Staking Vaults: How do they work?

Sure, you know that Staking Vaults are revolutionary. But why? What exactly is going on?

Kyle Turnbull

October 04, 2021 · 4 min read

How do staking vaults work

How do staking vaults work

Staking provides incredible value to users, communities, and blockchains. It’s an efficient way of validating a blockchain, and users earn rewards for participating in this work. But, as with most crypto-features, there are very few that exist that are easy for the user. And when you combine ease-of-use, with non-custodial, there are even fewer. Until now. Introducing Divi’s staking vaults. Alongside MOCCI, staking vaults are one of the most unique things we have built.

Let us be very clear.

Staking vaults are nothing short of revolutionary. Our protocol allows users of any skill level to participate in the security of the network, without the hassle. Blockchains thrive as their diversity increases, and through incredible UX/UI, and industry-leading technical solutions, we’re creating the most distributed and decentralized blockchain around. Alongside our one-click masternodes, staking vaults will revolutionize our proof of stake ecosystem, for the better.

Let’s talk about the details: What is staking?

Staking is the action by which cryptocurrency users validate transactions. There are two key requirements for someone to stake a cryptocurrency:

  • A stake: The user must own a ‘stake’ in the network. This collateral is an important aspect of the proof of stake consensus mechanism, as it ensures that the validator is committed to the health of the network.

  • A functional staking wallet: A functional wallet allows the user to connect to the blockchain to validate. This may be their own or one provided by a third party.

What do stakers do?

Granted, this will differ slightly from project to project, but the fundamentals will remain the same. Stakers are everything when it comes to processing transactions. They validate, verify and submit the blocks to the blockchain. They also re-verify blocks as the blockchain progresses. They maintain synced to the blockchain until it becomes immutable. They are also able to store and share blockchain data when running full-time.

For more information on staking and proof of stake, catch up with our complete guide 👉 Divi's ultimate guide to proof of stake.

Staking Vaults: A high-level understanding.

Staking Vaults enable a coin owner to turn their computer off after initializing the vault protocol and gain the benefits of being a Staker, without needing to handle the blockchain tasks. Staking vaults essentially require two parties, a ‘coin owner’, and a ‘staking manager’. The staking manager can be anyone. It could be a friend running their own private server, or the soon-to-be-released Divi Vaults built into the Divi Wallet. They both run on the same protocol built into the Divi Blockchain!

Your keys. Your coins. As always.

Staking managers are never delegated control of your coins. The process is not governed by any smart contract. The reason no smart contract is necessary is that the funds never leave the user's wallet, therefore there is no risk of loss to that party. The vault protocol splits the responsibilities of staking and spending and assigns them to separate keys. Only the staking key can stake, and only the spending key can spend. The spending key always remains in the user's control. The Manager uses the provided staking key to verify the coins, to carry out staking.

So, since the manager never possesses the coin owner’s coins, the Divi Blockchain rewards the Coin Owner and not the Manager. Coin Owners maintain control over their assets and can revoke a staking key at any time by simply spending or moving their coins out of the vault.

Vault protocol and furthering community development.

One added benefit of this protocol is that due to our open-source protocol, already built into the blockchain, anyone can run a staking hosting service, right now! We’re committed to creating a blockchain that developers want to work with, and this is a step in the right direction.

If you’re interested in learning more about how this works on a technical level, read this great community write up 👉 Set up a manual vault

The future of crypto is easy

Through every single piece of code and every single product, we make crypto easier and easier. The next feature set for release for Divi Wallet is our much-anticipated staking vaults. Leveraging the protocols we have just discussed, users will seamlessly be able to establish a staking vault within their mobile wallet, in seconds.

As with anything we do, the user is always the priority. We’re in the business of creating accessible and unique solutions to some of crypto’s biggest issues. Staking vaults are just another step on that journey, and we hope you'll join us.

Learn more 👉 Divi Wallet

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  • Staking
  • Proof of stake

Kyle Turnbull

October 04, 2021 · 4 min read

Browse Categories

  • Staking
  • Proof of stake

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