Staking is one of the hot spots in this industry.
Staking translated into Chinese is probably a mortgage, and the resulting Staking Economy is translated into equity economics. Staking refers to the investment behavior of the token holder to obtain the project additional tokens by mortgage the token to the node under the PoS or DPoS consensus mechanism.
Why is it fire? From the data, more than 80% of the new public chains have adopted PoS instead of PoW mechanism since 2018. Recently, in addition to the upgrade of Ethereum, the first step of the transition from PoW to PoS consensus, including star public chains such as Cosmos, Polkadot, Cardano, Difinity, etc., are all online, and none of them are PoS-like consensus mechanisms.
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EOS set off a super-node campaign, but did not trigger a Staking battle. Today, mining does not necessarily require the use of mining machines. The idea of building a super “mine pool” through the construction of nodes under the PoS consensus mechanism is becoming more and more market-oriented. .
The crowds are savage, barbaric, and huge interests are brewing a revolution.
Staking, "depreciation" without mortgage
The business logic of Staking mode is very simple. Regardless of PoS or DPoS consensus mechanism, node operators first influence individual or institutional investors through brand and technology influence, accept their tokens, and even invest in their own funds. Nodes, nodes obtain tokens for project issuance by issuing blocks and the like. For example, DASH's revenue is 7%, while Livepeer is as high as 150%. In the end, the operator gets the benefit of Staking according to a certain percentage. If the node operator simply provides operational services to the organization nodes, the risk is even smaller.
This is almost a win-win model. The project party can lock a certain percentage of tokens and reduce market selling pressure; the token holder can use the coin to be coined, which is equivalent to depositing the token into the bank to obtain a considerable interest rate. The node operator is able to revitalize the funds in hand and obtain a low-risk gain.
Finally, the purpose of the three tend to be consistent will promote the positive development of the entire public chain ecology. The proceeds from Staking are cryptocurrencies, so as the price of cryptocurrences rises, the benefits of Staking participants will be even greater.
What are the costs of the node operator?
First, server costs, this is often a cloud server or hardware server like AWS. Compared to EOS's node configuration cost of more than 700,000 RMB, the cost of Staking has been reduced a lot. Wetez once revealed in the Babbitt column: the cost of a cloud server configuration from low to high is about 3 Between 1,000 and 10,000.
Second, the operation and maintenance team, MatPooLCTO Jin Lei once said that for a mature team, assuming that the node does not need the currency holder to play the coin, the operation and maintenance of the node is not difficult. And if you need users to play coins, then you need to develop the corresponding wallet, the input cost is relatively larger.
Third, the cost of capital, assuming that the mortgage token comes from the node operator itself, this part of the lockout funds will be a relatively large cost.
Fourth, the operating costs, this part of the investment is mainly to build the brand, the operating node ecology, it is difficult to be estimated, but also the bulk of the investment.
The cost of the currency holder is the token of Staking. These assets will be restricted to flow, and the holders cannot quickly buy and sell according to market conditions. Second, if there is a technical problem with the node, Staking's token may be penalized by the system. In addition, the holder of the currency must pay a fee to the node operator.
In contrast, the cost of not participating in Staking may be higher, because the source of Staking rewards is the issue of tokens, such as Cosmos, which is issued at 7%-20% inflation rate. If the holder of the coin does not participate in Staking, In the case of a currency price sideways, the assets are actually diluted. Therefore, Staking is a very strong incentive mechanism.
A group of heroes, the game of "holding money"
If the early PoW consensus gave birth to large mining pools such as ant mine pools and fish ponds, as well as mining companies such as Bitian and Jianan Zhizhi, the rise of PoS is bound to drive the development of an industry.
Babbitt partner, MatPool mining pool COO Li Zongcheng introduced that the current Staking players probably have the following ways.
First, the traditional mining pool. For example, MatPool, which was born in September 2018, is currently a consensus node for NEO, Ontology and IRIS, in addition to the computational power mining that supports both the BTM and SIPC PoW consensus. The participation of traditional mining pools in Staking is much like the horizontal expansion of the business, with forward-looking and technical advantages.
Second, the wallet. Such as Cobo wallet, coin wallet. The business logic of the wallet is that it naturally stores the user's "encrypted assets", much like the bank in the crypto-asset sector. Staking is equal to providing users with additional interest, which can increase revenue and increase user stickiness.
Third, the exchange. For example, Fire Coin and Coinbase Custody, the crypto asset custodian that Coinbase serves for institutional clients, plans to support PoS projects such as Cosmos, Polkadot, and Algorand this year. The logic of the exchange is exactly the same as the wallet. But the problem is that the exchange holds the user's encrypted asset layout, Staking, how it will "divide" the user. Is it possible to spawn a transaction that not only avoids transaction fees, but also allows users to take "interest"?
Fourth, investment institutions. For example, the universal system of Hashquark. In fact, PoS consensus projects such as Cosmos, Polkadot, and Difinity often distribute tokens through private placements, so there are a large number of project tokens in the hands of investment institutions. If it is not sold in the secondary market, then Staking is undoubtedly an effective way to add value to assets.
Fifth, new participants, such as Wetez, which specializes in Staking's operation, will include many high-quality PoS projects in its development roadmap. Cosmos, Cardano, Polkadot, etc. are all objects of interest.
Stakingrewards.com is currently a comprehensive website for the Staking project and the team. It has 23 Staking node operations teams in the world. Germany, the United States and Romania are ranked in the top three in 5, 4 and 2 respectively. Only the Starfire Mine Pool was selected. MyCointainer in Estonia ranks first with 18 assets.
The average yield is 13%, and Staking Economy can be expected in the future?
Currently, according to data from Stakingrewards.com, the total market value of global cryptocurrency assets is approximately $173 billion, of which approximately $5.6 billion is spent on Staking, accounting for approximately 3.2%. There are 82 records of Staking public links, of which EOS ranks first with $2.5 billion, Dash ranks second with 550 million, Tezos ranks third with 530 million, followed by Cosmos, NEM, Tron and so on.
EOS currently ranks sixth in market value, with a total market capitalization of about $5 billion, which means that its Staking tokens account for about 50% of its market value. However, EOS's yield is relatively low, only 1.7%. However, according to the number chain rating statistics, Staking yield range is 0.02% to 156.23%, the average rate of return is 13.34%, and the median is 7.15%.
▲Data source: number chain rating
Earlier, Babbitt reported that in the past two years, nearly 80% of the newly launched public chain projects began to adopt PoS or DPoS consensus, and in 2019, this year is the year when the public chain is concentrated. To a certain extent, PoS or DPoS consensus is easier for developers to control the project and promote project development in the early stage. PoW not only needs to consider the power, but also considers 51% of the attacks, and the challenge is even greater.
The increase in PoS projects, the relatively low market value of tokens, and the considerable average rate of return, can these three factors lead to a huge Staking Economy? This is still waiting for the market to give an answer.
However, as the PoS consensus mechanism itself has been centralized, node operations also have a clear centralization. In addition, because of the uncertainties such as security and high volatility, Staking is also a risk in the blue ocean.
Currently, for holders of such cryptographic assets, it is necessary to clarify that Staking benefits are derived from the project's Token issuance, and high returns also mean higher devaluation risks. In addition, Li Zongcheng reminded that the currency holder should consider the value of the project itself when looking for the operation node, and also need to consider the security mechanism of the operating node. In addition, even the holder himself needs to have the correct encryption asset storage. experience.