A practical guide for the innovative investor
Staking coins is a magical experience. It literally prints money directly into your wallet.
Besides it helps to validate transactions, secure the network and keeps it decentralized.
We believe Proof of Stake and similar consensus models will become a standard for most public blockchain infrastructures.
To evaluate the passive income opportunities, it is substantial to understand the unique principles of each staking asset.
This week we are talking about Ark. We will go through the basics, core principles, explain how to stake Ark and how much to earn with it.
What is Ark?
Ark provides users, developers and start-ups with innovative blockchain technologies. The aim is to create an entire ecosystem of linked chains with sandbox tools where businesses and others can create their own blockchain from a clone of Ark in just a few clicks.
Who is the team behind Ark?
Ark was founded by 27 individuals from around the globe. Currently Ark has 23 core team members, coming from 11 different countries
Francois-Xavier Thoorens is one of the remarkable founders and a main contributor. Prior to launching Ark, he has long held the position as the chief programmer at Lisk. Now he is the Head of Development at Ark.
How was Ark launched?
The team concluded a Token Sale in December 2016, which raised 1279 BTC, worth $998,000 at the sale´s close. The initial supply of 125 million Ark was distributed as below:
75% for investors, 15% for the founders, 7% for the ARKShield program, 2% as bounty, 1% as escrow
Initially the source code has been a fork of Lisk, but it has quickly become original with a lot of changes and additions implemented.
Ark core principles
Smart bridges connect separate blockchains through the Ark core platform. Basically Ark becomes the intermediary between different chains allowing them to communicate with one another and trigger events across chains.
Simply the integration of a small snippet of code in the core protocol of any other blockchain is enough to make these blockchains compatible.
E.g. if you want to trigger an ethereum smart contract, but currently only hold ARK tokens, you can still do it inside the Ark Wallet with a smart bridge transaction.
Sending funds between different blockchains is made through encoded listeners. These nodes can be set up by any intermediary or exchange. By listening to the smart bridge transactions, they can receive and broadcast transactions and in exchange they receive the transaction fees.
Point. Click. Blockchain.
Ark´s infrastructure makes it super easy to fork Ark and create an own blockchain project. These forks are ideal for start-ups and they come fully equipped with all features. All chains deployed through this feature automatically come with smart bridges implemented.
This feature is expected to go live in Q1 2019 according to the roadmap.
Large variety of programming languages
The roadmap to an all-in-one blockchain
Ark will integrate the inter-planetary file system (IPFS). It will timestamp and secure large data and content, without having to put the data on the chain itself.
The ARK Virtual Machine (ARKVM) integration will allow users to issue ARK Smart Contracts. Similar to Ethereum.
Further Ark is developing hardware devices for contactless payments and Point-of-Sale integration.
Ark has a delegated proof of stake (DPOS) consensus model. Coin holders can assign their staking power by voting for Delegates, who are responsible to keep the network secure and stable. Delegates share the rewards with their voters after deducting a fee. The voting power is always in correlation to the individual holdings (1 Ark = 1 Voting Weight).
What is an Ark Delegate?
Delegates operate Ark full nodes and the 51 delegates with the most votes get the rights to validate transactions and create new block. Only these 51 delegates will receive rewards.
What to do to receive the staking rewards?
Ark holders have to choose one delegate of their choice and cast a vote for them inside the Ark Wallet. One address can only vote for one delegate at a time. Each vote (or un-vote) costs 1 ARK.
This guide explains the process in detail with screenshots and explanation.
What to consider before choosing a Delegate?
1. No. of votes Delegates forge a set amount of Ark a day (~422). The more votes there are, the more that 422 has to be spread out which reduces each individual voter's share. This means "less votes = higher returns" and "more votes = lower returns".
2. Service Fee Delegates usually charge between 5-25% for their service. Make sure to be familiar with the terms of your Delegate and only vote for Delegates, who clearly state their terms in a proposal or on a website.
3. Position of the Delegate Only the 51st Delegates with the most votes receive rewards. by choosing the delegate on position 51, the chance for him to switch to a position where he doesn´t get any rewards anymore is much higher than by choosing the delegate on position 1 with the most votes.
Considering "less votes = higher returns" it might be worth it to vote for a delegate lower in the list and regulary check and make sure the delegate still holds up his position. But in case he falls to a lower rank, the vote must be switched manually.
4. Pay-out frequency Usually delegates pay out rewards to their voters every few days or every week. Still this might not apply for every delegate. Make sure to be familiar with their terms.
What is the estimated yield for staking Ark?
Our estimation for the yearly staking yield is currently at 10.06% (excluding fees from delegates).
We estimate the yield based on the voting balance, which is the sum of all votes for the actively forging delegates. All coins from the voting balance do receive rewards from delegates.
If more investors start to vote for actively forging delegates the voting balance will increase and the estimated yield will decline.
Additionally we calculate the transaction fees spent per day in the network as a 30-day-weighted average and include them into the estimation. The more transactions fees are spent, the higher will be the rewards.
With a stable block reward of 2 ARK (no reduction anytime) and a current inflation of 5.76% (which would be the yield if 100% of the coins would vote for the active delegates), the yield is expected to stay in the current range and might even be topped from your personal wallet configuration by voting for the most profitable delegates.
If you hold large amounts of ARK, it might be favorable to split the holdings between different addresses and vote for another delegate with each address. This way we can split the risk and compare actual returns after a while.
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