The introduction of reward maximization strategy
The major reason why the cryptocurrency is experiencing massive adoption in such a short period of time since its inception is its tendency to solve global financial problems with much ease.
It all started with the idea of giving people the freedom of controlling their funds without the intervention of any central authority or third party after the world plunged into a financial crisis in 2008. Ever since cryptocurrency has evolved into a mighty and indisputable force that is revolutionizing every financial industry.
There have been several innovations in the space, one of which is the Proof-of-Stake (PoS) consensus mechanism; which was created to rival and alleviate the problems that come with utilizing the earlier Proof-of-Work (PoW) mechanism; in which validators are chosen to participate in block production according to the number of tokens they possess for PoS, as opposed to the computational power consideration of the PoW protocol.
Proof-of-Stake protocol might have been considered the best in its early days by many but it is not without its own shortcomings, and definitely was poised to face some more competent rivalry as modernization is concerned and the financial revolution continues.
One of the major rivalries or should I use the word “upgrade” of the Proof-of-Stake mechanism is Nomination Proof of Stake (NPoS).
Nomination Proof-of-Stake
Although a pure Proof-of-Stake system will require any token holder to participate directly, several projects recommend a centralized operation with a small number of validators with complete participation rights and privileges. This concept choice is justified with the idea that if the number of aspiring validators increases, the rise in operating costs and communication difficulty will eventually outweigh the decentralization benefits.
Again, as several token holders may wish to contribute to the system’s upkeep, the number of applicants with the necessary skills and equipment to guarantee a high level of operation is limited.
One further excuse is; in Proof-of-Work and Proof-of-Stake networks with a sufficient number of validators, the PoS mechanism appears to form pools in order to reduce the volatility of their earnings and gain more profit. Rather than allowing pools to be formed off-chain, the system can formalize and encourage pool creation on-chain, allowing users to cast votes according to their stake and select validators who will serve and operate on their behalf.
Nomination Proof-of-Stake (NPoS) is simply the process of choosing validators to be eligible to participate in the consensus protocol.
In the Nomination Proof-of-Stake protocol, users are free to become either candidates for block production or nominators. Nominators are responsible for endorsing candidates they believe in and vote for them using their tokens, and a committee of validators is chosen once per a stipulated period based on the wishes of the existing nominators.
Validators and nominators both lock their tokens as collateral and earn staking prizes in proportion to their stakes, but they can also face slashes or be forced to bear the loss of their collateral if an endorsed validator is of bad behavior. As a result, nominators are implicitly involved in the consensus protocol because they have an economic motive to pay strict attention to the changing list of candidates and ensure that only the most qualified and trustworthy are chosen.
StaFi’s NPoS Strategy
Stafi uses the NPoS (Nomination Proof of Stake) mechanism for selecting a validator set. When staking on the network, you can be a nominator or a validator. All nominators have access to the nominee list. Each nominator submits a list of candidates they believe deserve to be elected. Within hours, a certain number of validators with the most FIS support will be chosen and made operational.
However, on StaFi, transferring or trading staked assets would no longer require a lengthy 7-days unbinding cycle. To enjoy liquidity and mitigate price uncertainties, users can transfer and trade the staking voucher of StaFi’s issued alternative token at any time on the appropriate trading platform.
Furthermore, the complications of NPoS consensus protocol and staking reward calculation rules are no longer necessary. Users can deposit an asset into the contract provided by StaFi in a few basic steps, and the contract will automatically pick the best validator by implementing the staking reward maximization strategy formula.
Staking Reward Maximization Strategy
Staking rewards are maximized on StaFi through the following means:
Diversified Delegation
The user’s tokens will be allocated to several (N) mini staking pools. The size of the cumulative deposited funds will be used to determine the parameter N. Each mini staking pool will then select several (M) best validators by implementing the SRMS algorithm, reducing the slashing occurrence probability from a single node.
Strictly Select Original Validators candidates
In the StaFi SRMS algorithm, it is of utmost importance to pick competent and high-quality validators to enter as Original Validators (OV) and to ask them to set a significantly lower commission rate in order to offer higher APY to stakers. The StaFi network will track and review the performance data of original validator candidates based on metrics such as active rate, slashing record, self-bond ratio, node identity, commission ratio, and so on, to ensure that excellent validators with the significantly lower commission are chosen.
Original Validators Delegation Rules
If a platform utilizing the staking liquidity unlocking protocol of StaFi uses the NPoS consensus mechanism, each elected node receives the same staking income in complete amount. If two nodes are chosen, with one having more staked tokens, stakers will receive greater rewards if they stake the other node (with less staked tokens. As a result, each Mini Staking Contract Pool will use the following staking logic: rank all Original Validators by the number of staked tokens they received from low to high in every period of selection, and the top Original Validators will be chosen for nomination.
Conclusion
Staking Finance (StaFi) continues to present alternative solutions to uneasy situations for its community. Staking Rewards Maximization Strategy is just one of those solutions provided by the network and this strategy is centered on offering more gains to users utilizing the Nomination Proof-of-Stake (NPoS) mechanism.
