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Crypto Course

Bitcoin for Beginners

Crypto for Beginners

Staking in the Cosmoverse 

Preface

  1. Money
  2. Fiat Vs Bitcoin
  3. Cryptography and the Cypherpunks
  4. Using Bitcoin
  5. How Bitcoin Works
  6. How to Run a Bitcoin Node
  7. Using Centralized Exchanges
  8. Trading on Centralized Exchanges
  9. Withdrawing from Centralized Exchanges
  10. DCA & Bots on Centralized Exchanges
  11. How to Buy Bitcoin on Kucoin with a DCA Bot
  12. How to Buy Bitcoin on Binance with DCA Auto-Invest
  13. Beyond Bitcoin: The Blockchain Trilemma
  14. Beyond Bitcoin: Proof of Stake
  15. Beyond Bitcoin: Smart contracts
  16. Coding a Smart Contract
  17. The Internet of Blockchains
  18. More Crypto Projects
  19. Securing Multiple Wallets
  20. Evaluating Crypto Projects
  21. Introducing Staking
  22. Earning Yield by Staking ADA on Cardano
  23. Staking EGLD on MultiversX
  24. Staking In The Cosmoverse
  25. An Introduction to DeFi Lending & Borrowing
  26. Lending & Borrowing on Polygon with AAVE
  27. Introduction to DEXs

Afterword: All the Trouble in the World

Chapter 24:

Previous: Staking EGLD on MultiversX

Next: DeFi: An Introduction to Lending & Borrowing

 

Previously we talked about the Internet of Blockchains, and that Cosmos was designed from the start to enable blockchains to connect to each other. In this chapter we will learn about one more blockchain from the Cosmos ecosystem – Osmosis. Osmosis is a DEX running on its own dedicated blockchain… 

To stake ATOM you must be prepared to lock your funds for 21 days… Slashing… Yes, ADA on Cardano is quite special with its liquid staking in that you earn rewards just for delegating while keeping your funds. You can liquidly stake with ATOM, but this requires a third-party which brings additional risk which we will discuss another time. 

In this chapter we will learn to stake two different tokens for two different blockchains that are both in the Cosmos ecosystem. Just to keep with the theme of two, we will use two different wallet apps. One the highly established wallet app called Keplr where we will stake the ATOM token and one much less established but quite interesting Cosmostation. As usual I write this tutorial not to promote either of the tokens, blockchains or wallet apps but for variety to show you as much of what is available as possible. To be clear, you could stake on any or all Cosmos ecosystem blockchain with either wallet app or, of course, you don’t need to stake anything; you could just follow along with the process for educational purposes. I will use two different exchanges in this chapter, Kucoin for OSMO on the Osmosis chain and Binance for ATOM on the Cosmos chain – or hub – as it is more correctly known. 

Keplr and Cosmostaion wallet apps 

The wallet apps are both multifunctional. They both have browser extensions allowing you to connect to all the web based dApps in the Cosmos ecosystem. They both have mobile equivalent apps where you can enter the same seed phrase to track the same wallets. And they both have a web-based wallet or dashboard style dApp as a central place to manage all your Cosmos tokens, staking and swapping.  

Let’s get started with Keplr and ATOM.  

Setting up Keplr, getting some ATOM 

Keplr is the de facto wallet for the Cosmos ecosystem although there are many other excellent wallet apps. I thought it would be appropriate to use Keplr for staking ATOM the fundamental token of Cosmos. What we will do is install the Keplr browser wallet, send some ATOM to it from an exchange then stake our ATOM. 

Visit https://www.keplr.app/ to see your options for the Keplr wallet. You will see a selection of links to get the Keplr wallet. A point worth mentioning now is that if you get the mobile version of Keplr for Android or Apple you can do everything we will do in this tutorial on your phone or tablet device. If you decide to go mobile for this tutorial, the steps are nearly identical except the UI is different. I chose the browser wallet because it is best for connecting to the dozens of apps in the Cosmos ecosystem which are typically built on websites.  

Let’s get on with the tutorial using the browser wallet and web dApp. I am using the Binance exchange to withdraw my ATOM, but any exchange of your choice will involve nearly identical steps to the following: 

  • At https://www.keplr.app/download click on the link for your preferred web browser. Click the Add to Chrome button or whatever your browser is. 
  • Click on the Keplr icon in your browser extensions tool bar and choose Create new account. Backup your seed phrase, choose an arbitrary account name, choose and confirm a password then click Next. 
  • Re-enter your seed phrase in the correct order to ensure you have it correctly recorded and click Register. Finally click Done and the extension is set up. 
  • Open the extension and you will see your new wallet.  

New Keplr browser extension 

  • Log in to your preferred exchange and purchase some ATOM tokens with your preferred quote currency. Click the Withdraw link and dill out the form. Be sure that your Keplr wallet is on the Cosmos Hub, network field on the exchange withdraw form states ATOM Cosmos and that you have entered your Keplr wallet address in the Address field. This next image shows my completed withdrawal form for guidance. 

Withdrawing ATOM to Keplr wallet 

As discussed previously, if you are withdrawing to your own wallet, you can ignore the warning about completing the Memo field. Click the Withdraw button and answer the security questions to complete the withdrawal. 

Your ATOM should arrive in the Keplr wallet very promptly. This next image shows mine has arrived. 

ATOM in Keplr wallet 

In the preceding image notice the Stake button. Click it to begin the simple staking process. 

Your browser wallet has redirected and connected you to https://wallet.keplr.app/chains/cosmos-hub which is the Keplr web app. This next image shows the list of validators you can use to stake your ATOM tokens. 

List of ATOM validators 

Notice in the list there are familiar names like Binance and Coinbase. There are also some big-players like VC firms Polychain and Doki Capital or staking specialists Everstake and SG-1. You can click on the website link next to any of the names to find out more about who these validators are before committing. Note how much commission they charge from your earned rewards. Also note their voting power which indicates the volume of ATOM that has been entrusted with them. Also note the APR which is a reflection of how many blocks they have validated and is also a success metric. I have opted for a validator called StakeCito because he is a hardworking Cosmos educator who I think deserves support. Note I am not putting a significant amount of money into such a sentimental decision. If you are staking a meaningful (to you) amount of ATOM, you should do some extra research. Click the > to the right of your chosen validator to continue. 

  • In the pop-up shown above, click the Delegate button and you will see the next pop-up. 

Enter delegation amount 

In the preceding image you can see I have chosen to stake 2.5 of my 2.9 ATOM tokens. Also note the reminder that if you change your mind about staking you will need to come back here to unstake and then wait an additional 21 days for your ATOM tokens to be returned to you. You might have noticed a link on the previous screen to Liquid Staking. If you click that you will be taken to another website for a Cosmos chain called Quicksilver which provides a service where you can get staking rewards and still get a token to represent your staked ATOM which you can further utilize. Liquid staking has additional risks, but we will cover it when we discuss yield farming. When you are ready click the Delegate button and approve the transaction in your browser wallet. Be sure to note the transaction cost. Mine was $0.06 in ATOM tokens.  

A few seconds will pass, and you will be able to see the new state of your wallet in the Keplr web app and the Keplr browser extension. The next image shows mine. App on the left, browser extension on the right. 

My staked ATOM 

Also note, underlined in the preceding image, I already have some pending ATOM rewards. 

Furthermore, as a staker you can now vote on Cosmos governance proposals. Click on your wallet address in the top-right of the Keplr web app to see the following options. 

Vote on governance proposals 

That’s it. You can sit back and accumulate ATOM. Or we can investigate another project in the Cosmoverse – Osmosis. 

Setting up Cosmostation, getting some OSMO 

I am supplying my OSMO tokens from Kucoin. The reason is that I already have a Kucoin DCA bot buying a tiny amount of OSMO tokens each week so I could accumulate a few for this tutorial and in the hope, they might even appreciate a little in price. 

As mentioned, the web based Cosmostation dashboard app needs the browser extension to connect. So, let’s start there. 

  • In your favourite web browser visit the browser extension page by clicking on the official link on the Cosmostation website here: https://www.cosmostation.io/wallet#extension 
  • Click Add to Brave or whichever browser you are using. 
  • Once the extension is installed, click the checkbox to agree to the Cosmostation terms and conditions. Then click Start followed by Create Wallet. 
  • Enter a name for your account. This is arbitrary. It could be Account 1 or something more personal to you. I am using Crypto for Beginners to remind me why I created this wallet. 
  • Next, securely record your mnemonic phrase and click the Next button. 
  • You will now be asked to enter four of the words you recorded to verify you have done so correctly. Enter your four words and click Next.  Now you will see the Select chains screen as shown next. 

Cosmostation Select chains screen 

Cosmostation can connect to all the Cosmos ecosystem chains as well as EVM compatible, Aptos and Sui based chains. I have decided to keep my wallet for all things Cosmos based. If I ever decide to swap between tokens in the Cosmos ecosystem, then all the options will be ready. With this in mind I selected all the chains below the dividing line as shown in the image above. Select all the chains or less chains but be sure to select at least Osmosis because that is what this tutorial is about. When you are ready, click Next.  

  • Enter a password and then re-enter it to confirm and click Next again. Finally click the Done button. 
  • At this stage we are ready to send some OSMO to our Cosmostation wallet. But if toy explore the wallet there is no staking functionality – although there is a Claim Reward button. We need to connect to the Cosmostaion web app. Visit https://wallet.cosmostation.io/cosmos in your browser. 
  • Click the Connect Wallet button, select COSMOSTATION, and in the extension wallet, click Connect. You will see your account in the web app as shown next. 

Cosmostation ATOM wallet 

  • The app has defaulted to the Cosmos chain. Note COSMOS in the top right-hand corner. Click it and choose OSMOSIS from the list of chains. See the next image of the Osmosis wallet screen zoomed in and we will discuss it. 

Confirm Osmosis chain is selected 

  • It is important to confirm that we are on the Osmosis wallet because we want to send OSMO to the correct address. As a little reassurance, most exchanges and wallet apps wouldn’t let you send OSMO to an incompatible address. Look at the distinctive OSMO address in the preceding image. The address starts with osmo…. Just to be clear, however, exchanges and wallets may check you have the correct format, but you can have the right format and still have the wrong address. Copy your OSMO wallet address to the clipboard. 
  • Log in to your preferred exchange, buy small amount of OSMO and then click on the Withdraw link.  
  • Select OSMO in the Select Coin field, select Osmosis in the Network field and paste your Cosmostation Osmosis address into the Wallet address field. I already mentioned I was buying on Kucoin, this next image shows my completed withdrawal form.  

OSMO withdrawal form on Kucoin 

  • I have left the Memo option because it is not required when sending to your own independent wallet. If you were sending OSMO to an exchange, it will be essential to fill in a memo to identify you from other customers on the exchange. When you have double checked the details or sent a test transaction to be sure the details are correct, click the Withdraw button and answer the security questions. 

Your OSMO should appear in your wallet promptly. 

The OSMO has arrived 

In the preceding image you can see that my OSMO can be seen in both the Cosmostation extension and web app. We can now use the web app to stake the OSMO. 

Staking OSMO 

When staking OSMO tokens, there is a lockup period of 14 days. This means you will not be able to sell get your tokens right away, but instead need to wait the 14 day period for the tokens to unbond. This is something to keep in mind when deciding to stake.

In the Cosmostation web app, on the left-hand menu click the Delegate link. You will see a list of Validators to choose from in order to delegate/stake your OSMO. 

Choose a validator 

  • When you have selected a validator, click the Delegate button to the right of that validator. 
  • Enter the amount to delegate, as you can see in the next image, I staked 10 OSMO leaving me 0.7873 OSMO for gas. 

Staking 10 OSMO 

  • When you have entered an amount click Generate & Sign Transaction. You will get a pop-up message from the web app as well as a request to sign the transaction in the browser extension. This is shown in the next image. 

Review then sign the transaction 

Finally, you will see a transaction confirmation shown next. 

Transaction confirmation 

On the Delegate screen you can see I have a stake of 10 OSMO with Cosmostation. 

Staked with Cosmostation 

You can also see there are options to Delegate (to delegate more OSMO), undelegate to remove your stake back to your wallet, Redelegate, to make the exact same delegation again, and Claim Rewards to take the yield you will earn. Note that you will also have a Claim Rewards button in the browser extension. Also, note that claiming rewards costs gas so you will need to consider how frequently you claim your rewards. 

Summary

Congratulations, you have staked your OSMO and your ATOM and will earn a regular yield to grow your investment and offset the effects of inflation.

Previous: Staking EGLD on MultiversX

Next: DeFi: An Introduction to Lending & Borrowing