Hello everyone, I am Conan. In the last video, we talked about how to choose a service provider for the Staking model. In this video, we will talk about how to choose the currency to participate in Staking.

The first thing investors need to consider is which asset is more profitable for Staking. Before choosing to stake a certain currency, you need to understand several basic elements:

1. Inflation rate and Staking ratio

We know that the main income of token holders comes from tokens with increased value, but the inflation rate (increased issuance/circulation) is not the actual income of token holders. Because staking requires users to actively participate, if you do not actively perform staking, you cannot enjoy the corresponding benefits. There will always be a certain proportion of tokens that will not be staking, and will not be able to share additional tokens. Therefore, Staking rate of return = inflation rate / mortgage rate. (The mortgage rate, Staking Ratio, refers to the proportion of encrypted assets that are used for mortgage but cannot be sold)

Assuming that the current inflation rate of a project is 7%, if the Staking ratio is 50%, the actual pledge rate of return should be 7%/50%=14%.

2. Pledge fee collected by nodes

In addition, the general token holders need to entrust the tokens to the node, and then the node will participate in the block generation for the user and obtain the inflation reward on the chain. Due to the operation of the node, it is necessary to bear the related expenses of the server and operation, so the node will charge a part of the handling fee.

It is understood that the current staking fee standard charged by nodes in the market is about 5%-20% of the user's mortgage income. Different projects and different nodes have different charging standards, which are completely determined by the nodes themselves. However, the lower the handling fee, the better. This is similar to shopping in our life. Often the price and quality of the product are directly proportional. You have to make a balance according to the specific situation and choose a node with stable operation and good reputation.

3. Lock-up period after redemption

At present, most POS projects will set a lock-up period after pledge redemption. The lock-up period means that after the token holder participates in Staking, if he decides not to participate in the pledge (for example, when he decides to sell his own tokens in the secondary market), the user must wait for a period of time after the redemption operation. Tokens can be unlocked for free circulation.

At present, the length of the lock-up period varies for each project, and generally the lock-up period will be set at more than 20 days. During the lock-up period, tokens cannot be circulated and traded, so users may need to bear the risk of price fluctuations during the lock-up period, which also sets a threshold for some users who like to trade frequently.

The lock-up period is not set by the node, but is formulated by the project party. The reason why there is a lock-up period is mainly a safeguard designed to prevent the node from doing evil. In addition, setting the lock-up period can also prevent investors from concentrated redemption. Reduce currency price fluctuations in the secondary market to a certain extent.

We can compare the current popular assets on the above mentioned dimensions. Among them, according to the data of Stakingrewards.com, the most popular assets currently locked up are EOS, Qtum, cosmos, tezos, dash, etc. Among them, the lock-up value of EOS is 1.705 billion US dollars, Algorand 946 million US dollars, cosmos 665 million US dollars, tezos 530 million US dollars, and dash 514 million US dollars.

The value of Staking lock-up funds depends on two factors: the price of the underlying asset and the Staking ratio. (Pledge rate) calculation formula is:

The value of Staking lock-up funds = underlying asset price × Staking ratio

The most direct measure of income is the rate of return. The rate of return of staking is approximately equal to the ratio of the inflation rate to the mortgage rate; a higher inflation rate and a lower mortgage rate will lead to a better rate of return, which also means higher returns. Most projects that support staking will provide a staking revenue calculator on their official website, which can also be found on third-party websites such as Stakingrewards.com.

The rate of return is based on the currency standard, but when choosing to invest in an asset, in addition to the rate of return of the currency standard, asset fundamentals such as inflation mechanism, consensus mechanism, incentive policy, staking mechanism, etc. must also be considered.

Disclaimer: The information published in this article does not represent any investment suggestion of the company, nor does it constitute any investment advice. The picture is from the Internet. If there is any infringement, please contact to delete it. Please note the source for reprinting.

Follow the official Weibo of Beishu blockchain (WeChat ID: shuliancj), join the community and become a great master with me.

Disclaimer: The information published in this article does not represent any investment suggestion of the company, nor does it constitute any investment advice. The picture is from the Internet. If there is any infringement, please contact to delete it. Please note the source for reprinting.