Research Guide and everything you need to know about staking Waves
This Guide is sponsored by Waves Platform and reviewed by the Staking Rewards Team.
The Spotlight Journal will highlight existing and emerging projects, products and services of the staking sector.
Today’s selected project is Waves Platform, an ecosystem based on an open blockchain protocol offering a toolset for the development of decentralized finance (DeFi) applications.
So let’s dig into it and figure out the basics, core principles and everything around staking WAVES and the project itself!
What is Waves Platform?
Waves Platform is an ecosystem based on an open protocol that enables the creation of decentralized applications (dApps) for decentralized finance (DeFi), leveraging the advantages of a trustless blockchain environment. The protocol combines key properties of blockchain technology such as immutability and transparency with wide-ranging programmable functionality. This enables a broad range of interactions within a digital environment and economy to become more fair, trusted, verifiable and secure.
The Waves ecosystem was originally launched in 2016 to meet the most immediate needs of DeFi: easy creation and management of digital tokens. Today, the platform offers a large number of purpose-designed tools for making the process of developing and running dApps straightforward and fast, and hosts a variety of businesses, applications and use cases – from a decentralized exchange and algorithmic stable coins to DAOs, encrypted messaging, gaming and more.
The Waves protocol runs on a system token – WAVES, launched in April 2016 and initially limited to total supply of 100,000,000 WAVES. In September 2019 this limit was abolished by introducing community-driven monetary policy, allowing the community to choose the rewards for block generation and adding new tokens to the overall circulating supply.
The Waves ecosystem allows anyone to participate in staking and contribute to the network’s security by deploying a node and generating blocks directly, or by leasing their WAVES tokens to block generators and receiving revenues from this. Additionally, anyone can launch their own crypto tokens and dApps for a broad range of use cases. The protocol allows community-driven initiatives in which users create their own ecosystem, and individuals remain in full control of their own funds, data and privacy.
Who is the Team behind Waves Platform?
Waves Platform was founded in 2016 by Sasha Ivanov, a physicist and entrepreneur, who has been deeply involved in the electronic payments market since 2009. Before starting Waves he had already founded several tech companies, projects and products to help improve business, banking and public administration systems. Today, more than 250 engineers, developers, analysts and marketing professionals are involved in the development of the Waves ecosystem. Waves Platform developers speak at the top global tech events from New York and San Francisco to Tokyo and Singapore, as well as organizing Waves Platform blockchain meetups and hackathons all over the world on a regular basis. Waves Platform’s global community is expanding fast, with the support of over 50 regional ambassadors, from every continent.
How was Waves Platform launched?
Waves Platform was launched in 2016 following a successful token sale that raised 30,000 BTC. It was conceived as a powerful and low-cost blockchain-based crowdfunding solution, which allowed anyone to create digital assets quickly and easily, with no smart contract programming required. Waves Platform has since released numerous successful blockchain-based solutions and has steadily developed into a technologically-rich open protocol for DeFi dApps.
Waves Platform Technology
The Waves ecosystem offers an open protocol for DeFi applications that combines security and high speed for multi-purpose on-chain computations written in the Ride programming language, supporting formal verification with a community-driven monetary policy. With flat fees and no ‘gas’, Waves Platform has low and predictable operating costs and a zero failure rate for transactions.
Waves Platform uses the Leased-Proof-of-Stake (LPoS) consensus algorithm, in which anyone can participate as a block generator if they hold a certain amount of tokens or lease their tokens to block generators, therefore improving network security. The protocol also offers voting for new functions being activated on the network, and community-driven monetary policy, with block rewards decided by block generators.
The Waves-NG protocol, adapted from Emin Gün Sirer’s Bitcoin-NG proposal, was implemented on mainnet in 2017 in order to enhance transaction throughput and reduce latency.
Flexible token architecture
A flexible token architecture enables easy token creation and many different operations. Token transaction types support transfer and exchange, burning and reissuance, script invocation, data transactions, sponsored token transactions and more.
On-chain exchange support
The Waves Platform protocol allows the creation of third-party decentralized exchanges that can be deployed by any developer or company, thanks to support for built-in on-chain exchange transactions.
Purpose-designed programming language for dApps
Ride, Waves Platform’s functional programming language, was inspired by Scala and created specifically for dApp development. Ride is a non-Turing complete, formal-verification friendly modern typed programming language. It was designed to protect developers from various common mistakes which can lead to unintended consequences in smart contracts and potential loss of funds. As a straightforward, compact, powerful but human-readable language, Ride is also designed to make the process of learning and development faster. Ride is suitable for building DAOs, Escrow facilities, Referral and Loyalty systems, Marketplaces, Digital Securities, P2P lending, Gaming, Identity, and many other DeFi applications.
Developers can make use of a large suite of tools such as Waves IDE for sandbox development, the Visual Studio code plugin for advanced users, an Oracle protocol and tools to connect dApps to data sources, plus a wealth of SDKs, APIs, plugins and libraries, frameworks, tokenization tools and more.
Waves ecosystem offers a native desktop and mobile Client for accessing the most popular platform features, including easy token creation and operations, sending and exchanging tokens, and leasing WAVES. Waves Keeper, a browser plug-in similar to Ethereum’s MetaMask, makes interacting with Waves-enabled websites and dApps secure and convenient.
How can I stake WAVES?
There are two main options for staking on Waves Platform: running a full node and generating blocks yourself, or leasing your WAVES to a full node.
Block generation is generally the best option for those willing to install and run a full node. To do so, you will need to maintain a node with a balance of at least 1,000 WAVES. Additionally, you will need to factor in hosting costs for your server, which you can rent from Amazon or any other cloud provider. You don’t need anything too fancy — 2 vCPUs, 4 GB RAM and 40 GB storage should be enough. As an example, Digital Ocean charges $20 per month for a Droplet with these specifications. Block generators collect 40% of transaction fees for the generated block and 60% for the previous block. This 40/60 ratio is due to the specifics of the Waves Platform’s Waves-NG block generation protocol.
Those who do not want to install a node themselves and pay the running costs can still collect revenues by leasing their WAVES to other nodes. By doing so, WAVES holders can not only generate income but also help make the network more secure: the greater the proportion of total tokens leased out, the more expensive an attack on the network will be.
Different nodes will offer varying proportions of the WAVES they receive as rewards to lessors, as well as their own tokens and other benefits.
How much can be earned by staking WAVES?
Waves Platform’s current reward is 6 WAVES for every generated block. Block generators’ annual revenue is calculated by the formula:
R (%) = (B * N * D) / G*100
R is revenue (%)
B is the number of blocks generated in 24 hours
N is the block generation reward
D is the number of days in a year
G is total engaged (generating) balance ( https://www.stakingrewards.com/asset/waves/metrics )
In recent months, block generators have seen their revenues from transactions increase, thanks to the launch of the programming language Ride and the growing number of dApps on the Waves Platform. Revenues are now set to increase further. Assuming the initial block reward of 6 WAVES is maintained, rewards will be around 5% per year. (In practice, this may change since full nodes will vote every 100,000 blocks whether to keep this the same, raise it or lower it.)
In our Staking Calculator you can estimate your potential rewards and make reward predictions for certain network assumptions.
What are the requirements for staking WAVES?
For block generation
Unlike the Proof of Work consensus algorithm, Waves Platform’s Leased Proof of Stake consensus doesn’t require expensive computing equipment for block generation: an instance with a dual-core processor, 4 GB RAM and 40 GB (SSD) storage is sufficient, and a balance of at least 1,000 WAVES on a node’s account. As block generators don’t need to continually upgrade costly equipment, they can instead afford to raise their stake to maintain their chances of block generation.
WAVES holders can generate income and help make the network more secure by leasing their WAVES to full nodes: the greater the proportion of total tokens leased out, the more expensive an attack on the network will be. All you need is to have some WAVES tokens in your balance to lease them out. Different nodes will offer varying proportions of the WAVES they receive as rewards to lessors, as well as their own tokens and other benefits.
Will the rewards for staking WAVES change over time?
Waves Platform introduced governance for decentralized monetary policy, which means block generators on the Waves network are now able to vote to change the size of the block generation reward. The established block reward is to be valid for 100,000 blocks, which roughly corresponds to 69 days. The final 10,000 blocks (roughly a week) of each 100,000 block period will be a voting period for the following 100,000 block stretch.
During the voting period, block generators vote for higher, lower or unchanged rewards by writing their decision to all created blocks. The reward can be changed in increments of 0.5 WAVES at a time. For the reward size to be raised or reduced, over 50% of all block generators will have to vote for it. Otherwise, the reward size will remain unchanged for the next period.
As for the rewards for lessors, different nodes offer varying proportions of the WAVES they receive as rewards to lessors, as well as their own tokens and other benefits.
Is there any risk in staking WAVES?
A user who has leased their funds can spend them at any time, as the funds do not leave the user’s account but are only locked for leasing. Funds are unlocked immediately when a lease is cancelled. The only risk for users is that the block generator will not meet their stated terms and conditions and will not transfer remuneration to users who have leased their WAVES. In that case, users will not make any profit, but they will not lose their leased WAVES. Cheating and payment evasion will not bring significant benefit to the block generator; moreover, their deception will discourage all current lessors, so that leases will be cancelled, leading to lower profits.
Are WAVES coins locked up for staking?
A block generator’s stake is the sum of their own available funds and the funds leased to them for more than 1,000 blocks. The block generator’s own available funds can be withdrawn out of the stake and used at any time, while the funds leased to them cannot be influenced by the block generator in any way. They cannot transfer or affect them at all – they are even unable to refuse any funds leased to them. On the other hand, users who have leased their funds can cancel their leases at any time and with just a few clicks, since the leased funds do not leave the user’s wallet and are simply locked in the account.
How often are rewards paid out?
The amount of compensation and the frequency of transfer will vary, since each block generator determines the conditions of payment independently. Some block generators transfer funds to their lessors daily, others weekly, and so on.
As for the rewards block generators receive from the network, these are distributed at the moment of block creation. A block generator can use the rewards they receive immediately.
Rewards are calculated without creating an additional transaction on the blockchain. Instead, the balance of the block generator is simply increased.
To learn more, please feel free to visit the official Waves Platform website or follow on social media:
Telegram channel: https://t.me/wavesnews
Telegram group: https://t.me/Wavescommunity