Lately I see more questions about staking eCash than I do about burning eCash, which is saying something.
“How do I stake my eCash?” “Can I stake eCash on Binance?” “When will eCash staking be available?”
I see the questions on Twitter, Telegram, Reddit, Youtube, pretty much everywhere.
What does this tell me? Basically that people really like eCash and want more of it.
They want to be able to stake their coins and earn XEC for contributing to the network. But of course staking is something you can’t do on Bitcoin, or Bitcoin Cash, or any other Bitcoin fork for that matter. The mere idea of introducing proof of stake on the Bitcoin protocol has been considered blasphemy by some.
But not for eCash. eCash is the next gen version of Bitcoin, and the next generation wants to have a stake in their network.
For the first time since the genesis block, a Bitcoin fork is going to have built in staking rewards. To me this is a huge leap forward. One that’s bigger than raising the blocksize, or allocating part of the block reward to pay for development. Of course I’m talking about the integration of Avalanche.
Through the contribution of those willing to stake their XEC and run Avalanche nodes, the eCash network has the potential to become the most secure network in all of crypto. By layering a proof of stake consensus mechanism on top of proof of work, the network will be virtually impossible to 51% attack regardless of hash.
Avalanche will also enable instant transactions, meaning you will no longer need to wait for the next block to know a transaction is irreversible. Because with Avalanche Pre-Consensus, it wil be just as impossible to double-spend the network as it is to 51% attack it.
But as they say, nothing in life is free. In order to get all these benefits, what’s needed is a Sybil resistance mechanism, or a way to prevent anyone from cheaply spinning up pseudonymous nodes and attacking the network.
This is where staking comes in.
The idea is that in order to run Avalanche nodes, you must stake some amount of XEC to cryptographically prove you are a stakeholder in the system, that you have skin in the game. By forcing Avalanche nodes to prove their stake, an attacker would need to amass a large amount of XEC to attack the network, making it both expensive and irrational.
But you can’t expect XEC holders to run a node purely out of goodwill. Though it wouldn’t cost as much to run a staking node than a mining node, there is a cost, and that cost must not be overlooked.
So one question is how much should the staking rewards be? Currently 92% of the coinbase reward goes to miners, 4% to Bitcoin ABC, and 4% to the GNC. How much of that should go to staking rewards? There are other questions that will need to be answered as well, such as will there be a minimum amount required, or a lock-up period?
I don’t know what the right answers are. I’m not an economist, or a computer scientist, or a cryptographer. What I do know is that this project is led by people who are experts in their field, people who can adapt and iterate to move the technology forward as opposed to merely preaching the message of hodl.
Because I don’t want to just hodl, I want to contribute and be rewarded for my contribution. This is about more than just about the protocol. This is about culture. No more expecting people to work for free. Or letting others simply get a free ride. This is about everyone contributing, or paying a fee. Because that’s what the staking rewards will ultimately be. A share of the transaction fees on a truly decentralized network that processes millions of transactions per second. That’s what I envision the eCash network to become, and while the days of mining Bitcoin with a CPU might be long gone, the days of staking eCash using a CPU are just getting started.