This is Part 3 of our explanation of the ThunderCore PoS Scheme. In this post, we explain the details of how you can participate and become a staker on the ThunderCore Blockchain. The previous articles in this series can be found here:
- ThunderCore Proof-of-Stake Committee Structure
- ThunderCore Proof-of-Stake Committee Election
- How to Stake on ThunderCore
With the development of blockchain technology, Proof of Stake (POS) consensus mechanism becomes more popular to address energy consumption issues and scalability issues. In addition, Proof of Stake blockchains allow token holders to stake their tokens so that they can run validators and earn staking rewards in return. Some blockchains like Tezos are delegated Proof of Stake (DPOS) blockchains and they allow the token holders to delegate their tokens and earn staking rewards.
ThunderCore intends to allow people to run validators by staking their tokens and earn staking rewards. During the first few months of the ThunderCore mainnet launch, the rewards for staking, which come from network transaction fees, will be relatively small. Additionally, ThunderCore team realizes that most people do not want to perform the complex task of running and managing a committee node.
To make staking easy for retail HODLers of Thunder Tokens (TTs), ThunderCore is introducing ThunderCore Staking Pool Service. As part of this service, additional incentives on top of committee rewards will be provided at the beginning. It is an alternative way to participate in the ThunderCore blockchain’s consensus process. Through this service, ThunderCore will allow people to lock up their tokens and the pooled tokens can be used by ThunderCore to run committee nodes on the behalf of people locking up tokens. People locking up their tokens will get additional incentives in addition to the network fees.
In a simple sentence to describe the service, people can lock up their tokens and earn staking rewards on the locked tokens.
Staking Pool Service
Staking Pool Service allows Thunder Token holders to participate in ThunderCore’s proof of stake process. ThunderCore Staking Pool Service has the following features:
- On-chain: A smart contract where people can deposit tokens, pick a lock up period (e.g. 1 day, 1 week, 1 month) and earn staking rewards on the deposited token.
- Mobile friendly UI: A web application in ThunderCore hub or any DApp browser.
The amount of awards that you can earn depends on the period of lockup. The following is the awards scheme:
- One day = 0.01% or 3.7% APY
- One week = 0.1% or 5.3% APY
- One month = 0.7% or 8.7% APY
- Three month = 2.5% or 10.4% APY
- Six month = 10% or 21% APY
- One year = 30% or 30% APY
Let us take an example of a retail token holders of Thunder Token, who is willing to lock up 10,000 of her tokens. The table below lists the amount of tokens at the end of different lock up periods.
Why would the retail token holder not lock up his tokens for a shorter period of time and manually roll them over instead of having them locked up for a longer period?
Let us use one year as the timespan. If the token holder decides to lock up the tokens for three months, then she would earn 250 tokens per three months on her locked up tokens. At the end of the third month, she can manually roll over her tokens to be locked up for another three months. In this way, she would be able to have more liquidity and flexibility. At the end of the year, after 3 manual roll-overs, the token holder ends up with 11,038 tokens.
Alternatively, if she decides to lock up her tokens for the entire year, in the beginning, she would end up with 13,000 tokens instead. So although the token holder has less liquidity with a longer period of lock up, she earns more tokens. From this example, we can see that the longer the period of lockup is, the higher the award is.
How can you use this service?
It sounds great! But how can you, as a retail token holder, use this awesome service? It is very simple and straightforward!
- You just need to buy Thunder Tokens if you do not already own them.
- Once the Staking Pool Service becomes available at the end of Q2 this year, You can use a mobile-friendly webpage in a DApp browser to simply send Thunder Tokens to the stake-in pool service smart contract address and select the lockup period.
In this way, you will lock up your tokens and earn fixed predefined rate of staking reward based on the period of lockup. As the aforementioned staking rewards scheme shows, the longer the locked period is, the higher the staking reward rate you can earn on your locked Thunder Tokens.
The address used for initially depositing your locked tokens will receive both the original funds and earned staking rewards during the period. You can withdraw the accrued staking rewards at any time during the lockup period. Once the lockup period expires, you can choose to stake-out your tokens fully or partially. You can also extend the lockup periods so that you can earn rewards on the original principal and newly earned staking rewards.
When Will Staking be Available?
The smart contract code behind the ThunderCore Staking Pool Service has been carefully coded and rigorously tested for any bugs. In fact, the code has gone through an audit by the smart contract audit firm CertiK. They have formally verified the smart contract to be robustly secure and have certified that all funds will be secure.
The Thunder Token Staking Pool Service (“Program”) and all associated events and activities are not and will not be offered in the United States or to any U.S. persons (as defined in Regulation S promulgated under the U.S. Securities Act of 1933, as amended (the “Act”)). To the extent applicable, the Thunder Tokens have not been registered under the Act and may not be offered or sold in the United States or to U.S. persons (other than distributors) unless the securities are registered under the Act, or an exemption from the registration requirements of the Act is available. The Program is subject to all terms and conditions set forth in connection with such activities. This announcement is provided for informational purposes only and does not guarantee anyone a right to participate in or receive rewards from the Program.
The Program is additionally prohibited for the residents of the following countries: Albania, Belarus, Bosnia, Burma, Central African Republic, Democratic Republic of Congo, Democratic People’s Republic of Korea, Cote D’Ivoire, the Crimea region of Ukraine, Croatia, Cuba, Herzegovina, Iran, Iraq, Kosovo, Lebanon, Liberia, Libya, Macedonia, Moldova, Serbia, Somalia, Sudan, South Sudan, Syria, United States, Venezuela, Yemen, and Zimbabwe.