Interested in PoS mining? Insiders tell you to pay attention to these points when investing

As we all know, cryptocurrencies such as Bitcoin and Ethereum can be obtained through mining. Of course, mining has indeed made many people rich. With Ethereum switching from PoW to PoS and popular public chains adopting the PoS consensus mechanism, the PoS mining model has received more and more attention. So how can we get better returns? What issues should investors pay attention to when participating in PoS?

Whether it is PoW or PoS, the pursuit of returns in mining investment is nothing more than three points: Token unit price, block probability, and revenue per block.

But to obtain net benefits, the relationship between costs and benefits needs to be considered. HashQuark CEO Li Chen shared at the Golden Salon: Here is a picture comparing the price of Bitcoin and the difficulty of mining. It is obvious that as the difficulty of mining increases, the price must increase.

As for PoW, the higher the difficulty, the higher the market price. However, the costs and benefits of PoS are difficult to define because it is still in its early stages. Especially with the existence of liquidity costs, frankly speaking, there is no good way to evaluate the relationship between costs and benefits, but this is also an opportunity, indicating that Staking is still in its early stages and there are still great opportunities.

Compare the similarities and differences between PoW and PoS. PoW is a consensus mechanism based on technology. Its problems are: facing the energy constraints of the real world, it is impossible to grow indefinitely; facing the threat of technological breakthroughs, such as quantum computing; no token stickiness; high user threshold (need mining machines). PoS is based on the system, which includes the influence of human nature.

PoW is a consensus mechanism based on the system. This system contains both technology and human nature. First of all, as Newton said, I can calculate the trajectory of celestial bodies, but I cannot measure the madness of human hearts. Whether PoW can produce blocks is determined by technology and computing power, and has nothing to do with human nature, but Staking is related to human nature; in addition, it has token stickiness; in addition, the user threshold is low, as long as I have a token, I can participate in Staking. Even in the wallet, I can get income immediately.

But whether it is PoW or PoS, they both have their pros and cons, and no consensus is perfect. I would like to make a bold prediction. If it is a consensus based on PoW, its highest cost is the technical cost, that is, the cost of chips, electricity, and mining machines. If it is a consensus mechanism based on PoS, the biggest cost is the system cost. How to find a transparent, open, and fair system? I personally make a prediction that the next trend is likely to be republican. This is my prediction for the future of the consensus mechanism.

Bibox Vice President Xiang Dan pointed out: "In the PoS era, the roles of coin holders and miners overlap, and the construction of the functional role of verification nodes makes it no longer necessary for coin holders to mine with high computer hardware requirements. Everyone can truly mine, and holding coins means entering the market. The mining process is like staking coins to earn interest. The more coins you stake and the longer you stake, the more interest you get. The model is simple and easy to understand. At present, the average staking yield (coin standard) of major mainstream PoS projects is around 10% or even higher, which is higher than the yield of traditional investment and financial management. As the bull market gradually wakes up, the rise in coin prices will bring higher value returns."

But Staking is not a profitable business. First of all, the price fluctuates. At present, most users who know Staking are somewhat conflicted. They value the yield of Staking, but at the same time they are worried that the rewards gained from staking cannot keep up with the decline caused by inflation or market changes. In addition, the cost of user education is high. For ordinary users, many people do not know what Staking is specifically. If you tell them that it is similar to the concept of "interest on deposits", they will easily understand it as a simple fixed-income product. In fact, Staking is not a pure fixed-income product. How to choose a node? How to hand over the token to the node? These all require time to educate users, and from the current level of Staking application, this road is still long. In addition, the infrastructure needs to be improved. The good news is that there are more and more ecological participants in Staking, but because each has its own characteristics and advantages, it is necessary to further establish a win-win cooperation approach to meet the different demands of Staking users. That is to lay a more complete and better experience infrastructure for POS and Staking.

Sun Yushi, co-founder of EOS Beijing, said that investors should pay attention to the issues when participating in PoS mining: "The most important thing is security. Don't play with pyramid schemes and Ponzi schemes. Choose safe decentralized tools to participate. Under the premise of ensuring the safety of your own capital (guaranteeing the private key), choose a good project, pay attention to the inflation rate and staking ratio and return rate; compare the rate of return, and choose a reliable mining pool or node with better returns.

Li Chengcai, head of Huobi Wallet Operations, said: "It is very important to choose a project. PoS projects are not like PoW. It is not difficult to find nodes to launch a project. When it is so simple to launch a main chain, there are good and bad projects. In this case, you must identify the quality of the project; then the nodes, choose professional and reliable nodes (to prevent the risk of running away); and then when investing personally, you must distinguish between the currency standard and the gold standard. The currency standard is that the currency has increased. Our ultimate goal is not to get the currency itself, but to exchange it for Bitcoin or USDT or legal currency. Therefore, the annualized data of the currency is not very meaningful, because this is the currency standard, and the main thing is the long-term value of the currency. For example, the annualized rate is only 7%, but because the ecosystem is very good, it is good. Some projects have a very high annualized rate, so where does your value come from? For a formal financial management, an annualized rate of 10% or 20% is already quite remarkable. If the annualized rate reaches 80%, it is obviously an abnormal project."

Li Yao, senior vice president of Cobo Wallet, pointed out: "First of all, we need to consider security, and then we need to consider liquidity and returns. We must clearly distinguish the type of token we are investing in, such as PoS, DPoS, etc. The mortgage cycle, number of nodes, and mining costs of each coin are different, and users must study the logic behind them. Pay attention to the inflation rate. The inflation rate of many projects is so high that it is outrageous. It is highly recommended that users who do not understand the core logic can hand it over to a third party for processing."

Zhu Yu, co-founder of Biyin, further stated: “If I want to invest in PoS, I mainly look at two points. First, I will identify the team. Even if it is a PoW team, some are also mixed with PoS. Many projects have gone through bull and bear markets and are still trustworthy. Second, I will identify the platform. PoS has great risks. I must identify the established domestic teams, such as Cobo Wallet, Huobi Wallet, etc. There are billions of assets here, so there should be no problem.”