The opportunity to make money in crypto is everywhere. And the action of staking, where you keep cryptocurrency in your wallet for a period of time, is one of the more popular ways to do it.
Staking itself is nothing new and has been practiced over hundreds of years. In terms of crypto industries, incentives are offered for achieving processes like validating a block in a blockchain.
Nodes are awarded for confirming transactions by using tokens as a security deposit. Nodes that don’t follow platform rules are penalized and will lose tokens. As nodes are rewarded for following protocol, this means platforms are more trusted to be used.
Startup funding is usually a good guide to tracking popular trends. Staking startup Staked raised $4.5 million in seed funding from Pantera Capital and Coinbase Ventures. Staked lets users capitalize on token compounding through staking solutions.
The rise of Anything-as a Service
The Anything-as-a-Service (XaaS) business model has changed businesses across practically every industry.
XaaS has grown in much the same way as the internet has — with both giving on-demand services, products, and tech at much lower costs. It all began with web hosting solutions and productivity products moving to the cloud and becoming ‘serviced’.
Sidestepping the usual routes and processes to deliver products, services, technologies to customers, XaaS gives access to end users over the internet, usually through monthly subscription payments.
Companies like Microsoft and Adobe used to focus on producing goods that could be stocked in retail stores which would be valued at their full retail price. This was peak physical delivery of software that today is almost completely digitized. Nowadays organizations are sprinting towards the XaaS business model and in doing so create a long tail revenue for their corporations.
The changing of service delivery seen in XaaS is similar to how crypto-economics combines cryptography (secure communication in the presence of third parties), game theory, and computer networks. In crypto-economics, incentives and disincentives are used in decentralized technologies like Ethereum, Bitcoin and other public blockchain-based distributed computing platforms.
To explain crypto-economics in a little more detail let’s start with Bitcoin. Tokens used to get miners on board to support the network through transaction fees and the creation of tokens. It’s wholly dependent on such rewards. Bitcoin will also penalize those that go against its protocols. The cost involved to mine on Bitcoin and the needed hardware to do so is extremely high as so many individuals and companies are investing in their mining power. This is also known as Proof of Work. This makes it near impossible, for say, attackers to try and gain control of the network without having more access than 51% of the other miners. Proof of stake is a new iteration for this system and one of its main advantages is the reduced power footprint. Instead of relying on computing power to generate a secure environment, it relies on the “stake” or the “token value” to be set aside or locked as a security deposit. This encourages users to not go against the protocol, otherwise they risk losing their staked amount. Reward systems like this help to create new technologies and business models.
Staking as a business model
In terms of these new models and technologies, it’s the exchange platforms that have benefited largely. They draw revenues for fees applied to the buy and sell orders, transactions and withdrawal requests they process.
In 2018, global exchange Coinbase brought in annual revenues of over $1 billion, while South Korea’s Upbit reported having a monthly revenue of $100 million as early as last year.
As an overall market that’s gained the most benefit during the last 24 months, the exchanges have reaped the maximum rewards since they charge the same crypto tokens being traded back and forth.
Taking a similar approach is staking as a business model, where crypto companies take in deposits from users (to operate accounts), that act as a stake on the platform to hold in their wallets and earn rewards.
In terms of a blockchain, staking can be used to reward the correct information being added to a chain. Along with receiving rewards, users may also achieve elevated status or access to exclusive features of the networks that use staking procedures.
Where Hashing Systems fits in
At Hashing Systems we will act as a keystone on the Hashgraph by staking tokens of users. We want to create solutions that can be paid in HBAR alone — we make it easier for end users to use the network. For example, instead of using a credit card to take payment (which would mean there are more steps and accounts to keep track of in a transaction), this means less accounting needs to be done as this becomes a direct fee within the network. Another example of a direct fee is the transaction fee which is paid in the same denomination as the payment.
The staking as business model solutions we offer will be geared to make your money — or HBAR — work harder for you by providing access to easy to use solutions. Staking makes a limited amount of money back which will be enough to cover the low maintenance fees on the Hedera platform.