading opportunities.
We prioritise our clients' interests, offering transparent and secure services tailored to the needs of VCs and large token holders, as well as Web3 projects.
Our focus on custodial market-making ensures that we maintain strong liquidity support for projects, minimising the risk of price manipulation. Additionally, our wide range of trading services, reliable bank wire services, and a strong network of liquidity providers make us a one-stop solution for all your cryptocurrency trading requirements.
FAQ about build with Northstake
A product partner is a business or organization that builds regulatory compliant staking products powered by Northstake.
This type of partnership is particularly attractive to asset managers, investment firms, and hedge funds that want to offer staking services to their clients, but do not have the expertise or resources to build the products themselves. By partnering with Northstake, product partners can leverage our technology and experience in the staking industry to create high-quality, secure, and scalable staking products that meet regulatory requirements.
A referral partner is a person or entity that promotes Northstake's staking products to potential customers and receives a placement fee for every successful deal that they refer.
Referral partners can include placement agents, brokers, advisors, influencers, and wealth managers.
As a referral partner, you can leverage your network and expertise to help Northstake expand its reach and attract new customers. In return, you will receive a commission for every customer you refer who successfully stakes with Northstake.
A blockchain partner is a blockchain project, foundation, or decentralized autonomous organization (DAO) that partners with Northstake to upgrade their value proposition towards their investors.
By integrating with Northstake's offerings, blockchain partners can save time, optimize operations, and reduce costs by eliminating intermediaries in the staking process. This can help blockchain partners to provide a more efficient and attractive value proposition to their investors, which can ultimately lead to increased adoption and growth for their projects.