Custodial Staking is a method of earning rewards in crypto by entrusting your cryptocurrency to a third party service or platform.

It allows users to take part in Proof-of-Stake networks, without having to manage technical aspects or maintain constant connectivity.

As blockchain networks mature users discover new ways to contribute and participate to these decentralized eco-systems.

In this article we will explore the finer points of custodial stake and explain why it's important for the blockchain.

Understanding Staking

It's important to understand the basics of staking before you can move on to custodial stakes.

Staking is a way to actively participate in the operation of a blockchain by securing a certain amount as collateral. The collateral plays an important role in validating and securing transactions.

In traditional staking, users are required to manage the wallets of their staking-nodes and directly participate in the consensus mechanism on the blockchain. Custodial Staking adds a new twist to the process.

What is Custodial Stabbing?

Custodial Staking is the process of delegating responsibility for staking your cryptocurrency and securing it to a third party entity. This entity can be a custodian, or a service provider that provides staking services.

Users trust these entities with the technical aspects of stake, including node maintenance, transaction validation and other related tasks, while still maintaining ownership of their cryptocurrency.

The rise of custodial staking platforms

There are several custodial stake platforms that simplify the process, especially for those users who lack the technical knowledge or time to actively manage their staking. These platforms offer user-friendly interfaces and seamless staking experience, as well as additional features to enhance the overall stake process.

Custodial stakes: Benefits and Advantages

Cryptocurrency custodial stakes have many benefits. These are:

Simple and accessible

Custodial stake platforms are designed to appeal to a wider audience, by simplifying the process of staking. This accessibility is especially beneficial for those who are new to the crypto world, since it allows them participate in staking while not having to learn the technical aspects of running nodes.

Reduced Technical Burden

Staking can be a technical challenge, especially when self-managed. This includes maintaining server uptime and keeping software current, as well as troubleshooting any potential problems. The custodial stake services relieve this burden, as they handle the technical aspects for users. It allows users to stake without requiring specialized knowledge or constant supervision.

Liquidity

Custodial stake platforms are more flexible than traditional staking, which locks assets up for a fixed period. Users can keep their staked assets liquid, allowing them to react quickly to market changes or unexpected circumstances.

Earn Passive Income

Custodial Staking is a way for users to earn passive income by staking. Users can earn passive income by delegating assets to a custodian.

Risks and considerations

It is important to know the advantages and disadvantages of custodial stakes.

Trust Dependency

The inherent trust that users have in the custodial services is one of the main risks involved with custodial stake. Users must have faith that the custodian is going to manage their staked assets responsibly and securely. This dependence on a third-party introduces a single point of failure and emphasizes the importance of conducting thorough research before choosing a custodial stake platform.

Security Concerns

Due to their concentration, custodial stake platforms are attractive targets for malicious agents. In the event of a hacking or security breach, users risk losing their staked asset. It is important to choose a custodial service that has robust security features, such as encryption protocols, two factor authentication, and an open security history.

Centralization Concerns

Critics claim that custodial stakes introduce a degree of centralization into blockchain networks. This is contrary to the principles of decentralization these networks strive to maintain. Users who delegate their staking powers to a central entity run the risk of a few custodians controlling a large portion of staking power. This could compromise the security and decentralization of the network.

Possible Platform Closure

Users should be aware that the platform may close or stop offering its services. Users may have difficulty retrieving staked assets in such cases. This highlights the importance of selecting a well-established and reputable crypto exchange.

The Future of Custodial Staking

Custodial stake is a simple way for anyone to earn rewards and participate in blockchain networks without requiring extensive technical knowledge.

Although the benefits are obvious, it is important to choose a reputable custodian and thoroughly research them before staking.

As custodial stake continues to develop in conjunction with the crypto ecosystem, it is important to strike a balance between security and convenience.

Onyx is a cross token liquidity market that appears to be in limbo, trying to figure out the best way to recover from the hack of November 1, when the Web3 Project lost more than $2 million.

After the DAO leaders rejected the first two reimbursement plans, which offered the community the choice of using the DAO's treasury to compensate for hacks or depending on Strike Finance who was ready to takeover the protocol, they introduced the third proposal. The proposal focused on the use of the XCN DAO in order to resolve financial issues, while preserving Onyx and the XCN token. The plan included reducing inflation, changing staking rewards and winding down the lending markets.

Onyx Community tries to save the project with a new proposal

Onyx's community came up with a new proposal after the rejection of the old one. It was defeated as well on 25 November, despite a strong showing of support. Six addresses voted in favor with a total of 64,69 million votes and 11 addresses voted against with 260 million votes.

The Onyx team then proposed a new plan. They suggested the launch of Onyx V2 with an emphasis on primary markets. The proposal aims at maintaining current stake rates to encourage governing XCN stakeholders. The strategy also suggests redeploying NFT money markets in v2 market, with only ETH and WBTC lending markets and continuing support for all three NFTs.

The proposal has received support from 14 addresses, a total of 250.38 millions votes, and no votes have been cast against it. However, some members of Onyx's community are concerned about the lack of a clearly defined reimbursement plan.

The recovery strategy will include a snapshot of the user balances as v1 ends to create a plan for ongoing recovery. The recovery strategy explains that these high-revenue assets can be used to support the recovery plan.

Read on: Onyx Community rejects Strike Finance's proposal for Protocol acquisition

A number of community members also expressed their distrust, raising concerns over a large withdrawal, estimated at almost half a mil dollars as at the time of press, which was worth nearly 500 million XCN. The withdrawal took place two days after hacking, causing investors to worry about the possibility of an unauthorized withdrawal. The withdrawn XCN were divided between multiple wallets, and then moved to exchanges.

Alex, the DAO leader, explained that "Whales staked tokens or supplied XCN before the hack and, after they learned about the incident, withdrew the tokens from the protocol because they were confused as to whether it was safe for them to keep the staked tokens."

Wirex, an online financial platform that offers a crypto-enabled debit card, has announced the winners of their Rising Women in Crypto Power List 2023. Wirex, a Swiss crypto website and financial services platform, partnered with The Cryptonomist to launch the initiative. A team of experts was invited to examine each candidate.

Top 10 Women in Crypto

The 2023 Rising Women in Crypto Power List is as follows:

Amna Usman Chaudhry is the MENA Lead at Climate Chain Coalition

Amna is active in the space of blockchain since its early days. She is a passionate advocate of emerging technologies, and was a part of the Oxford Blockchain Strategy Program's first cohort. She co-founded BlockClean in 2018 to combat plastic pollution by tokenization.

Audrey Akwenye is the co-founder and founder of Black@

Audrey, an educator-turned-software engineer, embraced her tech career as a continuous pursuit of learning and expanding access. She wants to help diverse founders build impactful tech businesses. She is the leader of Black@, a token-gated, all-black, digital community that has over 250 members. This digital space provides a digital platform for black creators and founders.

Bridget Greenwood is the founder of 200Bn Club and co-founder of Bigger Pie.

Belinda, as the CEO and founder of Embolden Ventures is committed to empowering female entrepreneurs when it comes to building innovative businesses. As the leader of Women in Blockchain Asia's SG chapter, she champions an inclusive economic system. WIBA is a non profit that promotes women's leadership in blockchain technology. She is also the head for partnerships SG at The Sandbox, a company that specializes in metaverse.

Bridget Greenwood is the founder of The Bigger Pie and co-founder 200Bn Club.

Bridget is a leader in the web3 sector. She co-founded The 200Bn Club in London, an accelerator for female entrepreneurs, and founded The Bigger Pie to support exceptional women working in fintech. Bridget's work is data-driven, holistic and based on a holistic approach. She was the leader of The Bigger Pie, which supported over 10,000 women with their businesses.

Caterina Ferrara is a senior Blockchain consultant and Analyst at AlmavivA

Caterina is a prominent figure in the cryptocurrency industry, and has been recognized as a leader by LinkedIn. She is dedicated to social causes, and actively works towards leveraging crypto assets for charitable purposes. Caterina took part in a cryptocurrency campaign to support the Umberto Veronesi Foundation.

Charmaine Short is the operational test manager for Fnality International

Charmaine is a cryptocurrency enthusiast who has been involved in the industry since 2019. In 2020, she co-founded DAO Women of Crypto Art, which offers education on blockchain to artists and collectors, and promotes women's NFT artwork. She wrote various articles under the pseudonym Etta Tottie. This included a whitepaper promoting diversity in web3 applications. She founded Ettaverse, a web3 consultancy in 2022.

Lianna Adams is the founder of Impactful Artistry and a web3 advocate

Lianna advocates for a culture that puts humanity first in the fields of art, culture, and tech. She has over 18,000 speaking hours and shared many insights about web3 technologies, social impact, mental health in various communities, etc. Lianna is a member of ARTXV, a web3 collective that is neurodivergent.

Lori Souza is the co-founder of MetaFusion and its COO.

Lori has a multifaceted background that includes management, brokerage and business, as well as education, coaching, engineering processes, and management of technical support. She holds the title Certified International Blockchain advisor and is an organizer for Women in Crypto. Lori's consulting focuses on financial future education, crypto payment, compliance, licensing for money transmission, and crypto transaction forensics.

Priya Guliani is the CEO of Earth.ID

Priya is a technology entrepreneur and an impact investor. She advises start-ups and contributes to the web3 Community. She is the founder and leader of the Sustainable Environmental Stewardship Working Group within the Government Blockchain Association. This group was created to help organizations develop Sustainable, Attainable and Maintainable climate-change solutions.

Yaliwe Soko, Chairperson of the United Africa Blockchain Association

Yaliwe has been a leading speaker in the Web 3 area and is the driving force behind "1 Million For Blockchain in Africa (1MB)," a program that aims to increase awareness of blockchain among a million Africans. She has led UABA to establish chapters in nine African nations and bring venture capital into emerging tech start ups via the UABA Start Up Initiative.

Wirex also honored two other women in categories such as Social Media Influencer and Compliance Leader. First, the title was given to Randi Zuckerberg who is CEO and Founder at HUG. The second went to Natalia Latka who is Crypto Compliance Regulatory advisor at Merkle Science.

Stereotypically, it was believed that the crypto industry is dominated by males. Reality check shows that things are indeed changing. Recent research conducted in Singapore revealed that women are often more aggressive and active than men, not just as investors.

According to a second study, Nigerian women have a greater understanding of cryptography than their male counterparts.

Crypto is the second most popular asset class owned by women.

Web3 wallets allow users to manage, store and interact with digital assets such as cryptocurrencies. Web3 wallets provide full control of assets and are decentralized, unlike traditional wallets. Web3 wallets have become more popular as cryptocurrencies and other decentralized applications gain in popularity.

There are many options on the market, making it difficult to choose the best web3 wallet. When selecting a web3 Wallet, several factors must be taken into consideration, including security, ease-of-use, supported currencies, and compatibility across various platforms. The web3 wallet must meet the specific needs and preferences of the user.

Types of Web3 wallets

Web3 wallets can be used to interact with decentralized apps, store digital assets, and access decentralized applications. Web3 wallets come in different forms, with their own advantages and disadvantages.

Hot Wallets

Hot wallets, which are usually considered to be the most convenient Web3 wallets, are always connected to the Internet. They are simple to use and provide quick access to digital assets. They are more vulnerable to security breaches and hacks than cold wallets.

Cold Wallets

Cold wallets are offline, and provide a higher degree of security. These wallets are used to store digital assets for a long time and are not as convenient as hot wallets.

Custodial and non-custodial wallets

Custodial wallets, on the other hand, are managed by third-party providers who store your private keys and assets. Non-custodial Wallets give you complete control over your digital assets and private keys. Custodial wallets are convenient, but they also carry the risk that you could lose your digital assets in the event of a service provider's security breach or bankruptcy.

Mobile and Desktop Wallets

Desktop wallets can be used with computers, laptops and mobile devices. Both wallets provide different levels of security and convenience.

Hardware Wallets

Hardware wallets are devices that you can use to store your private keys, digital assets and other information offline. The highest level of security of all Web3 wallets. Hardware wallets like Trezor and Ledger are popular.

Paper Wallets

Paper wallets, also known as cold wallets, are created by printing your private keys out and storing them off-line. Paper wallets are secure, but they're not as convenient as other Web3 wallets.

Popular Web3 Wallets

Web3 wallets are available in many different versions, but there are some that are more popular.

Metamask

Metamask is a Web3 wallet that has become very popular. Metamask is a browser-based extension that gives users access to Ethereum and other Web3 network. Metamask has a simple interface that supports multiple wallets. This makes it easy to manage digital assets.

Trust Wallet

Trust Wallet, a mobile wallet, supports multiple Web3 networks including Ethereum, Binance Smart Chain and others. It is well-known for its security features such as biometric verification and backup options. Trust Wallet supports NFTs, and users can interact with decentralized apps.

Coinbase Wallet

Coinbase Wallet allows users to securely store their digital assets. It supports several Web3 networks including Ethereum and Polygon. Coinbase Wallet has a simple interface that allows users to easily manage their digital assets.

Rainbow

Rainbow is a mobile wallet which supports multiple Web3 networks including Ethereum and Polygon. It is known as a user-friendly wallet with security features such as biometric verification. Rainbow supports NFTs, and users can interact with decentralized apps.

Exodus

Exodus, a desktop wallet and mobile wallet, supports multiple Web3 networks including Ethereum and Polygon. It has a user-friendly interface, and it supports multiple wallets. Exodus offers a range of security features such as biometric verification and wallet recovery.

Security of Web3 wallets

Security is paramount when it comes to web3 wallets. Users must be confident that they can trust their digital assets and information to remain safe from malicious hackers. When choosing a web3 Wallet, there are a number of security features that you should consider.

A good web3 wallet will offer strong password security. Choose a password that's difficult to guess, and don't use the same password on multiple accounts. Two-factor authentication (2FA), which adds an additional layer of security to the wallet, is also a must. 2FA requires that users enter a code they receive via email or phone in addition to their wallet password. This makes it more difficult for hackers.

Private keys and seed phrases are another important security feature. Private keys are the password for a wallet. They should be stored safely and securely. Seed phrases are words or phrases that can be used in order to retrieve a wallet if it is lost or stolen. Users should not share their seed phrases or private keys with anyone. They should keep them safe in a hardware wallet, or password manager.

You should also choose a web3 Wallet that uses public-key cryptography. Public key cryptography encrypts data and allows users to send and receive digital assets securely without having to reveal their private keys. It is much harder for hackers to steal digital assets from a user.

FAQs

What is Web3 wallet and how is it different from traditional wallets

Web3 wallets are digital wallets designed to store, manage, and interact with digital assets and cryptocurrencies. Web3 wallets give users complete control of their assets, unlike traditional wallets.

What type of Web3 wallets are the most secure ones?

Hardware wallets, in general, are considered to be the most secure Web3 wallet type. The private keys are stored offline and reduce the risk of hackers. They may not be as convenient for frequent transactions.

What are the security features I should look for when buying a Web3 wallet

Consider strong passwords, two-factor verification (2FA), private keys and seed phrase (which are kept secure) and public key cryptography for encrypting data.

What should I do when I forget the Web3 wallet password?

Many wallets provide wallet recovery using seed phrases. You can use your seed phrases to gain access if you forgot your password. Keep your seed phrase safe and don't share it.