During my one-year experience as active QKC miner, staker and private pool owner I would like to share my opinion about current QKC coin economics and miner/staker difficulties. In my opinion part of QKC DEV team should be constantly working on improvement of user experience.
Current QKC supply is ~6B QKC (not counting mined coins). From my experience as miner QKC total ability to lock coins can be calculated as following (total lockability is not a fixed number but rather a function of QKC/ETH price, expected ROI of holders and miner willingness to find all POSW blocks).
Chain 1 4.5 M x 1.5 = 6.75 M
Chain 2 9 M x 1.5 = 13.5 M
Chain 3 18 M x 1.5 = 27 M
Chain 4 36 M x 1.5 = 54 M
Chain 5 72 M x 1.5 = 108 M
Chain 6 9 M x 1.5 = 13.5 M
Chain 7 36 M x 1.5 = 54 M
ROOT 4.5 M x 1.5 = 675 M
¬¬¬¬¬¬SUM 951.75 M (~1B QKC)
Looking at successful (pure) POS coins on the market, where ROI is usually less than 10% per year, amount of locked coins is usually more than 50-60% of current supply. This is reducing circulation supply and pressure on coin price while holders earn interest rate for supporting the project by buying and holding coins. Considering theoretical lockability of QKC of 1B and current supply of 6B we are coming to conclusion that only 16.6% of QKC can be successfully locked on chains. I would strongly advice that team burns part of coins every quarter (something like BNB coin burn) and even part of team funds which will be unlocked. This will create positive momentum in QKC current and future community.
Ensure user friendly staking experience –
User friendly staking experience can be created with several steps:
staking contracts which are already available on side chains. Disclaimer from qPool (picture below is not helping with growing up staking users). Team should stand behind their product either by having 3rd party security audits of contract of having some kind of contract insurance.
Staking application available at qPocket DApp store. User will be able to to send their stakes to various staking contracts, check their staking balance (with dividens) and send withdrawal request to contract owner (miner) with only few clicks. I think this is already in production.
Create contract marketplace for heathy competition and true decentralization. One contract would be one ‘’staking pool’’. Contract could be registered trough team and deployed by team to avoid malicious users. On marketplace contract could have following details:
a. Real ROI on 5 and 30days time frame
b. Time of creation of contract. Old and stable pools should be preferable
c. Current/Maximum stake on pool
d. Minimal stake per user
e. Other ideas?
Allow ROOT chain mining with staking contract similar (same) like on side chains. Possibility to combine two 440K QKC stakers into one root chain POSW block. Other solutions possible like delegated POSW? It would be crucial to find secure and easy solution to this problem. Each contract (miner) will be forced to run own QKC node creating bigger network.
I would like to point out that part of QKC DEV team should be constantly working on improvement of holder/staker experience as it will create positive momentum on the project and healthy growth of community.
Other possible and easier solution would be to allow exchanges like Binance, Kucoin and others to run their own staking pools but this will lead to pure centralization as there would be only maximum 3 big pools on root chain.
More to come…
Let me share some thoughts about our thoughts on staking and designing these numbers:
First of all, the PoSW and PoS have different implications on the availability of the network.
For PoS, e.g., Cosmos, no matter how much people stake, the network can operate and the minting rewards will be distributed to the staker proportional to locked tokens of a staker (here I ignore the effects of validators and delegators).
For PoSW, the total required stake, especially for root chain, can be treated as the minimal stake that the network can operate - this means if the requirement is too large, while a few would like to stake, then after PoSW blocks run out, the network will stop producing new blocks and thus cannot operate further.
When we start designing the numbers about one year ago, we have not idea what the minimal stake will be, but at that time, a lesson we learned from EOS mainnet launch - the launch was delayed several times because insufficient minimum EOS were staked to block producers (BPs), which is 10% (or 15% I forgot the exact number). Given the lesson, we chose to use similar number, i.e., the minimal stake to operate the root chain stake is about 10% of circulating QKC.
Another concern is that PoSW is a relatively-new consensus compared to PoW and PoS, and we have no idea how miners and stakers will play with it. And thus, we design a doubly-increased stakes from chain 1 to chain 5 to see how they will play. Currently, we observed that chain 1, chain 2, and chain 6 are well staked, while the rest are not, mainly because the stake size is larger and it is difficult for miners to find those stakers.
The actual staked QKCs can be greater than the required stake numbers (overstaked) or lower than (understake). We definitively would encourage more stakers to join by providing better staking experience. All your suggestions are very helpful, and we appreciate sharing the ideas. As a start, we plan to have qpool supports staking pool soon. We will keep watching to see current staking situation is improved or not.
Dear dr.Zhou, thank you for your response and clarification. I am looking forward to support of staking pools on Qpool. I general I am already running staking contracts for several months on chains 1,2 and 3 and so far i didnt observed any issues.
I have noticed several times big slow downs in block generation when chain is understaked and one of big miners stop their mining operation. Block time can increase up to 10mins due to very high diff and no further POSW block available at other stakers on same chain…
This makes me think how decentralized mining is important, especially with root chain mining.
Yes, this is partially caused by high diff. adjustment (20x) for staked miners. One way to improve this is to reduce the adjustment number to maybe 5x. However, for root chain, we plan to stick to existing number (10000x) due to security concern.
It happen to ROOT chain as well several times, but as for root chain diff adjustment is much bigger than on side chains it can literally stop whole QKC network. This is my opinion negative side of POSW.
One of the solution would be to have for example 20 registered miners (like POS projects have certain number of registered nodes). Each miner will mine to staking pool with 30-32 POSW block available. In this scenario ROOT chain will be over staked and if 20% of miners go offline for what ever reason ROOT chain will be able to perform and generate blocks as it should be.
To become registered QKC miner, you need to provide certain amount of QKC. Each miner would have to run own node with specific root chain singer address etc. It will be next step to decentralization of QKC.
Definitively there is a tradeoff between security vs. availability here - PoW has good availability but it is insecure for most of chains (even BCH/ETC). PoSW can offer (much) greater security, but the availability depends on the miners with considerable stake on root chain.
Yes, one way we could do is to choose 20 miners with 20 top stakes (including delegated) like Cosmos/Polkadot. We may also design the difficulty curve so that first 32 PoSW blocks with 1x post-posw diff, and for rest PoSW blocks with 2x post posw diff, etc. There are a lot of possible designs.
However, one question is that since we already select 20 miners (or block producers BP), why not we use use PoS on root chain with consensus such as Tendermint? This can provide better block rate and finality of transactions.
PoSW aims to combine the benefits of both PoS and PoW. I think one disadvantage of PoS is that it does not introduce external cost into the network, i.e., the cost of token mint is almost zero-cost. Further, PoS generally is less decentralized - becoming a block producer in the top 20 takes a lot of cost, although PoW’s pooling is worsening the situation at the same time.
Also note that PoS has different versions, which lie in two categories: 1, BFT-style PoS (e.g., Tendermint); and 2, Onchain PoS (e.g., Tezos). BFT-style PoS can have fast finality, while onchain PoS has also probabilistic finality, similar to PoW.
Thank you for explanation. At the moment we have staking contracts for side chains. Is it planned to have same (similar) staking contracts for root chain as well in Q3/Q4?
