Guide to Filecoin Staking
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An editor at Coincrop
20 Aug 2022 | 24 min read
ilecoin staking is a great way to earn rewards while supporting the Filecoin network. By participating in staking, you can help to ensure the continued success of Filecoin and be rewarded for your contribution.
Filecoin staking is a process by which users can support the Filecoin network and earn rewards. There are many different ways to stake Filecoins, so find the one that’s right for you. In this guide, we will cover some of the basics of Filecoin staking.
When you participate in Filecoin staking, you are essentially lending them to the network so that it can use them to power its operations. In exchange for your Filecoins, you will receive a portion of the rewards generated by the network.
Filecoin has been gaining a lot of traction lately and for good reason. Not only is it a project with a great potential, but it is also backed by some of the biggest names in the crypto space. Filecoin is a decentralized storage network that turns cloud storage into an algorithmic market.
In this guide, we will show you how to perform Filecoin staking and start earning rewards.
Disclaimer: All of the information written on Coincrop is without influence and based on our analysis. No guarantee is offered concerning the accuracy of this information and therefore, any individual following up on it does as such completely at their own risk. Rates are correct at time of publication.
What Is Filecoin?
Filecoin is a decentralized storage network that turns the cloud storage market into an open, competitive space.
It’s the first application built on top of IPFS, a distributed file system that allows users to store and share data in a completely decentralized way.
With Filecoin, anyone can rent out their unused hard drive space and get paid for it. This creates a marketplace for storage that is more efficient, robust, and lower-cost than traditional cloud storage services.
Filecoin works by allowing users to sell their unused hard drive space to the network in exchange for Filecoin tokens.
When someone wants to store data on the network, they select a storage provider and pay that provider in Filecoin tokens. The file is then broken up into small pieces, encrypted, and spread out across the network.
The file is stored on the network as long as the storage provider continues to receive payments from the file owner. If the file owner stops paying, the file is gradually deleted from the network.
The native token of Filecoin is used to pay for storage services on the network. Filecoin staking allows you to lock up your tokens in exchange for rewards.
What Are the Benefits of Filecoin?
Filecoin has several advantages over traditional cloud storage services:
- Decentralized: There is no single point of failure on the Filecoin network. If one storage provider goes offline, the data can still be retrieved from another provider.
- Lower costs: Since there is no need to maintain physical infrastructure, Filecoin storage is cheaper than traditional cloud storage.
- Enhanced security: Filecoin's decentralized nature makes it more resistant to hacking and data breaches than centralized storage providers.
Since Filecoin is still in development, there are currently two ways to get Filecoin: mining or participating in a file staking pool.
File staking pools are similar to cryptocurrency mining pools, where many people pool their resources together and split the rewards based on their contribution.
What Is Staking?
Staking is the process of holding coins or tokens in order to earn rewards. It usually involves locking up your coins for a specific period of time, during which you cannot spend them. In return for staking your coins, you will earn interest payments, or staking rewards.
These rewards are paid out by the network in proportion to the amount of coins that you have staked.
The main benefit of staking is that it allows you to earn passive income from your cryptocurrency holdings.
Unlike mining, which requires significant upfront investment and ongoing costs, staking only requires that you hold coins in a wallet that supports staking. This means that anyone with a few hundred dollars worth of crypto can start earning staking rewards, without having to put down thousands of dollars for mining equipment.
Another benefit of staking is that it helps to secure the network. By staking your coins, you are helping to validate transactions and prevent double-spending. This in turn makes the network more secure and reduces the chances of a 51% attack.
What Is Filecoin Staking?
Filecoin staking is the process of locking up your Filecoins to help secure the Filecoin network. In return, you will earn block rewards for helping to keep the network running smoothly.
When you undertake Filecoin staking, you are essentially locking them up to support the network. In return for your support, you will earn rewards in the form of newly minted Filecoins.
To start Filecoin staking, you will need to have a certain amount of Filecoins in your wallet. The minimum amount required will vary depending on which pool you choose to stake with. Once you have enough Filecoins in your wallet, you can then select a pool and begin staking your coins.
There are many different pools that you can choose from, so it is important to do some research to find one that best suits your needs. You will also want to make sure that the pool you choose is reputable and has a good track record.
Once you have selected a pool, you will need to set up an account with them and deposit your Filecoins into their wallet. Once your Filecoins are in the pool's wallet, they will start earning rewards for helping to secure the Filecoin network.
Why Should I Participate in Filecoin Staking?
There are several reasons why you might want to take part in Filecoin staking:
- To earn rewards: When you join in Filecoin staking, you are entitled to a portion of the rewards generated by the network. These rewards can be significant, and they provide a great incentive to help secure the network.
- To support the Filecoin network: By performing Filecoin staking, you are helping to secure the network and ensure its continued operation.
- To get involved in governance: Filecoin staking also gives you a say in how the network is governed. As a stakeholder, you will be able to vote on proposals that affect the Filecoin network.
How Do I Undertake Filecoin Staking?
There are two primary ways to stake Filecoin:
- Use a staking pool: The easiest way to stake Filecoin is to use a staking pool. A staking pool is a group of people who have pooled their Filecoins together to increase their chances of being selected as a block producer.
When you use a staking pool, you will not earn rewards directly. Instead, the rewards will be distributed among the members of the pool according to each person's share of the total Filecoins staked.
- Run your own node: If you want to earn rewards directly, you will need to run your own Filecoin node. This is a more complicated process, but it offers the potential for greater rewards. In order to run your own Filecoin node, you will need to have a minimum of 200 Filecoins.
If you decide to use a staking pool, there are a few things to keep in mind:
- Make sure to research the pool before joining. There are many scammers out there who will try to take advantage of Filecoin investors.
- Be aware of the fees charged by the pool. Some pools charge high fees that can eat into your rewards.
- Consider how large the pool is. A larger pool may have more Filecoins at stake and therefore be more likely to produce block rewards, but a smaller pool may offer more personalized service.
The Filecoin Staking Process
The Filecoin staking process is simple. First, choose the amount of Filecoins you want to stake and lock them up in a smart contract.
Next, select a validator from the list of Filecoin staking validators. Filecoin staking validators are responsible for running the Filecoin network and keeping it secure. When you select a validator, you will be asked to provide a deposit, which is used to cover any potential losses if the validator fails to perform its duties properly.
Once you have selected a validator and provided your deposit, your Filecoins will be locked up for a minimum of 30 days. During this time, you will not be able to access your Filecoins. However, you will earn rewards based on the performance of the Filecoin network.
If you decide to unstake your Filecoins before the minimum lock-up period is over, you will forfeit your deposit and may also be charged a withdrawal fee. Therefore, it is important to make sure that you are comfortable with the risks before you stake your Filecoins.
By following these steps, you can start earning rewards by helping to secure the Filecoin network as part of Filecoin staking. Remember to do your research and only stake as much as you are willing to lose.
How to Get Started With Filecoin Staking
The simplest way to participate in Filecoin staking is to delegate them to a trusted party. When you delegate your Filecoins, you’re trusting someone else to manage them on your behalf.
Filecoin’s design means that there are many different ways to delegation, each with its own set of trade-offs.
There are two main types of entities that can accept FIL delegation:
- Filecoin miners
- Filecoin Storage Providers (FSPs)
First things first, you'll need to select a pool for your Filecoin staking. There are many reputable pools out there, so be sure to do your research before selecting one. Once you've selected a pool, you will need to set up an account with them and deposit your Filecoins into their wallet.
Once your Filecoins are in the pool's wallet, they will start earning rewards for helping to secure the Filecoin network.
It's important to note that Filecoin staking is a long-term investment. Your Filecoins will be locked up for a minimum of six months, and during that time you will not be able to access them. However, the rewards you earn from staking can compound over time, so it's important to consider your overall financial goals before deciding whether or not Filecoin staking is right for you.
If you're ready to start earning some passive income from Filecoin staking, then follow the steps below to get started. Filecoin staking is a multi-step process:
Step One: Get Filecoins
The first step to Filecoin staking is to acquire some Filecoins. There are a few different ways to do this:
- Buy Filecoins on an exchange such as Coinbase or Binance.
- Earn Filecoins by providing storage or bandwidth to the Filecoin network.
- Mine Filecoins using mining software such as GoFileCoin or LotuS.
Step Two: Choose a Wallet
After you have acquired some Filecoins, you will need to choose a wallet that supports staking. Currently, two wallets support Filecoin staking:
- Filecoin Wallet
- Lotus Wallet
Both of these wallets are available for download on the Filecoin website.
Step Three: Join a Pool
Joining a pool is optional but it is recommended, especially if you are new to staking. There are many reputable Filecoin staking pools out there, so be sure to do your research before selecting one.
When you join a pool, you combine your Filecoins with other stakers in the pool and share in the rewards (and risks) together. There are many different pools to choose from and you can find a list of them on the Filecoin website.
When choosing a pool, be sure to consider factors such as fees, minimum deposit requirements, and distribution rules.
Step Four: Start Staking
The final step is to start staking your Filecoins! This can be done through either the Filecoin Wallet or Lotus Wallet. Once you have selected a pool, you will need to deposit your Filecoins into the pool. After that, you're all set and will begin receiving rewards for your Filecoin stake!
Step Five: Monitor Your Stake
After you have staked your Filecoins, it is important to monitor your stake regularly. This will help you ensure that your Filecoins are still being properly staked and that they have not been lost or stolen.
The Filecoin client includes a tool called 'lotus monitor' which can be used to monitor your Filecoin stake.
Decentralised Filecoin Staking
Decetranlised Filecoin staking is for the more advanced users who are capable of installing full-node software.
To get started with decentralised Filecoin staking, you'll need a few things:
- A full node running a Filecoin client (see our guide to setting up a Filecoin node)
- The Filecoin wallet software
- Some FIL coins to stake!
Once you have those things set up, you can start staking by following these steps:
- Run the `filecoinclient` stake command to create a new staking address
- Send some FIL from your Filecoin wallet to the new address
- Wait for your coins to be confirmed on the network (this may take a few minutes)
- Run the `filecoinclient` status command to check on the status of your stake
Other Ways to Earn Filecoin
In addition to Filecoin staking, there are several other means by which you can earn a return from your Filecoin:
Another way to undertake Filecoin staking is to become a miner yourself. Filecoin mining is the process of storing and retrieving data on the Filecoin network. As a reward for their work, miners are paid in Filecoins.
Filecoin mining is a complex process, and there are many different ways to do it. This guide will introduce you to the basics of Filecoin mining and help you decide if it’s right for you.
The final way to stake Filecoins is through storage dealing. In storage dealing, two parties agree to store each other’s data on the Filecoin network. The Filecoin network then records this storage agreement and pays each party in Filecoins.
Storage dealing is a great way to earn Filecoins if you have extra storage space and want to help others store their data.
Filecoin Staking Rates
The amount of Filecoins that you earn will depend on how much you stake and how long you keep your Filecoins staked. The longer you keep your Filecoins staked, the more rewards you will earn.
The table below shows Filecoin staking rates across a variety of organizations:
|Organization||Deposit assets||Reward assets||APY Rate|
Data provided by Seedling
The Filecoin staking process is not for novice users. But if you're willing to put in the effort, it can be a great way to earn Filecoin rewards. So what are you waiting for? Start staking today!
If you found this guide helpful, please share it with your friends and family who might also be interested in Filecoin staking. Also, be sure to check out our other guides on the Coincrop.
ChrisAn editor at Coincrop
Chris is a Coincrop staff writer based in the UK, covering the best rates for cryptocurrency earning and borrowing products. When not at work, he's likely assembling lego models.