A staking pool is a group of cryptocurrency holders who combine their assets to participate in validating transactions on a proof-of-stake (PoS) blockchain. By pooling their tokens together, contributors lower the minimum threshold required to run a validator node.
The pooled crypto assets increase the overall stake and chances for the node to be selected to validate new blocks and earn staking rewards. These rewards are then shared proportionally among the staking pool participants based on the amount they each contributed. Pooling tokens maximizes earning potential for those unable to meet minimum staking requirements alone.
Staking pools allow participants to earn staking rewards without relinquishing control of their assets, as users’ cryptocurrency remains in their personal wallets. Both centralized exchanges and decentralized finance protocols facilitate staking pools to optimize staking power.