Staking Explained¶
“Staking” refers to the act of supporting the blockchain by validating transactions on your computer (referred to as a “staking node”). In exchange for this work, the network rewards you with its cryptocurrency coins.
Additionally, Particl’s PPoS staking protocol allows you to securely and transparently vote on various issues and proposals using the power of blockchain technology. This process is called on-chain governance.
Table of Contents
Blockchain Consensus Mechanisms¶
What’s a consensus mechanism?
To guarantee the integrity of the blockchain, staking nodes connected to the network process all of the transactions happening on Particl. They then compare the processed data with each other and only validate transactions when the information is identical across a majority of the other nodes.
If enough staking nodes cannot confirm the data of a transaction on the network, the transaction is collectively rejected. This mechanism is what is generally referred to as a consensus mechanism.
Staking vs. mining
Just like Bitcoin mining (proof-of-work), staking (proof-of-stake) is a consensus mechanism. They are both protocols that ensure the integrity of blockchains by validating transactions and paying out block rewards to those doing the work.
Unlike mining, staking doesn’t require any special hardware (i.e., GPU) to verify transactions. Instead of providing electricity-intensive work, stakers are required to deposit a number of coins (as collateral for being good actors) on the network on which they’ll earn interest in dividend-like payments.
Advantages of staking compared to mining
Rewards stakers with auto-compounding passive income
No expensive hardware required
Carbon neutral and eco-friendly protocol
Very little technical knowledge required
Better accessibility and a much easier setup process
Makes community governance accessible to any user of a network
Particl Proof-of-Stake (PPoS)¶
PPoS Quick Facts
The current yearly staking interest rate for stakers is 8%
The current emission rate of PART is 1.70 PART per block.
Staking interest is paid in regular dividend-like payments.
All fees generated by the Particl Marketplace are redistributed to stakers as part of the usual block rewards.
Industry-leading staking security.
Adjustable level of privacy when receiving rewards is available.
No minimum number of PART coins is required to start receiving staking rewards.
Cold staking “pools” allow you to team up with other stakers to receive more frequent rewards.
Particl uses PPoS for its community governance to let users vote on proposals.
To support its network and verify transactions, Particl uses Particl Proof-of-Stake (PPoS), a unique Proof-of-Stake consensus mechanism designed by the Particl team. Unlike Bitcoin’s consensus mechanism, called Proof-of-Work, PPoS makes the entire process of verifying transactions digital. It also eliminates the need to purchase and maintain expensive and energy-hungry hardware.
On the Particl Marketplace, every user is automatically a “staker” (a user running a staking node) that verifies the integrity of the network in real-time. When a staker’s node finds a block and validates the transactions it contains, it receives a staking reward. The current yearly staking interest rate on Particl ranges from a minimum of 4% to approximately 8%. This interest is calculated based on the total of coins being staked by the user.
While the Proof-of-Stake consensus mechanism isn’t particularly new, Particl has been pioneering the technology during the past few years by making it much more flexible, secure, and also private. Indeed, PPoS is packed with several leading-edge features that let you get all the benefits of Proof-of-Stake, but without any of its typical security and convenience concessions.
Note
Did you know that Particl invented and deployed the first-ever “cold staking” protocol in 2017? Cold staking allows you to stake your funds, even if they’re online, with an extreme level of security and flexibility.
Earn Passive Income¶
Staking on Particl can be a great source of passive income. Just by keeping your Particl Desktop client connected to the internet, you automatically earn a yearly interest rate of 4% to 8% on the total number of PART coins you hold in your public balance. In other words, the more PART coins you own, the more PART coins you earn. Simple enough, right?
Tip
If you stake enough PART coins on the network, the staking rewards they generate could be enough to pay for the entirety of your listing fees on the Particl Marketplace!
What’s a staking reward?¶
A staking reward is defined as any number of PART coins received from the Particl blockchain in exchange for securing the network. These rewards are proportionally paid to stakers in exchange for their contribution to securing the network and validating transactions. This process is entirely automatic and happens in the background without you requiring to do any manual task.
How much can I earn?¶
On Particl, a staking reward is funded by two sources; the base reward (the number of PART generated by the blockchain at every block) and the fees paid by Particl users when interacting with the platform.
Base reward¶
As a general rule of thumb, you can estimate to earn 4% to 8% of the PART coins you hold in your public balance after a full year of staking without pause. However, it is impossible to know exactly how much you’d make in a year, given that the actual interest you receive depends on a few variable factors.
If you’re staking 24/7, you are guaranteed to earn at least 4% more coins than you hold in your public balance per year. But that’s only true if 100% of the coins in circulation are being staked by their owners. As you can imagine, this simply cannot happen.
Historically, only 35% to 60% of the PART coins in circulation are ever staked at any time, which means staking rewards get redistributed among a smaller pool of stakers. For reference, PART’s emission rate is 1.70 PART per block.
This means the smaller pool of stakers receives staking rewards more often because they will find blocks more often than if every single Particl user was staking. This makes the actual yearly staking interest rate more profitable than the guaranteed minimum of 1.70 PART.
Platform fees¶
More people using the Particl ecosystem means more profitable staking rewards. That’s because staking rewards also contain fees paid by users interacting with the Particl ecosystem. These fees come from a few different sources.
Marketplace listing fees
The Particl Marketplace requires a small listing fee to be paid by vendors when they list items or services for sale. That’s how the marketplace, which has no central authority, prevents spam.
All listing fees are added to the same block as the payment of the fee by the vendor. That means the staker who finds this block will earn the entirety of the fee(s).
Marketplace bumping fees
The Particl Marketplace has a Market Browser that lets users browse through all the available user markets and storefronts on the network. It also enables vendors to promote their markets and storefronts by paying a “bumping fee”. Doing so bumps the market or storefront at the very top of the list. This gives them greater exposure and brand recognition.
Just like listing fees, all bumping fees are added to the same block as the payment of the fee by the vendor. That means the staker who finds this block will earn the entirety of the fee(s).
PART transaction fees
When sending PART coins to someone else or into a smart-contract, a small transaction fee needs to be paid to the network. This fee is usually just a few cents, or even less, but it’s counter-productive enough to fight off spam on the blockchain. This is the same type of fee charged by Bitcoin or Ethereum for making any transaction. Whoever finds a block also earns the entirety of all the transaction fees it contains.
BasicSwap (Particl DEX) fees
BasicSwap is Particl’s upcoming decentralized exchange (DEX) that lets you swap between different cryptocurrencies without requiring a third-party. Although it is entirely decentralized, a small transaction fee similar to marketplace listing fees will be required. Just like other types of fees, it is necessary to fight off spam. Whoever finds a block also earns the entirety of all the DEX fees it contains.
Online staking calculator¶
While online calculators can give you estimates on how much you could earn staking PART, they do not consider the fees generated within the ecosystem. This usually makes their estimates less reliable, but it can still give you an approximative idea of the number of PART coins you could earn.
Staking Options¶
PPoS is a modern and flexible Proof-of-Stake consensus mechanism. Its most unique and groundbreaking feature is the ability to delegate your coin’s staking power to a separate staking node that contains no coin. That’s what’s called “cold staking”.
Not only does cold staking provide you with the most secure staking solution available anywhere, but it also unlocks a ton of ways you can stake your PART coins, each with its own benefits and considerations.
Regular staking¶
Pros
Can be activated effortlessly.
Activated by default on clients not protected by a password.
Allows you to participate in Particl’s community governance by voting on proposals.
Cons
Your Particl Desktop password is stored in your computer’s memory.
You need to keep your computer online 24/7.
Arguably the easiest way to start staking is to keep your Particl Desktop client open. This requires you to unlock your wallet for staking only, which means your Particl Desktop client will act as a staking node and be able to verify transactions. This simple way of staking doesn’t use Particl’s novel ability to delegate your coin’s staking power to another node, and for this reason, is a bit limited.
Regular staking requires a constant and active network connection, which means you need to keep your computer online and your Particl Desktop client open at all times. It also cannot be effectively implemented on external devices due to the constant network requirement, potential battery drainage, and security vulnerabilities.
This is the type of staking used by the great majority of proof-of-stake projects.
Cold staking¶
Pros
Very secure staking option.
The wallet that holds your coins doesn’t need to be online at any time.
Extremely flexible, it allows many other staking options.
Allows you to participate in Particl’s community governance by voting on proposals. Gives the same ability as any other staking option that relies on cold staking (hardware, mobile, etc.).
Cons
You need to set up and maintain an external staking node and keep it online 24/7. This is one reason many people instead opt to use a VM hosted externally for this purpose.
The setup process is more technically advanced.
Cold staking is the better, more modern way to stake proudly invented by the Particl team in 2017. It lets you delegate your coin’s staking power to an external staking node without having to keep the Particl wallet that holds your coins online.
That means you can store your coins in a cold wallet, a hardware device (i.e., a Ledger Nano device), your phone, or even a just simple piece of paper with the mnemonic written on it. You’ll still be able to earn staking rewards on those coins even though they are entirely offline. Indeed, cold staking grants you the maximum amount of security and adds a ton of flexibility not available with most PoS solutions.
To learn how to set up an external cold staking node, follow the instructions in the Staking Rewards guide available on the Particl Academy.
Note
The purpose of an external staking node is only to stake PART coins held by other wallets. It doesn’t store any coins at all. For this reason, hosting an external staking node on an untrusted environment (i.e., a server provider) or device (i.e., any computer, secure or not) is entirely safe. It will not put your PART coins at risk of being stolen.
Staking pools¶
Pros
Very easy to join. Takes less than a minute.
Offers the same level of staking security as cold staking because it entirely relies on it.
The wallet containing your coins doesn’t need to be online at any time.
Pays more frequent staking rewards, but they are smaller in size. You earn the same number of coins (minus pool fees) as you would with any other staking option. The only difference is the size of the payouts and who often you receive them.
Doesn’t require you to deploy and maintain an external staking node.
Cons
You need to pay a staking pool fee (a percentage of your staking revenue).
By delegating your staking power to a pool, you also delegate your voting power. A pool operator can vote on proposals using your coins, so make sure that you know the voting intentions of any pool you join.
You can team up with other stakers by joining a staking pool and combining your staking power to earn more frequent but smaller rewards. Whenever the pool validates a block with the full staking power of all its stakers, it receives a staking reward.
All of the staking rewards collected by the pool are then proportionally redistributed to its members according to their contribution to the pool’s staking power. In other words, if you stake in a staking pool and own 10% of all its staking power, then you will receive 10% of all its staking revenue, minus the pool fee.
Staking pools are safe to use as the pool operator cannot run away with any of the funds it stakes. That’s because it entirely relies on cold staking. You delegate your staking power to a pool instead of an external node you control, but the security benefits are the same.
They are ideal if you hold a small number of PART coins or don’t want to manage an external staking node yourself.
For a complete list of available staking pools on the Particl network, visit Particl Academy’s Staking Rewards guide.
Tip
Instead of an external staking node, you can also use a staking pool to enable mobile and hardware staking.
Hardware Staking¶
Pros
Most secure staking option.
The wallet containing your coins doesn’t need to be online at any time.
Cons
You need to set up a staking node and keep it online 24/7, unless you use a staking pool instead.
The setup process is the most complicated of all staking options on Particl.
For an even more secure staking solution, you can stake PART coins stored on a hardware device such as the Ledger Nano S or the Trezor. These hardware devices are secure cryptocurrency wallets that require direct physical access to authorize any transaction. They protect you against viruses, infected computers, compromised internet connections, and more.
Since PPoS is a highly flexible protocol, it doesn’t penalize you for going “security first”. Through its cold staking protocol, it lets you enable staking and earn interest in dividend-like payments on all of your PART coins stored in your hardware wallet.
To learn how to set up hardware staking, jump to the Staking Rewards guide right away!
Mobile staking¶
Pros
Very secure staking option.
The wallet containing your coins doesn’t need to be online at any time.
Relatively simple setup process.
Cons
You need to set up a staking node and keep it online 24/7, unless you use a staking pool instead.
As its name implies, mobile staking lets you earn a staking interest on the PART coins you hold on your phone. This functionality uses cold staking to delegate your coin’s staking power to another node.
Because your phone isn’t doing the actual staking work (that’s the role of the external staking node), it doesn’t lead to battery drainage issues and doesn’t require you to keep your phone powered on. It also won’t bust your mobile data as it uses no extra network resources.
It is a convenient and user-friendly staking solution that lets you carry your coins wherever you go and still earn staking interest on them.
Privacy¶
By default, Particl Proof-of-Stake distributes its staking rewards using public transactions. This process is completely transparent and auditable. This is a huge boost in trust and security for the network as any potential malfunction or coin-generating exploit could be instantly detected right at the source.
However, it also means anyone can trace staking rewards and look right into your wallet. Not something you would want to happen with your bank account, that’s for sure.
That’s why Particl allows you to control your level of staking privacy using Partyman; Particl’s cold staking application. To do so, you need to indicate to the network that you’d like to receive your staking rewards in another type of balance other than your public balance. Check out the staking guide to see how to do it.
Voting¶
PPoS is at the core of Particl’s decentralized governance. You can vote on various community proposals using your staking power as voting power. Register your voting preferences during a proposal’s voting period; every time you’ll stake a block during that period, you’ll cast one vote.
To learn more about Particl’s community governance model, head over to the Community Governance in-depth guide.
See also
Other sources for useful or more in-depth information:
Particl Academy - Guide Enable Staking.
Particl Wiki - PART coin learn staking
Particl Wiki - PART coin tutorials
Particl Wiki - Staking pools