Waves 101 (1): Explaining LPoS

WavesGo
WavesGo
Sep 8, 2017 · 3 min read

This is the first in a series of articles aiming at people with zero to little knowledge about the Waves Platform. Goal is to publish articles in simple words and with “real-life” examples. True to WavesGo’s mission: Making blockchain accessible to the masses

Congratulations, you just bought your first $Waves (great decision btw ).

You may have joined the Waves Slack (http://wavesplatform.herokuapp.com/) and noticed people are talking about leasing your waves to one of the Leasing Pools ( see an overview of all pools here http://dev.pywaves.org/generators/). First of all you have to understand what leasing actually means.

The Waves platform is using a Leased Proof-of-Stake algorithm to find a distributed consensus. Unlike bitcoin, which uses a Proof-of-work algorithm, you don’t need a lot of computing power to forge a new block. Your chances to find a new block only depend on how many $Waves you have ( i.e. your stake).

As all $Waves were forged in the genesis block, you will not receive a $Waves reward for creating a new block, but in order to make forging more profitable the Waves platform created a token called Miners Reward Token (MRT). You will receive all transaction fees and a predetermined amount of MRT for every new block you created.

Now to the important topic: What does leasing your waves do for you ?

Imagine every $Waves is a lottery ticket with a chance to forge a new block. All the people with lottery tickets gather in a room and every minute one lottery ticket gets chosen randomly, this lucky person receives all the transaction fees and the MRT of the newly created block.

Sorry to disappoint you but there is one rule to get into the room. The Gatekeeper only lets you enter the room if you own 10'000 lottery tickets. Now what are you going to do if you don’t have 10k $Waves (and you don’t want to spend your whole day in that room anyway)?

Right, you are giving your lottery tickets to somebody else! But, wait?! What if this guy is gonna run away with your lottery tickets? To keep it simple here, lets just say all the lottery tickets have numbers on it. These numbers are linked to you and everybody knows that these numbers belong to you. You keep all the lottery tickets to yourself and only tell the numbers to the room guy.

Now you still got all your lottery tickets, you hired a guy to stand in the room for you and you get the rewards for actually doing nothing. Sounds too good to be true? Well, except the small fee you have to give to the room guy¹, its really this good!

If this really simplified explanation of LPoS caught your interest and you would like to know more check the following links:

¹ We at WavesGo pay out 100% of all $Waves collected and 75% of the MRT.

Thanks for reading!

We are looking forward to announce a new WavesGo feature next week, time has come to expand the Waves Platform and let other Cryptocurrencies flow into it. Soon you will be able to hold and send wLTC on the Waves blockchain.

 by the author.

WavesGo

Written by

WavesGo

Making blockchain accessible to the masses. WavesGo.com is the official Waves blockchain explorer & biggest Waves Mining Pool.

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