Capturing the "redistribution" value of the network, staking participation has increased significantly since the beginning of the year
Beginning in 2019, the number of staking "shows up" gradually increased. The staking economy has gained more discussion and continued construction. Three quarters have passed quietly, have you outlined the overall outline of staking in your mind?
stake.fishOperations Manager Jun Soo Kim gave a keynote speech on staking at the Consensus Conference in Singapore not long ago. He once again explored topics such as the nature, status quo, and latest features of staking, and looked forward to the next trend.
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Staking and "Generalized Mining"
In the field of blockchain, even if you haven’t heard much about staking, you must often hear the term mining. In the Proof-of-Stake (PoS) blockchain network, staking is a governance behavior similar to mining on Proof-of-Work (PoW).
The role of validators is to handle complex activities on the network, including producing blocks. But unlike the PoW network, the PoS network uses "stake" instead of computing power. The more tokens a verification node owns, the more network power it has, and it is more likely to produce a block and get token rewards from it. .
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The essence is the "redistribution" of network power
Why staking? Obtaining network rewards is the most straightforward answer.
But perhaps Arthur Brightman, in his recent article on supply, is more accurate:
"The PoS consensus mechanism does not actually generate real rewards out of thin air, but by redistributing the ownership of the network from those who are not involved in maintaining network security to those who participate in network security."
Staking is an important way to participate in network construction.
Let us use the following diagram as an example to explain the difference between participating in staking or not:
Assume that in the first year, both Alice and Bob have 1% of network tokens on the network. Alice chose to maintain network security and participate in network construction through staking, but Bob did not.
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trade-offs
However, staking is not without risks, and sometimes it needs to make trade-offs, based on the following two reasons:
First, staking with tokens means losing their liquidity within a certain period. Because you have to lock these tokens, during this period, the tokens in the wallet cannot be transferred, and of course, transactions cannot be performed.
Second, if the verification node is unreliable, it will face the risk of being punished. People should choose their own reliable nodes to entrust tokens. If the nodes are offline for a long time, or perform malicious acts such as double signatures, the tokens you entrust will suffer a certain degree of loss.
Two Typical Ways to Participate
Although there are some risks and liquidity needs to be compromised, in general, we still advocate staking. So how to get involved?
You can set up a team to set up the infrastructure and run the nodes yourself, or you can choose to delegate tokens to validators like stake.fish.
As a verification node, it mainly does two things:
One is "Validating as a Service". Token holders entrust tokens to nodes through a network transaction to participate in network construction. During the process, the verification node cannot control or transfer your tokens, and you still hold the ownership of the tokens;
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Source: stakingrewards.com
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Source: stakingrewards.com and CoinMarketCap
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Source: stakingrewards.com, CoinMarketCap
From the perspective of staking ratio, although EOS has a market value of 1.4 billion staking tokens, the staking ratio only accounts for 48%, which is close to 80% on Tezos and over 90% on Cosmos. Looking at it this way, who do you think has the bigger staking community in each network?
Part of the reason for this phenomenon is that the rewards people get in the Tezos and Cosmos networks are visible, but in the EOS mechanism, unless you run your own nodes, it is difficult to get direct rewards.
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Source: stakingrewards.com and Bloks.io
In the figure, we can see that the proportion of staking rewards in various networks ranges from 0.1% of EOS to 12% of IOST recently, with an average of 6.3%, which is down from 7.3% in May.
We also see that there is no necessary relationship between the current reward ratio and the market value. Perhaps a higher inflation rate is helpful for the retention of verification nodes, but it is still too early to draw conclusions on the relevant laws, and we need more practice To summarize the relationship between inflation rate and market capitalization.
So what are the characteristics of staking? What are the new expectations and highlights of the staking economy in the fourth quarter of 2019? Please continue to pay attentionstake.fishrecent articles.
