Staking Pool

An account where all the stakes are gathered together is called a staking pool. Coins of several investors are collected together, allowing investors to participate in staking even with lesser amounts to spare. Investors with the lowest of stakes, too, can earn profits through the staking pool.

Staking pools allow the investors to pool their assets together in order to increase their chances of getting chosen as the validator for the next block transaction on the blockchain network.

Staking pools are similar to mining pools used in the proof of work consensus mechanism, wherein the participants gather an adequate amount of computational resources to gather enough hash rate, giving them a competitive advantage over the participants in other networks. Staking rewards are generated, and then redistributed among the participants of the pool depending on their staked amount.

Staking pools are used on blockchain networks using a proof of stake consensus mechanism. These pools are usually run by pool operators, who ask the participants in the pool to lock their stakes or coins in a specific blockchain address. This, therefore, enhances the staking power of the validators on the network thereby increasing their chances of getting chosen by the algorithm.