Gemini, a crypto exchange, announced it is launching a crypto staking service on its platform on August 18th. Before this product launched, Gemini users would have to go natively on chain to earn rewards as blockchain validators.

How will Gemini Crypto Staking Work?

Gemini announced that its staking service would attempt to provide some additional benefits for participating validators. The crypto exchange promised it would cover all gas fees associated with staking and unstaking.

Additionally, they offer to reimburse their users for certain penalties such as slashing. Furthermore, Gemini announced one of its aims was streamlining the process for anyone who wants to participate by offering to manage private keys as well as other risks.

A part of their program will also include yield for all validators. While it is not certain how high it will be, Claire Ching stated in an interview for CNBC that she expects an overall yield of 10% on ETH staking following the “Merge”.

As of August 18th, Polygon will be available for staking through Gemini. The company intends to add Ethereum, Polkadot, Solana, and Audius to their offering in the near future.

What is Crypto Staking?

Staking is a way of validating transactions on a blockchain. The idea is that users would lock in a certain amount of their crypto assets to serve as a guarantee of honesty.

By making sure that potential bad actors have a stake in the overall chain, any malicious activity which might hurt the currency as a whole is made less enticing. On the other hand, all investors with staked currency get rewards, usually in the form of tokens, for every successful validation. This makes staking one of the preferred ways of generating passive income with crypto.

This form of transaction validation is a key component of a proof-of-stake (PoS) protocol like the one ETH is migrating to right now. A major benefit of staking over the more traditional proof-of-work (PoW is that it requires far less energy. In fact, the difference is so dramatic that ETH gas fees are expected to fall by around 99% after the “Merge”, and did in fact plummet as soon as its date was announced.

Proof of work, on the other hand, has been a staple of the industry since BTC was launched, and not everyone is happy with the notion that staking might fully replace it. Certain Ethereum miners have plans to create a separate PoW fork to ensure the continuation of their business model.

This article originally appeared on The Tokenist

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