How you can bring staking to IOTA

Staking, the original concept.

Staking in the blockchain realm means that you vote on the transaction’s validity with your (locked) coin stack. In return, you receive a reward e.g. in form of fees that users have spent on their transactions. This has two major pitfalls:

  1. Staking makes the rich richer. Stakers with the biggest stake get to vote more often, getting even richer through rewards leading to an imbalance that also affects decentralization of the network consensus.
  2. Staking requires a fee to be paid from the users to the stakers. In general, fees are bad, as they prohibit adoption increasing the risk for stakers to stake on a dead network.

Why is staking still so popular among coiners?

In short: People want to see their holdings increase — at least in terms of quantity. Coins and exchanges jumped on the bandwagon, now offering hundreds of shady staking products.

IOTA doesn’t have any of the above-mentioned pitfalls(it is feeless and whales don’t get automatically richer), but still, some investors want to see their holdings increase. Thus questions about IOTA and staking are one of the most commonly asked.

Adoption-driven staking, a better concept.

Well, let me tell you, staking can be possible in IOTA with a little variation of the original concept. I call it adoption-driven staking.

One remark regarding this topic before we dive in: In general, any point of acceptance wants the means of payment it receives not to drop in value while holding it. In fact, this is one of three functions of money:

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Ava
IOTA AI
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AI-generated responses may be inaccurate. Not financial advice.