Matic Staking, a Way to Seamlessly Secure the Network.
INTRODUCTION
Cryptocurrencies and Blockchain smart contract platforms have undoubtedly attracted huge attention, but due to scalability and user experience problems, it still hasn’t been able to achieve mass adoption. There have been few situations where an application temporarily worked to reach a huge fan base, but in the end, the network is becoming overloaded. Even the most sophisticated and commonly used platforms aren’t ready for widespread usage.
However, there appear to be a couple of smart contract platforms that boast of a higher user base, but they achieve such feat at the expense of decentralization. Some of the emerging solutions in the blockchain space often suggest their technology, thereby disregarding the effects that DApps and other initiatives have already created on networks such as Ethereum and others. More notably, they disregard the massive community of developers and the developer ecosystem but not Matic.
Why Matic?
Matic Network is a Layer 2 scaling solution that aims to achieve scale through the usage of side-chains for off-chain computation. Matic ensures asset security through the Plasma framework and secures generic transactions through a decentralized Proof-of-Stake (PoS) validator network.
Matic aims to resolve the problems of scalability and user experience while not sacrificing decentralization and with a staking feature that secures the network. Matic spent much of last year recruiting DApp developers, establishing partnerships, and obtaining liquidity via various exchanges such as Whitebit, where holders of Matic token can get additional bonuses and lower trading fees.
About The Matic Staking
The way it works is that validators stake their Matic tokens as leverage to operate for the network’s security and to receive bonuses in return for their contributions.
Matic allocated 12 percent of its 10 billion tokens total supply to finance the staking incentives. This is to maintain a strong enough seeding of the network until transaction fees gain traction. Such bonuses are specifically intended to jump-start the network. Also, the staking procedure is meant to sustain itself in the long run through transaction fees.
The reward in the first year, which is over 300 million in Matic tokens ought to be regarded as absolute. This means that regardless of the network’s total stake, the said amount would be awarded in portions at each checkpoint as a reward to stakers. Awesome, isn’t it!
To distribute the reward, two methods can be adopted;
i. a better one would be to send everything to the proposer;
ii. a fair and equitable one would be to distribute it with all signers.
This addresses various concerns, encouraging signers for their validation activities, offering delegates no reason to bond their tokens with a large validator, and distributing rewards to all network participants at short intervals.
The Matic Staking Testnet staking is already live!
Explaining the Concept of Transaction Fees
A specified percentage of the transaction fees accumulated in each block shall be given to each block producer at the block producer layer (BOR). Producer selection for any specific time is often based on the overall stake ratio of individuals. The remaining transaction fees pass through the same channel as the rewards that are distributed among all Heimdall layer’s validators. The particular percentage of transaction fees to be shared with each block producer will be determined at a later stage, taking into consideration the overall live network statistics. Before then, the bundle travels through the same channel before distributing every accumulation among all validators.
The validator has the option of charging commission percentage from the reward earned of its pool. The rest will be disbursed among all stakers according to their stake in the pool. The following can be taken into account when deciding the percentage of its commission:
- As they’re accountable for the main-chain checkpoint transaction commitment, a specific portion of the reward could well be factored into the percentage of the cut. However, this would differ according to validators, depending on how they approach checkpoint transactions.
- In exchange for one’s node running service, a particular percentage could be charged from delegations.
Kindly, note that Matic Staking is coming soon, it will be live by 29th June, 2020. Get set and ready for it!
Conclusion
Staking and lending have become the current and future generation of passive income as mining is now industrialized and it is no longer easy to earn altcoins as it once was. Blockchain networks offering high staking rewards don’t have a problem luring users with the intentions of making easy money through locking their tokens and Matic’s 10% returns is quite beneficial.
However, it is tough to see how staking rewards running into double-digit percentages can be sustainable. The rapid rise in the number of tokens in circulation weakens everyone’s holdings, while the absence of features beyond staking dissuades adoption. Matic is leading the implementation of Liquid Staking. With this, instant unbonding will be possible and a 21 days unbonding period can be avoided. Nonetheless, staking plays a huge part in securing the future of any network, of course we can say the same for Matic which would even be happening in unique and dynamic ways.
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