Pros and Cons
There are some positives to staking such as high yield rewards for staking, securing the network, receiving airdrops and being able to vote on governance proposals but there are also some negative aspects. Firstly, once you have bonded your token to the network you can no longer access the token if you should want to sell it. It is locked up until you unbond the token and upon unbonding your rewards cease and your token is still locked for an unbonding period. Some chains this is 14 days, other 21 days and some are as high as 28 days unbonding period. This can feel like a long time and if you are planning to try selling the top or taking profits then your technical analysis has to be quite long sighted, as 14-28 days can feel like a long time in the fast-moving cryptocurrency space. There is one more negative aspect in that you must choose your validator wisely. To prevent validators from acting maliciously and to encourage them to stay online 24/7 validating transactions a slashing penalty is in place. Most validators will refund you any slashing should that occur however, DYOR as it is possible (although rare) that your funds could be slashed (a small portion taken as a fine), should your validator act maliciously or simply have a period of downtime.
In summary, staking has a lot of benefits, from gaining substantial staking rewards, receiving airdrops, securing the network, allowing you take part in governance and being a part of a thriving community, however, be vigilant in choosing your validators. Even though the risk of slashing is very small it is something to be aware of. As always, nothing in this article should be considered financial advice. Before making any decisions always do the due diligence and research thoroughly.
I’ll be deep diving into more chains and aspects of the Cosmos ecosystem over the coming weeks and months so subscribe if you haven’t already to keep up to date with everything Cosmos
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