Module 3.0.0. Hard Staking versus Soft Staking
Though the POS system is much more simplified than POW mining, it still requires some technical details. You need basic technical skills to be a node validator of a POS system and you will need to be responsible for storing data, processing transactions and adding new blocks to the blockchain.
Therefore, if you acquire the basic technical skills, you can set up your POS system and stake your coins into the blockchain, which will mint new coins for you as profit. This is referred to as Hard Staking.
However, not everyone interested in POS mining will want that extra burden of acquiring the basic technical skills required to set up a POS system.
The good news is that in the Crypto Market, there are third-party service providers who take care of such technical details.
These third-party service providers simplify POS mining in two ways:
(1). Lower the technological barrier to entry
By using the services of these third-party providers, you no longer need any technical skills to become a node validator in order to stake your coins into the POS system.
(2). Lower the cost barrier to entry
In Hard Staking, you need a lot of coins to be able to stake in the POS system. For example, you need a minimum of 32 Ether to be able to stake in the Ethereum blockchain.
However, using the services of a third-party provider, you will need a far smaller number of coins to stake in a POS system. That is, these providers lower the cost barrier to entry.
For instance, some third-party service providers allow as little as 0.1 Ether to be staked in an Ethereum POS network.
Because they lower the entry barrier to staking, the service of these third parties is referred to as Soft Staking.
What a third-party provider does is to provide you with a crypto wallet where you simply keep your coins in order to start earning new coins.
However, realize that behind the scenes there are a number of technicalities that take place, which include connecting that wallet to a blockchain network so that by keeping your coins in the wallet, your coins are actually staked into the blockchain network. But you don’t need to bother about such details since they are taken care of by the third-party provider. All you need to do is simply to keep your coins in the provided wallet.
Therefore, by these soft staking services, anyone can stake their cryptos in a POS network and earn rewards.