Now that staking rewards are live, I’m seeing lots of questions that can easily be answered as long as you have a little basic knowledge. Questions like how often can I expect to win a block? How do I participate? Why are the blocks so slow? This article will try and answer those questions as well as give people some basic information on how eCash staking rewards works, the minimum requirements to stake your eCash, and a few other things that might help answer any questions you might have.
First and foremost, in order to participate in eCash staking rewards you will need a minimum of 100M XEC, and the ability to run a node using a virtual private server, or VPS, which will cost anywhere from $15/month to $100/month (i.e. Contabo, Hostinger, AWS, Vultr, etc.). More resources on running your own node and creating a stake proof are available in this article.
For those who are already running an eCash staking node and wondering when you can expect to win a block, let’s start with why the blocks have been slower than average for the past couple of days.
The way eCash and all Bitcoin forks work is that a block is supposed to be mined every ten minutes on average. This is accomplished through something called the difficulty adjustment algorithm, or DAA. Blocks are added to the blockchain only once a miner on the network is able to find a number that meets a given requirement. As more computing power gets dedicated to finding that number, the faster it will be found, which is why the difficulty of finding the number gets adjusted periodically to ensure that the time it takes remains as close to 10 minutes on average as possible.
Since miners cost money to run, both in terms of the cost to purchase the miners and the electricity cost to run them, miners are incentivized to mine coins only when it is profitable to do so. eCash relies on the same Sha256 mining algorithm that is used by Bitcoin and Bitcoin Cash, so miners can use the their equipment, also known as ASICs, to switch back and forth between each chain depending on whichever is most profitable.
For example, if it’s going to cost you $30K to mine one Bitcoin worth $37K, or $300 to mine one Bitcoin Cash worth $200, you’re obviously going to mine Bitcoin instead of Bitcoin Cash. This is because the miner who finds the block is rewarded with what’s known as the block reward, and the current block reward on all Bitcoin forks is 6.25, as in 6.25 BTC, 6.25 BCH, or 6.25M XEC.
Typically what happens is that the amount of mining power, or hash power, reaches a state of equilibrium between all three Sha256 chains: BTC, BCH, and XEC. If the price of one of those coins pumps in relation to the others, the miners will suddenly move to mine that chain until the difficulty ratchets up as a result of the increased competition for rewards, reaching a new state of mining equilibrium. On the other hand, if the price of one chain were to suddenly dump, it could make it less profitable to mine it, resulting in less mining power pointed at the chain and blocks taking longer than ten minutes on average to be found.
What happened with the recent eCash upgrade was that the rules were changed such that the amount of the block reward going to miners was significantly reduced. Whereas the miners on BTC and BCH have always received 100% of the block reward, the eCash miners shared the block reward with the a developer fund in a 92/8 split where the miners got 92% of the block reward, with the remaining 8% going to a developer fund to pay for protocol and infrastructure development.
But after the recent upgrade on November 15, 2023, this allocation was changed so only 58% of the block reward would go to miners, 32% to the developer fund, and 10% to the stakers. With their share of the block reward suddenly lowered, the incentive for miners to mine XEC was drastically reduced. This led to the average number of eCash blocks being found going from a block every ten minutes to a block every couple of hours.
Fortunately, the DAA on eCash adjusts every block, so little by little it will become easier to mine eCash until a new equilibrium is reached and blocks are found every ten minutes again.
So once that happens, how often can you expect to win a block? It all depends on the amount you stake in relation to the total. At the time of this writing, there is approximately 180B XEC staked on the network. If you happened to have 18B staked, or 10% of that amount, you would expect to win 10% of the blocks. With 144 blocks a day on average, you’d expect to win 14.4 blocks a day. Compare this to someone with only 180M staked, or 0.1% of the staked amount, who would expect to win 1.4 blocks every 10 days.
Since each block reward is 6.25M XEC per block, this means the staker who wins that block wins 10%, or 625K XEC (plus 10% of the transaction fees). But this is only until the halving in April, at which point the block subsidy will be cut in half and reduced to 3.125M XEC.
Keep in mind that someone could get lucky and win multiple blocks in a row; a whale might only win half the blocks they would normally expect to win over the course of any 24 hour period; and a min staker could get lucky and win 2 in the same day when the math says they shouldn’t win that many in two weeks.
As anyone who has played blackjack can attest, good and bad streaks can happen, but over a long enough period of time, and assuming your node has good uptime, the system works such that you can expect to win your fair share of rewards from the protocol. Below is a table showing the number of times you should expect to win per day assuming a total stake amount of 180B XEC:
|Amount Staked||% of Total||Blocks Expected Per Day||Blocks Expected Per Year|