The Proof of Stake: The value of Persistence Product, pSTAKE

Staking is a common term in the blockchain space these days and almost everyone is in one staking program or the other. But what exactly is staking? Staking is all about holding coins of a blockchain project in a crypto wallet so as to support the blockchain network and provide security. The thing with staking is that it works within a proof-of-stake network and users can earn rewards depending on the APR. You might want to ask: What is this Proof of Stake (PoS) mechanism and what differentiates it from the Proof of Work (PoW) we so often hear about.

Proof of work

The proof of work mechanism is one that Bitcoin works on . The transactions are made into blocks and connected to form a block chain. Miners will then be in a race against time and themselves to solve a mathematical puzzle, with the fastest miner being the one to add the next block to the growing chain. The miners are usually rewarded for this.

Proof of stake

Here, it is a different ball game. There is no race. All users have to do is lock their stake and wait to be picked by the protocol as the user to validate the next block. The more coins you lock, the greater your stake and the greater your chances of being picked. Simply put, User A stakes 200 coins and User B stakes 2000 coins, it clearly depicts that User B has 10x the chance to be selected to validate the next block and as such will receive larger rewards. With the Proof of Stake, its quantity over speed.

Why move to Proof of Stake?

Just like in normal day-to-day activities, our everyday struggle is to make life better, easier and certain processes more efficient and effective. Ever since the inception of blockchain technology, there has always been talk surrounding decentralization, security and scalability. The perfect system is one that is scalable. More and more users will always hop into these platforms but it is up to the platform to accommodate the growing number. Decentralization too is another important feature of blockchain technology with users preferring projects without a central authority. Security also would not be left out. The more secure a project, the better, as users would feel they are immune to malicious attacks. There has always been an ongoing debate over these three factors and all these have led to the evolution of the Proof of Stake (PoS). Created as an alternative to the Proof of Work (PoW), it sought to overcome some of the challenges associated with the proof of work. First was the amount of energy required to do a proof of work. Mining always requires a large amount of power to solve these calculations. A very high amount of power and electricity is required for the proof of work and this has always led to miners selling the coin rewards to fiat in order to cater for the electricity bill. You know the implication? A price dip for the cryptocurrency. With the Proof of Stake, all that is greatly reduced as the mining power is no longer attributed to the speed of solving the puzzle but the proportion of coins that the miner has. If you have 2% of the available coins, you mine 2% of the blocks.
Proof of Stake also sorts security issues that can take place in the conventional Proof of Work. One of such is the incident referred to as the "Tragedy of Commons". Here as a result of the amount of energy required to mine and also the cost of paying for it, the only fees that would subsequently be earned in the Proof of Work process would be from transaction fees and even this will go down because more and more users who prefer to pay lower fees. The resultant effect would be quite huge as there would now be much more reduced number of miners than is needed for the mining process. What is the resultant effect?? Vulnerability. It could lead to a scenario referred to as the 51% attack where as a result of fewer miners, one miner controls 51% of the computational power of the network. This miner or mining pool can then attack the network by creating malicious blocks and also invalidating the transactions put forward by the other miners. Boom!!! The network is gone.
To put this into context in the Proof of Stake mechanism, let’s look at this. To carry out this 51% attack, the attacker would have to be in the custody of 51% of the total coins of the project. This doesn’t end there. The Proof of Stake is set up to prevent a potential attack because if someone is able to accumulate up to 51% of the network, he would want to secure it rather than destroy it, knowing that the value of their holdings would fall if the cryptocurrency falls. They would have a natural inclination to maintain a secure network. So we’ve seen how the Proof of Stake came in to solve some issues that could be found with the Proof of Work
The blockchain space is indeed evolving from the Proof of Work to the more effective and efficient Proof of Stake and mind you, there are lots of benefits. This include

  • Lesser energy requirements
  • High throughput
  • Greater user experience
  • Preventing malicious actions
  • Promoting good actions
  • Transaction finality

This brings us to the role of pSTAKE in making the staking process more profitable.

Staking is now seen as a lucrative venture with many cryptocurrency token holders preferring to stake their assets other than leave them in their wallets like that. According to stakingrewards.com, there is over $146 billion locked in staking, with an average staking reward of 14.95% APR. When compared to the total value locked (TVL) in all DeFi ecosystems combined ($117 billion), you’d come to see how huge it actually is. You can not deny the amount of benefits and rewards that these staked assets have been availing users as well as the amount of security they profer to the POS networks but it comes with a twist . They are locked and cannot be used for other means, currently.
This is where persistence comes in . Providing the next evolution of PoS by presenting the next-gen financial product, pSTAKE that brings liquid staking into play.
With liquid staking, staked representative tokens would be issued to users by tokenizing the underlying network’s staked assets. These staked representative tokens will then help unlock staked assets which can then be used in decentralized finance, allowing you to get greater yield. pSTAKE is built to do exactly that; unlock the true potential of your staked PoS tokens. Let’s make this clear. You stake your PoS tokens through the pSTAKE application, gaining rewards in the process. The platform will then issue 1:1 pegged stkTOKENs that represent your staked tokens on the Ethereum network and you can use these ones for additional yield. With pSTAKE, you’re maximizing profits from your staked assets. Persistence is committed to making the DeFi space much more enjoyable and profitable. With pSTAKE, the challenges faced by the PoS stakers will be effectively addressed while also helping to improve the end-user experience, thus driving mass adoption.

Let’s take the DeFi space by storm.

PERSISTENCE
Website: https://www.persistence.one/
Telegram: https://t.me/PersistenceOneChat
Twitter: https://twitter.com/PersistenceOne
Official Blog: https://medium.com/persistence-blog

pSTAKE
Website: https://www.pstake.finance
Twitter: https://www.twitter.com/pStakeFinance

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