Research Guide and everything you need to know about staking IoTeX
This Guide is sponsored by the IoTeX Foundation and written by the Staking Rewards Team.
The Spotlight Journal will present emerging projects, products and services of the staking sector.
Today’s selected project is IoTeX. A privacy and IoT focused blockchain platform to power the Internet of Trusted Things.
So let's dig into it and figure out the basics, core principles and everything around staking IOTX!
What is IoTeX?
IoTeX is a privacy-IoT blockchain platform to power the Internet of Trusted Things, where all physical and virtual “things” — humans, machines, businesses, and dApps — can efficiently exchange information and value at global scale. IoTeX combines blockchain, trusted hardware, and edge computing to deliver new capabilities for privacy, IoT, and blockchain developers.
The IoTeX Network is designed to be scalable and privacy-centric, with in-house innovations such as Roll-DPoS consensus, multi-layer blockchain architecture, cross-network governance, extensible state transitions, and a Layer 2 privacy chain.
Who is the Team behind IoTeX?
IoTeX has a team of 30+ professionals with their headquarters in Silicon Valley, a hardware office in Shenzhen, and operational offices in Singapore, China, Korea, and Vietnam. IoTeX’s founding team consists of:
- Raullen Chai - Prior to IoTeX, he was the Head of Cryptography R&D and Engineering Security at Uber,Tech Lead at Google, and Ph.D in Cryptography from UWaterloo
- Qevan Guo - Prior to IoTeX, he was the Senior Director of Facebook Ads products, advisor of several startups in Silicon Valley, and Ph.D in Computer Vision at National University of Singapore
- Jing Sun - Prior to IoTeX, she was the Managing Partner of Sparkland Capital, leading investments in AI, cybersecurity, blockchain, and other frontier tech, She is also an advisor of many Silicon Valley startups.
How was IoTeX launched ?
IoTex conducted a private Token Sale to 40+ accredited investors in February 2018. IoTeX did not have a public ICO. The Token Supply has been distributed as following:
- 24% to Private Sale Investors
- 6% to the Community Rewards Program
- 15% to the Team
- 30% reserved for the Ecosystem
- 25% to the Foundation
The IoTeX-Mainnet has successfully launched since April 22nd 2019.
The Internet of Things (IoT) is a concept to connect all electronic devices to the internet, where they can autonomously interact and exchange data with each other. This may include cars, smart home appliances, medical equipment, any kind of sensors and many more.
The challenges to enable an Internet of Things (IoT) via blockchain are Scalability, Security and Interoperability. Devices need to communicate with each other across all dimensions and they need to facilitate an immense throughput of transactions in a secure fashion.
The IoTeX blockchain is focused on overcoming all these challenges with it’s highly scalable blockchain-in-blockchain architecture powered by the native IOTX token.
IoTeX’s Roll-DPoS consensus mechanism delivers cross-network consensus with instant finality and enables efficient cross-chain communication for billions of IoT devices, providing higher network throughput and reduced transaction costs.
This enables the coordination and connection to the physical world for all autonomous devices.
Privacy & Trusted Computing
Another major IoT enabler for IoTeX is the privacy by default feature. Although Privacy generally adds extra storage requirements to the blockchain, IoTeX has developed several lightweight privacy innovations to maximize the efficiency of privacy computations.
Users can store and compute data on the blockchain privately via IoTeX’s Layer 2, as well as connect different types of IoT devices and run them as lightweight/full nodes with guaranteed security. The IoT data can be stored on both permissioned and permission-less sub-chains enabling different levels of visibility via the Multi-Chain Ecosystem.
Currently IoTeX has launched it’s Mainnet Root-Chain (Layer 1) which prioritizes security and acts as an orchestration layer to manage and coordinate various function-oriented Layer 2 Chains.
Two additional layers will be initiated to the IoTeX Ecosystem within the coming year.
Layer 2 Chains are the operational layer that each handle business logic for specific use-cases and applications. They can communicate and interact with each other via cross-chain communication enabled by the main Root-Chain.
The third layer is the governance-focused Gravity Chain, which exclusively fosters decentralization and transparency of the ecosystem. It is the layer that facilitates tasks such as staking, voting, slashing, protocol-related proposals and more.
Until the launch of the Gravity Chain, the Ethereum mainnet acts as the governance layer and facilitates all these tasks. IoTeX has developed a cross-network bridge between IoTeX and Ethereum Mainnets, which is a first-of-its-kind milestone for cross-network blockchain interoperability.
Randomized Delegated Proof of Stake (Roll-DPoS)
Roll-DPoS can be seen as a combination of randomization (DKG, BLS), Delegated Proof-of-Stake (DPoS), Practical Byzantine Fault Tolerance (PBFT) and Verifiable Random Functions (VRFs).
It enables fast consensus and instant block finality, which are crucial to power Internet of Things (IoT) use cases.
Currently there are maximum 100 delegates eligible to validate blocks on the IoTeX blockchain. However, this number might be raised soon with the launch of new Layer 2 chains, to further increase decentralization.
The 36 Delegates with the most votes are considered Consensus Delegates.24 of the 36 Consensus Delegates are randomly selected to form a Committee for each epoch cycle (currently 1 hour), which grants staking rights and rewards.
After this random selection, IoTeX uses PBFT to reach consensus, in which one of the committee members proposes a new block, which is voted for by the other Committee members. A ⅔ consensus on the block is then considered final.
Staking IoTeX (IOTX)
How to stake IOTX?
IoTeX currently has two active tokens - IOTX-E (ERC20) and IOTX (native). The ERC20-Token is currently used for staking/voting on the Ethereum Mainnet for IoTeX Delegates. By voting the user can assign his staking rights to the Delegate, who can then stake and generate rewards on behalf of the voter.
It is a simple one-click process which can be done here via the Metamask, Trust, Cobo, and many other Wallets.
The rewards are then paid by Delegates to voters via the IoTeX Mainnet Address of their choice.
How much can be earned staking IOTX?
The individual earnings for stakers highly depend on the Delegate they vote for and especially on the timeframe they choose to stake their tokens.
Consensus Delegates earn a 16 IOTX block reward for every successfully proposed block as well as currently a Bonus Reward of 2,880 IOTX per day from the IoTeX Foundation to incentivise early stakers and Delegates in the first year.
In addition to these fixed rewards, every Delegate with at least 2 million votes (Consensus Delegates included) receives an Epoch Bonus Reward based on their total weighted votes. Each day, 450,000 IOTX is split between all Delegates.
By voting users receive the rewards from Delegates deducted by the service fee they charge which is on average around 10%.
An additional bonus is provided for setting a stake duration in the staking contract, which can be done in 7 day intervals. It is recommended to choose a stake duration of at least 28 days as the bonus curve is highly rewarding for it. And in case of a long-term investment in IoTeX it definitely makes sense to lock up the tokens for 350 days to receive a total 33% bonus votes/rewards.
In general the rewards are higher the more users choose to vote and stake. At Staking Rewards it is easy to keep track of the current reward curve, all the network metrics and to calculate earnings.
Will the rewards for staking IOTX change over time?
The rewards always depend on the current network conditions as well as the implemented incentives design.
While estimating staking returns in the long-term, the network conditions to take into consideration are the Block Time, Block Rewards and Stake Ratio.
Block Time determines how often new blocks are proposed by delegates. For each successful proposed block the delegate receives a reward. So the higher the frequency of new blocks, the higher are the individual rewards for staking.
The current block time for the IoTeX network are 10 seconds, however it is expected to decrease to only 3 seconds in the future. Rewards will be adjusted accordingly based on community-wide voting.
Another factor to consider are the Bonus Rewards for Delegates. For the first year after Mainnet launch the Foundation supplements 2,880 IOTX per day to incentivise Delegates and voters. Please consider the bonus will drop afterwards.
Most importantly it is to consider the Stake Ratio which presents the Percentage of all the circulating IOTX tokens currently voting or staking. IoTeX currently has a rate of around 40%, which will likely increase over time.
What are the requirements to stake IOTX?
There is no minimum token requirement, any amount can be used to vote for IoTeX delegates.
You only need IOTX ERC-20 tokens and a compatible wallet, such as MetaMask, TrustWallet, Cobo Wallet, and more.
Is there any risk to stake IOTX?
The staking process is totally managed by smart contracts and funds are considered safe. The staking/voting smart contract was audited by the blockchain security firms, CertiK and SlowMist. You may find the verification reports here: CertiK & SlowMist.
Just keep in mind that the crypto market keeps fluctuating.
Are the IOTX coins locked up in staking?
The lock-up period for staking is decided by the user. A longer lock-up leads to higher returns in general.
Anyhow the tokens can still vote for delegates without being locked up for extended periods of time. By setting a stake duration of 0 days, the staked tokens can be unstaked at any time. So funds are freely available at all times.
How often are the rewards paid out?
Rewards Payout Frequency depends on the individual schedule of the Delegate voted for.
Although some Delegates distribute rewards daily, usually rewards are paid out every 7 days by Delegates.
What are the criteria to choose a IoTeX Delegate?
There is a comprehensive list of all the IoTeX delegates and a voting tool at https://member.iotex.io/ Important factors to do research on for each Delegate are the
- Fee (determines how much is earned)
- Track Record (identifies competence and long term vision)
- Efficiency of the Node (its basically the node uptime and indicates if the node receives all the rewards that it can receive potentially)
- Community Involvement (certain tools built by the Delegates may increase the value of the total network and are therefore well worth considering)
Is my decision for a IoTeX Delegate final?
No. You can easily redirect your vote to a new Delegate at any time. Also the stake duration can be extended at any time.
As a tip it is recommended to split the total staking funds into different buckets and delegate them to a bunch of Delegates, which helps to reduce risks and also allows for various staking periods with each of these buckets.
How to become a IoTex Delegate Node?
Operating a Delegate Node requires knowledge of starting and maintaining a blockchain full node. Delegates must maintain servers and support iotex-core software updates to produce blocks accurately and on time. They should be familiar with how to run, monitor and explore a full node and interact with the IoTeX blockchain.
Furthermore Delegates are required to stake at least 1.2 million IOTX and receive more than 2 million votes.
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