A quarter of 2019 has passed. If there is any major event during this period that can affect the development of the entire industry, the consensus mechanism of Ethereum will gradually shift from PoW to PoS. Ethereum, which has the second largest cryptocurrency market value, "turned around", directly expanding the PoS market, and then the mainnet launch of the public chain Cosmos also attracted a lot of attention. Staking, born alongside PoS, has quietly become a new hotspot in the industry.
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Staking is still a blue ocean
Under the consensus mechanism of PoS (Proof of Stake), nodes need to be responsible for packaging transaction information, maintaining network operation, and participating in community governance. This process is Stake. As a reward, nodes can obtain additional tokens issued by the system. The way of this kind of income is Staking, and its essence is to obtain equity rewards for exercising power. Because the responsibilities of nodes are similar to miners in PoW, the process of node Staking is also called "mining" by analogy, and Staking is equivalent to mining rewards.
At present, there are two mainstream methods of staking. One is mining by holding coins. For example, on typical PoS public chains Cosmos or IOST, coin holders can directly obtain corresponding dividends by mortgaging tokens to nodes. The other is "entrusted" mining, which usually occurs on the DPoS chain, a derivative mechanism of PoS. At this time, users who hold coins need to vote for nodes (mortgage coins to nodes), and the nodes selected by the votes will obtain benefits and return them privately to user.
In addition to the above-mentioned coin-holding mining and commissioned mining, PoS mining pools also have some emerging models, such as Filecoin's LPFS storage mining. But Li Chen said frankly, "Unlike the previous two models, this new model has already undergone a lot of practical tests, so we just explore and understand it. If it is good, we may involve it."
Compared with PoS mining, PoW mining has already formed a complete commercial closed loop. In this closed loop, there are chip manufacturers and mining machine manufacturers upstream, mines and mining pools in the midstream, and miners downstream. Mining machine manufacturers sell mining machines to miners, and the coins mined by miners benefit in the market. This business model may even be the only mature model in the blockchain industry at present. With the currency price hitting new highs in 2017, the participants in the early PoW mining have obtained excess profits and made a lot of money. However, in the bear market in the second half of last year, the price of coins fell, the computing power increased, and the cost was high, and PoW mining declined accordingly.
The bear market has exposed the disadvantages of PoW mining, that is, the accumulation of computing power will increase energy consumption, which means that the fixed cost will rise and the income will decrease. More importantly, this will trigger a chain reaction. When the income is not enough to support the cost When the mine is shut down, the reduction of miners will increase the security risk of the PoW public chain, and the 51% attack becomes easy. Seeing these disadvantages, Li Chen judged, "In the future, the PoW public chain may be led by Bitcoin, and there will be no more than ten, while the remaining public chains will be PoS or DPoS, and there will even be other consensuses in the future. The market for staking will be quite broad.”
Moreover, PoS mining is an asset-light business, without the high costs caused by venues, machines, and energy consumption, because PoS mining only needs one server. "One server can mine many currencies, which is actually quite I packed a wallet," Li Chen further explained.
But there is another more important reason to attract players like HashQuark to enter PoS mining - the Staking market is still a blue ocean. In this blue ocean, there is no mining bully such as Bitmain. "The core of PoW mining is the chip. The chip is by no means a day's work. It requires a lot of manpower and material resources, and the giants have already done so maturely. It’s really hard to catch up with them.” On the contrary, the subdivision of staking is still in its early stages. Although there are Huobi Mining Pool, Cobo Wallet hatched by Shenyu and Bit.Fish, Babbitt’s MATPool mining pool, there is no There is a giant who can eat all the world, so in the eyes of Li Chen, the Staking market is full of opportunities, and everyone is on the same starting line.
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The huge imagination space of Staking
If you want to stand on the trend of Staking, you must first understand the essence of Staking.
In Li Chen's view, "Staking is a savings business." But this kind of savings is different from bank savings. It doesn't mean that the more money you save, the more income you will get. The blockchain industry has its own rules of the game. "Staking has a mechanism. The principle is not that the more coins you have, the more you will mine. This is not a linear correlation. The core of Staking is that the more coins you pledge, the higher the probability of mining. So how many coins are there on the main network every day? Tokens being staked is a very important variable in PoS mining.”
According to the data of stakingrewards, the Stake ratio of various public chains varies greatly, with the highest exceeding 81% and the lowest being about 10%. However, half of the PoS public chains within the statistical scope have a Stake ratio exceeding 46%. Moreover, there is no correlation between the Staking ratio and the annualized income. The median annualized income of the PoS public chain within the statistical scope is about 10.5%. Surprisingly, the annualized income of EOS, the origin of Staking, is only 1.72%. In the eyes of industry insiders, there may be problems if the income is too high or too low.
According to PANews on HashQuark's official website, the income from HashQuark mining pool mining is higher than that of mainnet mining. Li Chen introduced that this is mainly due to the algorithm model developed by HashQuark. "This is our core competitiveness, because Staking is a probabilistic event. By calculating the Stake rate, we can find a model, that is, under a certain ratio, the highest income can be obtained." The biggest advantage of the mine.
The savings model is not only beneficial to individual currency holders, but also an opportunity for Token Fund. Especially in the current sluggish market, the trading frequency of Token Fund is extremely low, but at the same time, it hopes to increase its value. Due to the relatively large amount of funds in the Token Fund, Staking is like a "free lunch" for them.
In addition to this most primitive, basic, capital-guaranteed savings model that does not involve transactions, Li Chen believes that the business model of Staking still has a lot of room for imagination, and these imagination spaces need to be linked to specific scenarios. For example, Staking can empower wallets. In fact, most of the wallets on the market today are relatively monotonous, with only storage functions and no added value. But in Li Chen’s opinion, if the wallet and staking are combined to empower the wallet business, “if the tokens stored in the wallet are used for mining, there will be a fixed and relatively good income every day.”
The more far-reaching impact of staking may be to increase users' income, thereby activating or even attracting more people to hold coins. Originally, it is actually a custody process for users to store coins in their wallets. Users need to pay fees to the custodian, but in the Staking model, the escrow buyers and sellers are reversed. Because staking custody can continuously generate value, the custodian will naturally give profits to users in order to strive for more escrow amounts. Li Chen said that he is very optimistic about the new business model that may be derived from this situation.
The airdrop business can also be empowered through Staking. "The current airdrop service is to find an address and cast it. In fact, it is very inefficient and blind, because the real situation of the address cannot be judged", but Staking can solve this problem, because the process of staking and voting can naturally determine the real address. In this way, the airdrop can be targeted, which is a way for the project party to improve resource utilization.
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Staking is the realization of the team's comprehensive ability
For PoS or DPoS mining, it is very important to become a node, only nodes are eligible for mining. Although PoS mining does not require a lot of fixed costs, becoming a node also requires a certain amount of investment. For example, the EOS super node election last year was a "capital war".
As a result, the market has always questioned the "capital determinism" of PoS or DPoS consensus, but Li Chen disagrees. He believes, "To be elected as a node, you don't necessarily need to have a lot of coins, and more importantly, you To attract others to vote for you, from this perspective, the cost pressure of node elections is shared by the node team and the community, and in a situation like EOS, even if you cannot become 21 super nodes, you can still enter the top 100 candidate nodes. There are benefits."
According to the statistics of the blockchain browser EOSX, nearly 100 million EOS are required to become one of the 21 super nodes, and at least more than 10 million EOS are needed to enjoy the benefits of entering the top 100 nodes. If these costs are fully borne by the node team, almost is impossible. Moreover, although the daily income of a super node is equivalent to twice that of other candidate nodes, more than 50% of the top 100 nodes can obtain a daily income of more than 245 EOS, and the minimum daily income is 101 EOS, which means that according to Based on the currency price on April 4th (about 5 US dollars), even the lowest-income node team can earn about 3,400 yuan a day. This data supports Li Chen’s judgment.
If capital is not the core of staking, then what is the core of staking?
Li Chen’s answer is that staking is the realization of the comprehensive capabilities of the node team.
This comprehensive capability includes many aspects. Li Chen explained that the first is the reputation of the node team itself. Because everyone needs to vote for him, and some who do not support voting need to transfer coins, so reputation is very important.
The second capability is security capability. The security of PoS mining should be examined from two aspects. Internally, it is necessary to ensure that nodes can continue to produce blocks. Externally, if deposits are required, nodes must also prevent Hackers steal coins.
Furthermore, monetization also needs to consider the community influence of the node team. Node elections are very similar to political elections. Voters examine how much the node team has done in the community and how much they have contributed. For example, Li Chen said, "I have seen some nodes, they have no coins themselves, and they can become a node only by community governance, continuous voice, and continuous activities." This is also an important reason why HashQuark is deeply involved in the community. , they hope to improve their community influence by free translation of technical articles and dissemination of research results to promote community governance.
The importance of the above-mentioned security capabilities stems from the fact that security is one of the factors that are currently being questioned in PoS mining. This may be related to the nature of staking. Li Chen explained, "The essence of staking is online mining. In fact, to put it bluntly, It is hot wallet mining. So the security risks faced by Staking may be similar to the various hacking attacks suffered by DAPP.”
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PoS mining pool may become an industry fusion agent
"We hope to form a win-win situation." The win-win situation mentioned by Li Chen includes PoS mining pools, users and project parties. For PoS mining pools, the more mining currencies are launched, the more likely it is to attract users from different public chains, and naturally the user base of the mining pool will expand. For users, through mining pools, users may discover and hold other tokens. In the same way, for the project side, it is possible to reach users of other public chains through the mining pool and expand the market. Therefore, Li Chen mentioned many times that what HashQuark wants to do is actually a link point for the entire industry, and the goal is to open up the liquidity of the entire industry.
Of course, this effective connection is based on high-quality projects, only in this way can a virtuous circle be established. Li Chen provided two criteria for judging the quality of projects, which have the same reference significance for ordinary users when choosing the type of currency they hold.
The first criterion is technical clearance. But after all, ordinary users are not all proficient in blockchain technology. At this time, they can judge from the time of private placement and whether the mainnet is online or not. "Generally speaking, private placement for more than one year can avoid a lot of air coins with a high probability. In addition, if the main network of the public chain has been launched, it is likely to be a good project." The second criterion is the degree of community activity. The higher the value, the more likely the project will continue to grow.
If the PoS mining pool can become the fusion agent of the industry, the impact on the entire industry will undoubtedly be huge. In addition to technical bottlenecks, the important factors that hinder the development of the industry are not enough participants. Perhaps Staking can attract more people into the blockchain industry through real benefits.
