Decentralized finance (DeFi) has changed our perception of earning passive income. With DeFi, ordinary individuals are no longer just spectators but active participants in the complex blockchain network governance and validation world. One of the standout features of this movement is staking—a method where you essentially "lock in" your cryptocurrency to back a network's operations and, in return, get rewards.
In this article, we will show you how to stake SEI. We'll review the ins and outs of Sei Network's staking, what you need to get started, and what you can expect regarding rewards and risks. By the time you're done reading, you'll know exactly how to stake SEI and why it might be a good idea for you.
What is Sei?
Sei is a Layer-1 blockchain that is exclusively designed for trading. Using the Cosmos SDK brings proven flexibility and modularity to its infrastructure. One of its standout features is integrating an order book at the foundation. This model, common in most exchanges, provides detailed market insights, such as demand, supply, and pricing.
Powered by Tendermint Core for consensus, Sei ensures reliable and consistent operations. Unlike many DeFi platforms that use automated market makers (AMMs), Sei employs on-chain order books. This approach matches buy and sell orders at set prices, offering a distinct advantage: DeFi applications can directly access Sei's central limit order book (CLOB) and its extensive liquidity.
The focus on trading creates a strong network effect. Sei attracts various applications, from DeFi DEXes to NFT marketplaces and gaming DEXes. This means that any trading-centric application can operate more effectively on Sei than on other Layer-1 blockchains.
Main Sei features
Some of the notable features of the Sei Network include:
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Trading Focus: Sei Network prioritizes trading, which has led to a robust network effect that attracts various DeFi applications and products in the Web3 ecosystem. This feature enables DeFi DEXs, NFT marketplaces, and gaming DEXs to operate more efficiently on Sei Network than other Layer-1 blockchains.
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On-Chain Order Books: Unlike most DeFi applications that use automated market makers, Sei Network employs on-chain order books to match buy and sell orders at given prices. This feature allows DeFi applications to utilize Sei's central limit order book (CLOB) to access its vast liquidity.
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Tendermint Consensus Mechanism: Sei Network uses the Tendermint consensus mechanism, a Byzantine Fault Tolerant (BFT) consensus algorithm that ensures fast and secure transactions.
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Cosmos SDK: Sei Network is built on the Cosmos SDK, a modular framework for building blockchains that allows for interoperability between various blockchains. This feature makes it easier for developers to create new DeFi applications and products on Sei Network.
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EVM Compatible: Sei Network is compatible with Ethereum Virtual Machine (EVM), meaning it can support Ethereum-based smart contracts and decentralized applications (dApps). This feature enables Ethereum developers to migrate their dApps to the Sei Network easily.
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Governance: Sei Network has a community-driven governance model that allows token holders to participate in decision-making processes related to the network's future developments and upgrades.
Sei Network's features make it a compelling option for developers and users looking to build and use DeFi applications in a fast, secure, and efficient blockchain network.
Sei Ecosystem
Sei Network acts as the center of the ecosystem. It emphasizes delivering unique features and intuitive user interfaces, ensuring efficient transaction speeds and unwavering stability. The platform is designed to be accessible, allowing anyone to craft DeFi applications that harness the extensive liquidity Sei brings to the table. Users, traders, and developers can dive into an expansive world of pooled liquidity and a robust decentralized financial framework by joining the Sei ecosystem.
Notably, the growth trajectory of Sei Network is remarkable. With over 100 dApps already in its repertoire, the network is rapidly expanding its reach. Dive deeper into its evolution by exploring our “Sei Ecosystem Overview” article.
What is SEI token?
SEI is the native currency of the Sei blockchain ecosystem and acts as more than just a medium of exchange. It facilitates transactions, rewards network participants, and safeguards the ecosystem's stability and security. By holding SEI tokens, users can wield influence in network governance, stake to earn rewards and foster the Sei platform's continual growth.
Read more about Sei Tokenomics here.
What is Sei staking?
Sei staking is a process that allows users to earn passive income by holding and locking their SEI tokens in the Sei Network. By staking SEI tokens, users bolster the network's security and decentralization, which is vital in validating transactions and facilitating block additions.
Sei Network relies on validators to uphold its integrity and process transactions. When users stake, they can delegate their SEI tokens to a preferred validator, positioning themselves to earn rewards for their contribution to network security and consensus.
Earning staking rewards on the Sei Network hinges on several parameters, such as the staking amount, the stake's duration, and the chosen validator's efficacy.
Above all, staking embodies the ethos of Sei Network, emphasizing stability and sustainability. It's not just an incentive mechanism—it's a tool that encourages active participation in governance and bolsters the network's decentralized, community-centric ethos.
How to stake Sei?
To start Sei staking, the initial step is to confirm that you have a wallet to store the tokens securely. You need to select the most appropriate wallet for you (at this moment, it can be the Compass wallet).
After you have selected a wallet, you can transfer SEI tokens into it. Within the wallet app, you can purchase SEI tokens using your bank card or exchange other tokens for SEI using the built-in exchange feature. You can commence staking as soon as you have transferred SEI tokens into your wallet.
A step-by-step guide to SEI staking
To stake SEI, you need to follow these steps:
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Acquire SEI tokens: You can purchase SEI tokens from a cryptocurrency exchange that supports SEI trading pairs.
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Choose a wallet: You will need a cryptocurrency wallet that supports SEI staking (currently, Compass wallet).
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Choose a validator: After connecting your wallet, you can choose a validator to delegate your SEI tokens. Validators validate transactions and add new blocks to the Sei Network. You can review the list of validators on the staking dashboard and select one that aligns with your preferences.
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Delegate your SEI tokens: Once you have selected a validator, you can delegate your SEI tokens to them. You can do this by entering the amount of SEI you want to delegate and confirming the transaction on your wallet.
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Start earning rewards: Once you have delegated your SEI tokens, you will start earning staking rewards immediately based on the amount of SEI you have staked and the duration of the stake.
Pros and Cons of Sei Staking
As with any financial decision, it is crucial to understand the advantages and disadvantages of staking clearly. Let’s check the pros and cons of staking SEI:
Pros:
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Passive Income: Staking SEI tokens can provide a passive income stream. You earn rewards for holding and staking your tokens, which can be a valuable source of additional income, especially in a long-term investment strategy. Also, you’ll have complete control over your assets.
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Network Security: Staking SEI tokens contributes to the security and stability of the Sei blockchain.
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Alignment with Project Goals: By staking SEI tokens, you demonstrate your support and alignment with the goals of the Sei blockchain project. This participation strengthens the community and ecosystem, potentially leading to the growth and success of the project.
Cons:
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Market Volatility: Like any other cryptocurrency, the value of SEI tokens can be subject to market fluctuations. The value of your staked tokens may rise or fall, potentially affecting the overall returns from staking.
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Potential Risks: While staking SEI tokens is generally considered safe, there are potential risks to be aware of. These include smart contract vulnerabilities, slashing penalties for validator misbehavior, or risks associated with the specific staking platform or network. It’s crucial that you also do your own research before delegating your tokens.
How Will Delegators Select Validators?
Delegators are free to choose validators based on their own criteria. These criteria may include:
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Amount of self-bonded SEI: This refers to the quantity of Sei that a validator personally stakes in their own staking pool. Validators with a higher self-bonded Sei amount have more at stake, which makes them more accountable for their actions.
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Amount of delegated Sei: This indicates the total amount of Sei that has been delegated to a particular validator. A higher stake demonstrates that the community trusts the validator. However, it also means that the validator becomes a more attractive target for hackers. Large stakes provide more voting power, which can weaken the network. If 33% or more of the staked Sei becomes inaccessible at any given time, the network will come to a halt. To prevent this vulnerability, it is encouraged to delegate away from validators with excessive voting power. Validators may become less desirable as their amount of delegated Sei increases.
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Commission rate: This refers to the percentage of rewards that a validator deducts before distributing them to their delegators.
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Track record: Delegators can assess the track record of a validator they are considering. This includes factors such as seniority, past voting behavior on proposals, historical average uptime, and the frequency of node compromises.
Building a good reputation within the community is crucial and the most essential aspect when it comes to attracting delegators. In blockchain and decentralized networks, trust plays a pivotal role. Delegators are likelier to choose validators who have demonstrated a responsible and ethical behavior history.
Where to Stake Sei?
Staking SEI can be done through two primary methods: wallets or exchanges. However, staking through wallets is considered more secure as it provides complete control over your funds and allows you to choose your own validator. By doing so, you can enjoy several benefits compared to staking through exchanges:
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Staking with a validator significantly reduces the risk of losing your funds as your funds remain in your wallet and are not controlled by any third party. This is unlike staking with an exchange where your funds are at risk of being lost if the exchange gets hacked or goes bankrupt.
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Staking with a validator usually provides higher rewards as they typically charge a lower commission fee than exchanges, resulting in more staking rewards being distributed to the stakers.
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The validator's income and work depend heavily on performance and uptime, which means they prioritize these factors. This is not the case with exchanges, which often offer staking as an additional service and rely on something other than it as the primary source of income.
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Finally, staking with a validator offers greater flexibility than staking with an exchange since the user can select a validator that provides terms that best suit their needs rather than being subject to specific conditions such as a minimum staking amount or a lock-up period.
Why Stake Sei (SEI) with Everstake?
Everstake has established itself as a trusted validator, earning the confidence of over 625,000 users across more than 70 blockchain networks. Our primary focus is advancing the development of various cryptocurrency projects and actively contributing to the growth of the ecosystems we support. We firmly believe that a thriving blockchain community benefits all participants, and we take pride in being an integral part of this ecosystem.
By staking your assets with Everstake, you gain the opportunity to enhance your yields while benefiting from our team's extensive expertise and unwavering commitment to excellence. We prioritize the safety and security of our clients' funds above all else. You can confidently delegate your tokens, knowing that they are in reliable hands with Everstake.
FAQ
What’s the Best Place to Stake SEI?
Opting for wallets is widely regarded as a more secure choice as it grants you full control over your funds. Furthermore, staking through wallets empowers you to select your desired validator, providing numerous advantages over staking via exchanges. These include heightened security, increased rewards, and greater flexibility.
How Much SEI Do You Need for Staking?
There are no limitations, you can stake as much as you want.
Is Staking Crypto Safe?
Staking crypto is an inherently secure process that offers numerous benefits to participants. When staking, users contribute their cryptocurrency holdings to support the network's operations, and in return, they receive rewards. The underlying blockchain technology and consensus mechanisms employed by staking networks are designed with security in mind, utilizing cryptography and decentralized validation to protect against fraud and malicious activities.
By staking crypto, individuals have control over their assets and are not exposed to the risks associated with centralized exchanges. As long as proper security practices are followed, such as using hardware wallets, maintaining strong passwords, and staying vigilant against phishing attempts, staking crypto can be considered a highly secure and reliable way to earn passive income while actively participating in the blockchain ecosystem.
Can I Stake SEI with Everstake?
Yes, sure. When you decide to stake your tokens with Everstake, you gain access to personalized support and exclusive benefits, especially if you delegate significant quantities of tokens. By selecting Everstake as your staking service provider, you can enjoy a seamless staking experience while actively contributing to the growth and security of the Sei Network.
Conclusion
In conclusion, staking SEI tokens allows users to actively participate in the Sei blockchain network while earning passive income. Throughout this article, we have explored the step-by-step process of staking SEI tokens, highlighting the importance of selecting a reputable staking platform, understanding the staking requirements, and ensuring the security of your staked assets.
Choosing to stake Sei via Everstake goes beyond the allure of passive income. It's a commitment to solidifying the very core of the Sei network. For a comprehensive understanding of the potential rewards and the intricacies of staking Sei with us, we encourage you to explore our dedicated Sei Staking page.
Everstake's credibility, built across 70+ blockchains, speaks volumes about our track record and unyielding trustworthiness as a validator. However, it’s important to note that our dedication goes beyond just offering attractive staking rates. We continually reinvest in our infrastructure and are at the forefront of developing cutting-edge tools and applications that enhance the blockchain experience for every user.
When you choose to stake with Everstake, you're not just embarking on a rewarding staking adventure. You're also becoming an integral part of a mission to amplify and enrich the Sei blockchain ecosystem.
Any questions left? Don’t hesitate to contact our Sei Blockchain Manager on X for any inquiries!
