Let's talk about where are the opportunities and risks of Staking?
Let's talk about opportunities first:
At present, it is still in the early stage of the market, whether it is a project party, a node service provider or an investor, they can find their own opportunities. For the project, if there is at least one chain in the POW chain, it can only be Bitcoin, and everything in the POS chain is still being tried, and any technological or model innovation can gain opportunities. For node service providers, staking is equivalent to POS mining, and the earlier they enter, the more they can gain a first-mover advantage. And the market is not yet perfect, even small node service providers can gain a foothold through differentiated services. For investors, as long as they are alert to risks and choose good projects and good node service providers, they can get certain benefits.
Risks that require special attention
1. Centralization risk
The POS mechanism is basically a super node mechanism similar to DPOS. Due to technical limitations, it is difficult to avoid centralization. Therefore, the centralization of power can be prevented from three aspects.
(1) Prevent centralization by improving the consensus mechanism.
For example, the larger the number of stakes held by a node, the greater the corresponding probability of being selected, but after being selected, it will be equalized, so that even if it has a large number of stakes, it only has one voting right.
For example, MultiVAC may have 8 shards or 16 shards. Your joining a certain shard is determined by probability, and the number of your Staking determines how likely you are to join a certain shard. If you stake a lot, you will join multiple or even all shards to become miners. But within each shard, your power is equivalent to that of others, and you will not have greater privileges.
A shard can be thought of as a "committee", but it's highly dynamic and completely changes every few minutes (this is important: fast, random rotation). There are hundreds of people inside each committee, and everyone is equivalent. Staking more can make it easier for you to join the committee, and you may join multiple committees at the same time, but you only have one vote within the committee.
(2) By restricting the authority of large nodes in the Staking mechanism, while supporting small nodes. like:
a. Adjust the locking time according to the size of the verification node;
b. Give each verification node a fixed reward, which will allow smaller verification nodes to obtain higher returns;
c. Algorithm to reduce rewards (this will make, if entrusted to a large validator, you will get smaller rewards;
d. If the user entrusts multiple node service providers, the single rate of return will be increased;
e. Lower the threshold requirements for becoming a verification node and node service provider;
f. There is no limit to the number of verification nodes that meet the minimum requirements;
g. User Experience.
Decentralization is driven by a large number of participants and requires a friendly user experience for all parties involved, such as lowering the threshold for layer 2 solutions and lowering the technical requirements for running nodes.
The issuance of initial tokens is more fair and decentralized, reducing the cost of node operations, and an incentive mechanism that is beneficial to small nodes.
(3) Increase the diversity of infrastructure.
At present, the node service provider is too single, and a diversified node service provider ecology can hedge against the risk of singleness. This requires varying degrees of incentives to drive diverse infrastructure.
In short, for POS projects, preventing centralization is a long and difficult process, which requires both technological progress and the enhancement of users' awareness of decentralization.
2. Security risks
Including financial security and network communication security risks. Fund security such as the loss of private keys, network communication security such as, POS nodes need to connect to different networks at high speed, and at the same time broadcast the broadcast block, this process may have the risk of being attacked, including the protection server being attacked.
3. User experience and user education
In addition, POS is not so friendly to ordinary users at present, and the voting rate is not very good, so there is a lot of room for improvement in terms of user experience, which is also an opportunity for small node service providers. At the same time, user education is also a long and difficult process. They need to be told about a healthy blockchain ecosystem, and everyone needs to actively exercise their rights and make good suggestions, not just based on short-term yields.
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.
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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.
