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Ethereum 2.0 Brings Back "Token Staking"

Since many blockchains have chosen the Proof of Stake (PoS) consensus mechanism, it is expected that more PoS-based token pledge services will appear in the future. Ethereum 2.0, which shifts from a proof-of-work mechanism to a proof-of-stake mechanism, may play a catalytic role in this. Just like Compound ignited the DeFi boom, Ethereum 2.0 may reignite people's attention to the token pledge model.

So, besides Ethereum, which other blockchains are worthy of attention? Among the various such projects, Tezos (No. 13 by total market capitalization) and Cosmos Coin (ATOM, No. 20) deserve special attention. Tezos uses Liquid Proof of Stake, which can be upgraded without a hard fork, which can save time and cost. Currently, there are more than 400 randomly selected validator nodes. Cosmos is a cross-platform service project that links multiple blockchain platforms. Currently, 125 verifiers verify the Delegated Proof of Stake that generates blocks.

So, how much usage is Tezos and Cosmos? Longhash, a blockchain data analysis company, sorted out and analyzed the data of amberdata and found that Tezos had a total of 560,000 user addresses in mid-June, including 494 validator addresses. The top 10 addresses holding Tezos tokens hold 20.71% of the total Tezos tokens, and the top 100 and top 1000 addresses hold 53.24% and 81.23% of Tezos tokens respectively. Cosmos’ ATOM has a total of 31,400 user addresses. The top 10 addresses holding the number of tokens hold 88.82% of the total ATOM, and the top 100 addresses hold 98.62% of the tokens, which means that all tokens are in the in the hands of the verifier. Ethereum currently has a total of 101.54 million token addresses, and tens of thousands of new addresses are generated every day. Among them, the top 10 addresses holding the number of tokens hold 15.93% of the total amount of Ethereum, and the top 100 and top 1000 addresses hold 35.32% and 64.87% of the total amount of Ethereum respectively.

That said, Ethereum is the most decentralized in terms of token holder dispersion, followed by Tezos and Cosmos; it is also overwhelmingly dominant in terms of number of addresses as a measure of actual or potential user numbers .

What about token staking on Tezos and Cosmos? According to data from the cryptocurrency analysis company "Messari", as of mid-June, Tezos pledged 79.93% of the total circulation, with an annualized rate of return of 6.94%; Cosmos' ATOM pledges accounted for 93.88% of the total circulation, annualized The rate of return is 9.26%, and the pledge ratio is relatively high. Ethereum 2.0's token pledge expected yield is about 2%-3%, which is also a relatively high value.

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Will Tezos and Cosmos continue the DeFi boom?

Recently, the concept of DeFi (decentralized finance) has become popular, and Ethereum and many blockchains are considering launching DeFi services. Tezos also sees DeFi services as a priority. Tezos said that after the Tezos token tzBTC linked to Bitcoin was issued earlier this year, the platform has been trying to launch DeFi services, and is currently focusing on building a "Dexter" platform similar to the decentralized trading platform "Uniswap".

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Investors and project teams have different concerns

Investors focus on depositing certain cryptocurrencies through token pledge (or DeFi) projects to obtain income, so they will chase blockchain platforms or DApp applications with higher income.

But the focus of platforms and DApps is elsewhere. Tezos is most concerned with decentralization, cooperation and security, and Cosmos aims to build a stable network system through decentralization. They believe that too much emphasis on the price of tokens will lead to the inability of the project to develop in the long run, and the price of tokens is only incidental value, not the ultimate goal of the project.

In Korea, Coinone Exchange provides Tezos and Cosmos ATOM token pledge services. Tezos is settled on a weekly basis, and ATOM is settled on a daily basis, and the system automatically distributes income to users. Ordinary users who do not understand the blockchain can also easily obtain income through pledge. However, tokens are pledged through centralized exchanges, and the price of tokens can easily be artificially raised, which is quite cause for concern. In addition to fraudulent projects that want to "make a fortune", blockchain platforms and DApps that insist on following the right path are very vigilant about the centralization of power.

JOIND Kwon Seona reporter kwon.seona@joongang.co.kr

JOIND Kwon Seona reporter kwon.seona@joongang.co.kr