There has been some places that is doing this but the most recent and huge one is binance. The problem is that you are not making too much money so people do not see it as a way of making money.

Everyone thinks that when you give people 3% or less they would see it as an investment or some sort of savings account type of thing you make money but in the end there are many many poor countries in the world with higher than 3% interest rate already, even freebitcoin as a company gives 4% bitcoin return and why would I pick an inferior bad altcoin that gives me 3% or even 4 when I could just pick the OG coin bitcoin with 4% interest rate? So, only time it will actually get more popular will be when people actually have coins that gives them 10% or more which would make sense to invest into.

Staking use to be a good cash cow for investors before 2018 bull run, the bear market kill most of this because they kill dumping and most people lose money, but recently exchanges are looking into this staking business reason being that most people keep their tokens on exchanges and they can get reward holding them

I think it's good as long as we trust the exchanger who runs the staking program. If we plan to hold it in the long run, this staking program will benefit because our goals are achieved and also get passive income

Lol. Reading this thread is like watching the OP play with all those who took the effort to respond. You are not familiar with the topics of staking and staking-as-a-service but you are very familiar with what SMART VALOR is offering using their native token VALOR? You deserve to get credit for shilling for this project with cunning style. Those all-caps words are making everything obvious. Avoid it. Lol. But I kind of like their services though to be honest.  

Invest with caution because you dont control the funds. The exchange can ran-away with it when they decide to close down
Almost all of the big exchange are already doing this staking feature and it is getting interest but its better to stake it your own if possible its much safer and the profit goes directly to you.

I have never been interested in such passive income earning projects, and I would not recommend it to others. The amount you send will remain in their cold wallet for 1 year and you do not know what will happen at the end. It is even more important than reliability of exchange. To me, the coin is yours as long as it is in your wallet, but if it is elsewhere, you should be nervous until you get.

So what is their deal? Can you somehow stretch it here?

Staking needs some coins. This means you will still invest something to them. Example is you will have a share instead buying the whole 1000 DASH.
I hope I am understanding it right.
If not, please enlighten me more about this.
Will they run a pool for different users until they fill up the whole pool for the staking process? I guess that is what is happening here.

As i remember DASH required 1000 DASH coin to start a masternode and staking it t ,you can earn around 7% anually.its impossible for lower budget traders to have that amount  unless you have a large fund willing to invest.

The problem of giving it to 3rd party is the risk that you will lost what you invest for staking since you dont have full control of your balance.

Staking service or staking pool has happened from many years ago until today, only PoS based project can do that.
If I can afford to hold it by myself, I would rather stake it on my own VPS other than giving it to the exchange.
But if you do not know how to do it or do not want to keep maintain it, giving it to the service provider is fine too.

This is not interest buy staking the coin to get a new coin because of proof of stake consensus.