The birth of PoS (Proof of Stake) dates back to 2011, when a netizen named Quantum Mechanic first proposed this concept on the Bitcointalk forum of the Bitcoin community. The principle of PoS is similar to the shareholding system in the real world. The more shares you have, the stronger the right to speak, and the greater the probability of obtaining bookkeeping opportunities.
PoS and Staking
Staking is a concept complementary to the PoS (Proof of Stake) mechanism, that is, Crypto holders obtain system rewards through a series of pledges such as voting, delegation, and token locking. Its security comes from the value of the mortgage economy. In theory, the higher the number of Staking, the higher the income.
Unlike PoW, the core of the PoS consensus mechanism is the currency in the network, so the threshold for participating in Staking is also relatively low. In the PoS consensus mechanism, nodes can be rewarded by running and maintaining the network, so the motivation to run nodes is very strong. While not everyone is willing or able to run a node, the staking mechanism is important for decentralization because PoS allows all token holders to vote and participate in consensus without running a node. ADAM’s global node network adopts the consensus mechanism of PoS.
Ethereum merger may once again set off a wave of PoS Staking
In recent years, the consensus layer of the blockchain is clearly shifting from PoW (Proof of Work) to PoS (Proof of Stake, Proof of Stake or Proof of Stake). As Ethereum moves from PoW to PoS, this process may speed up again.
At present, among the top 15 public chains by market value, only BTC, DOGE, and LTC will still use PoW consensus, and most of the rest of the public chains will use PoS consensus. According to Glassnode data, the pledged amount of the Ethereum 2.0 deposit contract has exceeded 13 million ETH, which is about 11% of the total circulating supply.
Ethereum core developer Tim Beiko once gave a timetable for the Ethereum merger (Merge) on the 14th, which is expected to start the week of September 19th. With the merger of the Ethereum main network and the beacon chain, the consensus mechanism of Ethereum will gradually complete the PoS transformation. At that point, we could see several major changes in the short term. First, the migration of related industry chains, which involves a large number of users and funds, we need to pay close attention to this trend; second, the merger of Ethereum may once again set off a wave of PoS Staking.
In the past, not only was the resource waste brought about by PoW widely criticized, but miners were also heartbroken. Miners not only need to bear expensive equipment, but also need to constantly look for low-cost power resources to reduce costs. And ETH’s move to PoS can just improve this problem. Due to the popular science and cognitive output of opinion leaders such as Buterin, many people have been able to accept PoS Staking. This is indeed a good choice for those who retain their goodwill towards the PoW consensus mechanism and do not exclude participation in PoS Staking.
Compared with the PoW mechanism, POS provides a more effective incentive scheme to select the creator of the next block: miners mortgage tokens, usually selected according to some function of their stake size. The important thing is that if the miners work badly and don’t create honest blocks, the stake staked by the miners will be “confiscation”
The PoS wave is surging, and the ADAM global node network may benefit
As we all know, under the consensus mechanism of PoS (Proof of Stake), nodes need to be responsible for packaging transaction information, maintaining network operation, and participating in community governance, and this process is Stake (staking). The same is true in the ADAM global node network. The node needs to purchase the token “ADAM” to pledge, maintain and guarantee the operation of the network; at the same time, as a reward, the node can obtain the ADAM output income. This income model actually adopts Staking. Nodes receive equity rewards for exercising power and fulfilling obligations.
Because the responsibilities of nodes are similar to miners in PoW, the process of node Staking is also called “mining” by analogy, and Staking is equivalent to mining rewards. To put it more clearly, it is “lock-up mining” and in ADAM we call it “node mining”.
In order to ensure the security of the entire node network, ADAM implements an incentive and punishment mechanism, that is, once a node makes an error in operation, there is a risk of losing the reward; if a node has serious consequences due to improper operation, even its own mortgage may be lost.
Not only that, in order to prevent nodes from doing evil, ADAM has a lock-up period for the rewards of nodes. That is, after the token holder’s tokens participate in staking, if they decide not to participate in staking, for example, when they want to sell in the secondary market, it will take a period of time to fully unlock the free flow. ADAM has very strict restrictions on this aspect. After the node exits, the rewards still need to be released linear release, and it will take about half a year to unlock and circulate, which protects the interests of investors in the secondary market to a certain extent.
In general, ADAM, as a mature PoS project, has a high probability of becoming a beneficiary in this Ethereum merger event. ADAM has designed a set of effective mechanisms that combine global nodes with the economic model, while maintaining great decentralization in the process, which is really commendable.
At present, staking is still only a new track that has been emerging for only 5 years, and its rapid development stage is mainly concentrated in the past year. According to JP Morgan’s forecast, in 2025, the staking of ETH will generate $40 billion in network revenue. With the conversion of Ethereum to PoS,, which ranks second in market value in the encryption field, there will still be more players involved in the PoS tide, and the Staking Economy will surely burst out more investment opportunities.
