How Nimera plans to solve the issue of overpowering whale stakes?
With dPoS and PoS blockchains are gaining popularity, especially as Etehreum is transitioning from the Proof-of-Work to Proof-of-Stake, staking itself is attracting thousands. In fact, there are about 33,700 validators in ETH 2.0, with 12,000 more queuing to enter. After all, if you have a solid-enough network connection and powerful enough hardware, as well as funds to afford it, staking is a promising way of gaining passive income.
So much so, that whales and investment funds are beginning to flock to the blockchain market in search of higher return rates.
Unfortunately, this creates a bit of a problem.
Unfair distribution of staking
This problem is often overlooked when we talk about the issues that modern blockchain networks meet in their development. Most talk nowadays is about scalability, interoperability, volatility, or transaction costs — but this, we think, is a matter that is just as pressing.
Unfair staking distribution then: what do we mean by this, exactly? By being significantly more profitable than most other forms of passive income, with a staking return rate averaging at 14.95%, staking is beginning to attract institutional investors, funds, and whales, who join in pursuit of easy enrichment. Some companies even aggregate smaller participants and create a collective stake on their behalf, sharing part of the income.
Their participation indeed helps the network by supporting it, but it also means that the large percentage of the network’s token ends up being aggregated in a few wallets.
The statistics below demonstrate clearly how much the value ends up being aggregated by whales.
Following the same example of Ethereum, some 69% percent of stakes are worth 10,000 ETH each, which translates into 27,918,900 US dollars at the time of writing.
Some projects solve this by increasing the emission. But if the number of participants in staking exceeds the emission, the cost of the token starts climbing. In general, a price bump due to an increase in demand and a decrease in supply is a perfectly normal market instrument, which cannot be viewed as a negative factor. But what if decisions within the network are made by voting, and weight is distributed according to the number of tokens stored in user wallets?
We already witnessed what happened during the vote to increase the block size of BIP91, which resulted in the emergence of Bitcoin Cash, when a community of large holders did not agree to increase the block size from 1MB and separated from the main Bitcoin network.
Similar problems plague all projects, even “classic” ones where governance is performed through staking and node validation. To increase their gain, many funds attract smaller holders for collective staking, sharing part of the income with investors. However, the right to vote remains a privilege of the fund. As a result, sometimes decisions made end up being based on mercantile considerations of a narrow circle of users, not considering the long-term benefit of the project or the technology.
How does Nimera Blockchain plan to solve this?
Nimera aims to solve this problem. Our blockchain does not have hidden mechanisms for passive enrichment and the logic of the network’s operation implies reasonable consumption: it makes no sense to keep more than you need — you cannot monetize your stake unless you are one of the 100 validators, whose number is limited.
The very logic of how the network works will lead to a more even distribution of balances among the majority of the population and will not give a major weight advantage to the biggest holders. in decision making for protocol development.
Further, for protocol voting, the network is considered to be a module of the number of tokens, leveling the balance and making the distribution of votes more even still.
The notion of reasonable consumption will be achieved through the main principle of Nimera Blockchain, which is the following. In Nimera, each participant gets the opportunity to use the network for free, simply by holding NION. The amount of the network one can use is directly proportional to the number of tokens one holds.
Validators, who have a greater responsibility than regular users can share part of their bandwidth for a fee. Or deploy services on SmartChain to monetize a project. The priority for becoming a Validator is given to services.
About Nimera Blockchain
In Nimera, each participant uses the network for free, simply by holding NION. The amount of capacity one can use is proportional to the number of tokens one holds. This approach promotes reasonable consumption, not rewarding users for holding more tokens than they need. This leads to more democratic voting, while the cost of using the network — already much lower — doesn’t rise with the token price.
