This is the fourth part of the PoS series, the impact of the PoS economy on the capital side, I have not read the series oneWhat kind of opportunities will the awakened PoS consensus bring to the Staking economy?It is recommended to look at it first to have a global view.
Under the previous model, whether it is Token Fund or traditional legal currency capital, the main business of the capital side is to invest in blockchain projects to obtain long-term returns. Under the baptism of cryptocurrency under the baptism of the bear market, many projects cannot persist or even run away, so the capital side started Be cautious, and there are not so many good targets in the market. We have noticed that some capital parties have begun to spend part of their energy on cutting into the PoS field.
In the era of PoW consensus, the capital side can only indirectly participate in the PoW mine business through investment, because the threshold for operating a mine is relatively high, and in addition to basic technology, local resources and background are required, which is not within the scope of the capital side's circle of competence. The PoS consensus era has brought about different changes. The Proof of Stake mechanism does not require mining machines to mine. As long as you hold tokens, you can mine through Staking. The capital side finds itself an important player in the PoS field. Because many of the early investment projects are based on the PoS consensus, such as Cosmos, Polkadot, Difinity, etc., the tokens in the hands of the capital side are mining tools in the PoS era. Be cautious in the bear market and there are not many projects to invest in. The capital side can Cut into the PoS field, generate cash flow for your own currency in a bear market by running nodes, and at the same time continue to invest and hold the token for a long time.
example:
example:
1. Establish team maintenance nodes by yourself, such as Stakewithus, Mythos, etc.
2. Entrust a third-party team to run and maintain nodes. The most famous example is Pantera Capital and Coinbase Capital investing in Saked.us
Let's carefully analyze the cost and benefits. The capital side has a better judgment standard when considering whether to enter the PoS field (assuming that the capital side runs the PoS node only for the token service of its own capital, and does not consider opening up the entrustment of ordinary people)
There are three main costs
1. Team cost
The team cost is that the capital side needs to hire engineers, build nodes from zero to one, and do subsequent upgrades and maintenance. The following is an analysis based on our experience
About building: If it is a chain whose main network has been stabilized, it only takes about a week to build a node to run the entrusted service, and it only takes a few days if you are familiar with the chain; if you want to hurry up and start tracking from the testnet stage, The front line will be dragged on for a long time. The test network will have a series of structural parameter adjustments. The time for each chain varies. We track the Cosmos project and run nodes from November 2018 to the end of February 2109. The main network has not yet been launched.
Regarding maintenance: The maintenance work after accessing the chain depends on two factors (the upgrade and update of the blockchain itself, and the structure of the node when it is built). After the blockchain itself is stable, the update is usually every few months. On the other hand, if If the initial architecture of the node is quite sound, then there will be less follow-up maintenance. If it is not sound, it will need to be adjusted and optimized from time to time.
This is a process that is not easy to quantify. It tests the personal ability of engineers and the cognitive cost mentioned later.
2. Server costs
The cost of servers can be divided into two categories, cloud servers and hardware servers (Data Center).
Cloud server: It is relatively simple and convenient to maintain. The cost is divided into fixed fee part (server configuration) and traffic part (data synchronization on the chain). Generally speaking, running PoS nodes does not require too high configuration (2 core CPU 2G RAM is enough, In special cases, the chain itself needs to consume a lot of memory, you need more than 4G 8G of RAM), the traffic part depends on the chain, and the situation of each chain is different.
Remarks: DPoS chains such as EOS are exceptions, because the nodes on EOS belong to supernode configurations with higher configuration.
The configuration of a cloud server ranges from low to high, and the cost is about (3,000-10,000 a year). If you choose a more complex and secure solution to prevent various malicious attacks such as DDoS, you need to deploy more than one node through the sentinel node mode You need multiple servers.
Hardware server:
The hardware server is a more secure and private service than the cloud server. For the super big capitalists who are not at ease, they hope that their own node operation services can be controlled by themselves instead of relying on third parties, but the cost of maintaining the hardware server will increase. Higher, and need to maintain uninterrupted power supply and stable surrounding environment.
PS: Generally speaking, the solution of cloud server with hardware wallet is the most convenient, and it can ensure that the private key is not leaked.
3. Cognitive cost
Cognitive cost is the highest cost in our opinion. In terms of technology, if you recruit an engineer without blockchain related experience, you need to know where to read documents, where to find relevant resources, and when you encounter code problems Discuss upgrades with the community in a timely manner; in terms of operations, the capital side must also be clear about the token economic rules of each chain, how much is the participation threshold, how much revenue can be generated by chain issuance, and under what circumstances will there be Slash penalties
The difference in cognitive cost affects the responsiveness of the team.
income part
The annualized return of most PoS blockchains is between 5% and 25% (the rate of return denominated in the token).
The capital party's reward is calculated as: the number of coins held by the capital party * the annualized rate of return of the blockchain
PS: Finally, consider the risk of the currency price relative to the legal currency
The capital side can add up the three costs of running the node and compare it with the handling fee charged by entrusting the third-party team. Objectively, from the perspective of economies of scale, the third-party outsourcing team has scale benefits, from zero Begin to understand and build a node on the chain, and to multiple nodes on the same chain, the marginal cost is relatively low.
Judging from the capital side of the currency circle that we have come into contact with so far, there are mainly two types
One is a relatively closed private investor, similar to a family office, with a long redemption period for fund investment, and the other is a more open limited partner, with a shorter fund investment redemption period. Private investors only need internal agreements to carry out Staking operations because investors are stable for a long time, while limited partners need to disclose important operations to investors, and the rights and interests involved in the process involve contractual issues (use investors’ tokens for Staking to get rewards) , private investors are more likely to build their own teams.
If the capital side builds its own node service team, what is the next possible profit opportunity?
Introduce proxy service to community users:
This is a possible direction. The capital side not only invests, but also participates in the actual blockchain business. In fact, the threshold for launching a commissioned service for C-end users is higher, and professional operators are required to promote activities. At the same time, it is necessary to maintain the community well and compete with many small team nodes in the community for existing users. If you think about the advantages of the capital side itself, the capital side has some advantages in attracting medium and large retail investors. By binding some The investment quota in the primary market or internal professional reports can attract some people to join the capital party's entrusted service membership system, thus establishing an entrusted service.
Wetez believes that the capital side can consult the third-party service team before making a decision. The measurement between cost and benefit is the most important indicator. If the capital side invests in many projects in a dispersed manner and conducts some operations on a regular basis, choosing a third-party service is a must A better choice, such proxy operation node service is detachable. When the capital side makes a profit, it can choose not to purchase the node service of a specific chain. When the capital side purchases a new project, it can immediately access the entrusted service, saving management and training costs.
Tokens are the most important symbol of rights and interests in the PoS field, and all entrusted services and benefits are born around them. In the end, what role will the capital side choose to integrate into the PoS ecosystem? The market will give the best answer, and in the end most capital parties will choose a similar path.
