Learn How Stake Pool Marketing Works

Stake pools are one of cryptocurrency’s many new business models. Like any business, stake pool marketing is essential to the project’s success. As Bitcoin became popular, so did mining. More and more crypto enthusiasts built their rigs, investing thousands of dollars in obtaining computing power to be the first to solve the proof-of-work puzzles. 

Cryptocurrency mining activities grew so much that people started building mining rigs that demanded industrial halls to fit in. And because Bitcoin became so hard to mine, people began exploring other proof-of-work coins that were supposedly easier to mine. 

The mining competition has resulted in a more secure blockchain environment. However, resource consumption and relatively low output and performance have pushed for alternative, more scalable securing methods. 

Proof-of-stake cryptocurrencies are just one of the alternatives and are currently the most popular. In this model, users put their funds at stake to confirm transactions and perform network security. 

As the users stake their cryptocurrency, they will use significantly fewer resources yet fulfill many more operations in a shorter time. 

But there is a catch. Generally, the higher the stake, the better your chances of confirming transactions. Additionally, some environments require a minimum stake to open a node, and with all this going on, stake pools came into play. 

Key takeaways   

• Proof-of-Stake is one of the more scalable consensus algorithms believed to be a suitable alternative to Proof-of-Work.  
• A stake pool generally describes a server aggregating funds from several users to run a staking node. Although not mainstream, a successful stake pool must be treated and run like a regular business.  
• Some of the most well-known blockchain environments allowing stake pools are Cardano, Tezos, Cosmos, and Ethereum.  
• Potential investors will examine your stake pool’s uptime, penalties, pledge, margin, fees, and returns regarding protocol criteria. Regarding off-protocol criteria, reputation, causes, and usability can boost your stake pool.  
• A stake pool company’s marketing strategy follows the same principles that any internet business would follow to some extent: establish an online presence, develop a reasonable offer, and ensure the word reaches the right audience.   

What is a Stake Pool?

A stake pool is generally a server that aggregates funds from several users to run a staking node.  

The stake pool maintains the combined funds of the various stakeholders in a single entity and registers a significantly larger total stake. Therefore, it will increase its chances of confirming transactions and claiming the fees.  

From the beginning, the Proof-of-Stake model was questioned whether it would not give the whales a clear advantage, creating an environment where only a few wealthy individuals would control the network.  

In this regard, the newer proof-of-stake cryptocurrencies employ mechanisms to prevent unruly behavior and encourage decentralization. Usually, the minimum stake required to open up a node is rather significant, and there is a maximum stake on which you can obtain rewards. 

Also, automated rules alternate validators so that the same staker isn’t picked several times in a row, and validators who act against the rules are penalized. In this context, stake pools give those who want to become node operators the means to gather the necessary funds.  

For the pool participants, stake pools offer a way to earn fees without committing too much money or managing the uptime or other technical details.  

Environments allowing Stake Pools

More and more cryptocurrencies are being backed or planning to implement a proof-of-stake algorithm or a deviation. From a business perspective, it is essential to understand the staking implementations and stake pool opportunities in popular cryptocurrencies to decide which suits you best.  

Stake Pools in Cardano 

Cardano is one of the most popular cryptocurrencies and the biggest blockchain for successfully implementing Proof-of-Stake. Although there have been several delays since the Shelly update (July 2020), ADA has seen much growth with the kick-off of Cardano staking.  

The update also introduced a delegation and incentives system to drive stake pools and community adoption.  

The Cardano blockchain relies on the Ouroboros Praos protocol to agree on the network’s state. This protocol divides time into epochs, each lasting five days and comprising 432,000 individual slots (one second each).  

The algorithm randomly chooses a slot leader from the stakeholders (the node owners that keep a particular ADA stake) to confirm transactions and earn rewards in ADA. The chance is correlated to the number of coins held by a node.  

To build a node, run it, and connect it to the Cardano main net, you would need: 

• A Linux system with at least two cores; 
• A 2GHz processor; 
• 8 GB RAM; 
• 24 GB hard drive space; 
• A good internet connection; 
• About 1 GB of bandwidth per hour; 
• A public IP4 address.  

As you will research it further, these values vary, but one thing is for sure: the more, the better.  

However, no minimum stake amount is needed to start a pool with Cardano. Yet, when you register your pool, you will need to deposit 500 ADA to the blockchain. That deposit is refundable, and you should also submit a small fee in addition to the deposit.  

The entry bar could be higher, yet to be successful, you need to attract delegators to your pool and raise your total stake as much as possible. Small pools have minimal odds of minting blocks.  

The Best Cardano Staking Platforms 

1. Binance 

Binance is a significant exchange known for its flexibility. Therefore, depending on the lock-up time, you could stake ADA for varying periods, with returns ranging from 2.5% to 3.6% APR. 

2. KuCoin 

Another prominent exchange with a history of ADA staking since 2021, KuCoin offers staking options for regular users and Pool-X program members, with returns reaching up to 3% APR. 

3. Exodus Wallet 

This wallet goes beyond just ADA. Stake various cryptocurrencies directly within your Exodus wallet and earn interest on all your holdings. While rewards fluctuate, they typically fall between 3-5% APR. 

Stake Pools in Tezos 

Tezos chose to name its delegated proof-of-stake algorithm “baking.” To create a new block, one baker and over 32 endorsers must be present.  

The baker is the one who creates the block and receives 40 XTZ as a reward for completing the task. The endorsers are the accounts chosen to verify if the block was baked correctly and will be rewarded 40 XTZ each for completing the task.  

Whether you want to bake or endorse, you must set up a baking node holding at least one roll with a 6,000 XTZ minimum stake. The more XTZ, a baker, is staking, the more chances he has to create and endorse new blocks.  

Minimum hardware requirements include: 

• 256 GB SSD; 
• 8 GB RAM; 
• A dual-core CPU; 
• A good internet connection of around 1 Mbps.  

The delegated proof-of-stake algorithm is more focused on connecting casual users to bakers. So, after establishing the bases of a node, a baker can even build up a roll by attracting delegators.  

Tezos offers an enticing way for users to generate passive income on their XTZ tokens. The annual percentage yield (APY) you can expect varies depending on critical factors, such as the total amount of XTZ currently staked on the network and the number of validators actively participating in the validation process. Generally, the APY falls from 5% to 15%. 

Best Tezos Staking Platforms 

1. Coinbase 

Coinbase supports a broader range of cryptos for staking, including Tezos, empowering its users at every step. Moreover, since multiple digital currencies back up the platform, investors’ staking flexibility is ensured and up to 4.63% APY. 

2. Binance US  

With high liquidity and increased trading volume, Binance US could be the way for staking Tezos. It offers buying and selling options with no price slippage. Moreover, depending on your staking period, Binance offers 2% to 11.9% APY. 

3. Kraken 

Kraken is another suitable on-chain staking option for Tezos investors. Its rewards vary between 5% and 7% APY, with bi-weekly reward handouts. So, through a Kraken account, you can directly connect to the Tezos blockchain, and the rewards are distributed from there. 

Stake Pools in Cosmos 

Cosmos employs a proof-of-stake variation called Tendermint. Although it can operate with a third of the validators offline, it limits the number of validators it can employ in a hub.  

For the Cosmos blockchain, it is 180. However, if you don’t want to set up a validator node, you can easily select one or more existing validators to start earning rewards. Because of the reduced number of validators, you can see returns of 9.7% of staked ATOM annually.  

Moreover, opening a validator node is more complex than in the other cases, but in terms of hardware specs, it is recommended that you have a setup with: 

• 2GB RAM; 
• 4 TB NVME SSD; 
• 8-core x86 CPU; 
• Linux or macOS operating system;
• A stake of 10,000 ATOMS.  

Although the number of validators is relatively low, it is pretty hard to get in. You must be delegated at least 1 ATOM to be an active validator. To get and stay in the top 100 validators on any hub or zone, you may need to invest seriously in your hardware and operations.  

When discussing the staking rewards, they are not fixed and can fluctuate based on network activity and the total amount staked, but you can find current estimates using online tools.  

The high staking ratio, around 63.59%, and significant staking market cap relative to the overall token market cap demonstrate strong investor confidence in Cosmos. However, remember that staking rewards are estimates and not guaranteed, so it’s crucial to do your research before staking your ATOM. 

The current estimated reward rate of Cosmos is 12.96% for current block/epoc rewards for Cosmos. 

However, this is just the starting point. Many cryptocurrency exchanges and staking pools provide additional incentives on top of the base APY to attract users to their platforms. These incentives can significantly boost your overall staking returns. 

The Best Cosmos Staking Platforms 

1. Coinbase 

This popular crypto exchange supports 100 digital assets, including Cosmos. With a user-friendly dashboard and up to 5.75% APY, Coinbase stands out as a key player.  

2. KuCoin 

KuCoin is another viable option that supports more than 40 staking options, including Cosmos. What makes KuCoin stand out is its earn products, similar to stakings, such as savings, dual investments, and other earning promos for new users. So, give it a go. 

3. Kraken 

Kraken offers flexible and fixed-period staking or bonded staking with high rewards. When discussing the APY rates, they might vary between 1% to 13. 

Stake Pools in Ethereum 

Ethereum Proof-of-Stake was launched in its initial form in December 2020 and has fully moved to stake on September 15, 2022. With the start of the Beacon Chain, Ethereum is preparing to handle blockchain operations through staking nodes assigned randomly to shards and transactions.  

The proof-of-stake consensus mechanism relies on an economic incentive to keep the validators honest. The validators can open up staking nodes by locking 32 ETH in a contract. As they secure the network, they will receive an APR of 3.1%. 

Regarding hardware specs, it is recommended that you build a setup with: 

• A minimum 2.80 GHz CPU; 
• Minimum 16 GB RAM; 
• 1TB storage.  

Starting in February 2021, the setup must include +400 GB for ETH main net alone. You can establish a staking pool on Beacon Chain by creating a staking pool smart contract.  

Ethereum Staking Platforms 

1. Nexo 

Nexo offers insurance on your deposited ETH, a significant plus for security-conscious users. It also ensures instant liquidity, meaning you can access your staked ETH whenever needed. While Nexo offers the highest interest rate at 5% APY, these rates fluctuate. 

2. Crypto.com 

Crypto.com offers staking options that lock your ETH for a specific period, limiting your access, with a 2.82% APY on Ethereum staking. 

3. eToro 

eToro has an interest rate of 4.3% APY on ETH staking, which falls between Nexo and Crypto.com. It’s important to remember that these rates can change. 

Stake Pools in Tron 

As we know, Tron (TRX) operates on a Proof-of-Work consensus mechanism, which is not fully compatible with staking since it is a mechanism seen more on PoS protocols. However, there can be some turnarounds through the derivative of liquidity pool arrangements providing yielding. 

As such, you’ll need to tokenize Tron on a Proof-of-Stake blockchain, often called “wrapping,” which allows you to participate in different DeFi protocols for earning the taking rewards. So, you will create a bridge to a PoS blockchain, in which Tron is tokenized as an equivalent PoS digital asset.  

Depending on the chosen staking pool, you can earn an average of 4.12 % in rewards each year, paid out in additional TRX tokens. 

Tron staking hardware requirements: 

• CPU of 3.0 GHz or higher; 
• 64 GB RAM; 
• A minimum capacity of 2.5TB; 
• 1 Gbps dedicated internet connection; 
• Ubuntu or CentOS has a Tron server software compatibility. 

The Best 3 Platforms to Stake Tron 

1. Tron Wallet 

This crypto wallet is a mobile one that allows you to stake TRX to earn rewards through a variety of staking pools and other options. Tron Wallet is a viable staking option with a user-friendly interface and low fees. 

2. TronTrade 

TronTrade is a staking DEX that offers TRXD rewards for different ways of staking. The minimum staking amount starts at 100 TRX, and payouts are daily. 

3. Cryptomus 

This crypto payment platform offers Tron staking rewards through its user-friendly dashboard. The Cryptomus dashboard lets you easily manage passive income by connecting it to multiple crypto wallets. 

What are People Looking for in a Stake Pool?

As mentioned, you must treat it as a business to run a successful stake pool operation. Knowing what your potential clients want is essential. Generally, you need to take into consideration two categories of criteria:   

• Protocol Criteria;
• Off-protocol Criteria. 

Protocol Criteria 

Although you may find other names for them, the principles are mostly the same. Protocol criteria refer to the concrete details about your stake pool and what it is in for the potential stakeholders.  

1. Up-time & Penalties   

Stakeholders in pools usually want to participate in the network’s security without bothering themselves with the technical side. As we all know, in most PoS environments, nodes are needed to continuously secure the network. Failure to do so results in penalties that can lead to stake slashing.  

Therefore, it is only natural that investors would look to give their funds to pools that are the least likely to have their stakes slashed due to faulty behavior.  

2. Stake Pool Owner’s Pledge   

Naturally, when the stake pool’s owner deposits more, the node has a higher chance of confirming transactions and earning fees. The pledge also shows how committed the owner is to keeping the nodes running and avoiding penalties, as his losses can be significant.  

3. Rewards   

Those looking to join a stake pool do so to earn a profit. Therefore, you must be clear-cut about your pool’s margin, operational fees, and saturation.  

State clearly how much your stake pool takes from the rewards before distributing them among its delegators, the fixed fee per epoch that the stake pool charges to cover operating costs, and the stake cap on which rewards stop increasing.  

Off-protocol Criteria 

With protocol criteria only, you may get to a point where it takes a lot of work to differentiate yourselves from other pools. Yet, when you consider off-protocol criteria, you can get a few more points to make yourself stand out.  

By building up a brand and focusing on making a good name, you can attract investors easier.  

Focusing on reviews, running as a legitimate business entity or NGO, donating to causes, and running on green energy or in a particular location are just a few ways to make your stake pool stand out in the market.  

Furthermore, offering an application that easily tracks rewards will provide convenience to your potential stakeholders, ultimately improving their experience.  

Marketing for Stake Pools

A stake pool company’s crypto marketing strategy should follow the same principles that any internet business would follow to some extent.  

Build a cryptocurrency digital marketing strategy that emphasizes establishing an online presence, creating a reasonable offer, and ensuring the word reaches the right audience. To be clear, you can extend your stake pool marketing activities as much as you want to meet your goals.  

Website and apps 

Once you open a stake pool, you must offer your potential clients a user-friendly interface.  

A website will help you state the details of your stake pool operation, such as pool margin, fees, and expected returns. Furthermore, your interface should offer a medium where users can regularly check the evolution of their staked funds.  

In this regard, you can even offer a mobile app for easier access and reward tokens so stakeholders can feel more ownership.  

Social Media, Specifically Twitter   

In an earlier study on 682 crypto companies, we found that 92.8% of cryptocurrency-related projects are active on Twitter, which is one of the top choices for building a social media network. So, put in the effort to develop and engage a community.  

Keep them posted on the state of your operation and upcoming updates, ask questions, and give answers. Furthermore, find a network of cryptocurrency pages and engage with them to build a dialogue that new people can join.  

Set up a Telegram Channel   

The same study showed us that Telegram is the most used messaging platform in the cryptocurrency market. Therefore, the best practice is to create your channel and add participants and crypto enthusiasts interested in staking with your pool.  

YouTube   

Video content is effective, for sure. However, building up a YouTube channel is most definitely challenging. If you have the necessary resources, create a YouTube channel to share updates and educational content for your audience.  

You can create educational content on the basics of blockchain and cryptocurrency, information about the cryptocurrency your pool is staking, and even crypto-related news. However, although YouTube can boost your online presence, it is one of the most challenging marketing channels to tackle organically.  

Run Campaigns   

To attract more new clients and “strengthen the bond” with your actual stakeholders, you can conduct lotteries and promotions without margin staking and offer to dedicate NFTs (Non-Fungible Tokens).  

These are just a few deals you can offer to get people interested in your staking pool. But whether you choose to give freebies or just want to show your base offer, you need to get your message in front of the right audience. Here is where advertising comes in.  

Unfortunately, stake pool advertising is not allowed on mainstream ad platforms, as in Google’s policy. However, you can reach quality cryptocurrency traffic by running ads with Coinzilla.  

Donations and CSR   

Donations and corporate social responsibility actions will attract sympathy toward your brand. And when your niche is just so competitive that no promotion can give you a hedge, donating to a cause people care about might be just the right tool. You can even create an NGO to clean the ocean or encourage green energy usage.  

However, make sure that your audience is aware of your good deeds. You should not just post about them on your website but also make sure the press writes about them. In this regard, you can ensure that the crypto world knows about your CSR actions by launching PR articles through the Coinzilla Marketplace.  

Conference Participation   

Finally, go to conferences and other crypto events. Cryptocurrency conferences are the best place to network with potential investors. Also, while you are on that, bring some branded stuff. Pens, shirts, and notebooks are just a few examples of what you can give people visiting your stand.  

Final Thoughts

As you can see, the stake pool landscape offers exciting possibilities for crypto enthusiasts and investors. By understanding the core principles and implementing effective marketing strategies, stake pools can become a driving force in the future of decentralized finance.