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September 20, 2023

Securing the Polymesh Network: Understanding the Role of POLYX Staking

Discover how POLYX staking enhances Polymesh's security and decentralization through Proof of Stake consensus. Learn the staking process and benefits for both stakers and node operators.

In the evolving world of blockchain and decentralized finance, or DeFi, security is paramount. Polymesh, a public permissioned blockchain for regulated real-world assets, is no exception. To ensure the network’s robust security, a unique Proof-of-Stake mechanism is used relying on the network’s protocol token, POLYX

In this blog post, we’ll take a look at staking and unravel how it contributes to security on Polymesh via POLYX tokenomics as well as the benefits and rewards it offers to participants. We’ll also take a look at the role of staking in promoting decentralization and how it aligns with Polymesh’s overarching goals and vision to revolutionize security tokens through a transparent, immutable public ledger. 

How does POLYX staking contribute to the security of Polymesh?

All blockchains require network security, Polymesh included. POLYX staking plays a crucial role in enhancing security on Polymesh by locking staked POLYX tokens as collateral, creating financial incentives for participants to maintain network integrity.

Node Operators (also known as validators on other networks) are responsible for validating transactions honestly according to the protocol rules. To do this, they have to stake POLYX tokens just like the stakers do to increase their chance of having one of their operator nodes selected into the operator pool for a given era. If they’re successful at being selected and writing blocks, they’ll earn block rewards in the form of POLYX, but if they exhibit malicious behavior or fail to act according to the protocol rules, they’ll be fined instead. 

Stakers, who stake their POLYX by bonding it to specific operator nodes, share in a percentage of the Node Operators’ rewards.

This mechanism, known as Nominated Proof-of-Stake, deters malicious actors by creating a risk of losing staked tokens if they attempt any fraudulent activity. Typically on a Proof-of-Stake (PoS) network, the more tokens staked, the stronger the security of the network and the more resistant it will be to attacks. At the time of writing, 400M POLYX has been staked on Polymesh – a huge number when you consider that Ethereum, a much larger network, only has 16M ETH staked since its switch to PoS.   

TLDR; POLYX staking forms a robust line of defense by creating economic incentives for good behavior (and disincentives for bad behavior), fortifying the Polymesh Network against potential threats.

What are the benefits and rewards of participating in POLYX staking?

Participating in POLYX staking doesn’t just contribute to network security. It also comes with attractive benefits and rewards for stakers, who can earn a share of the network’s block rewards as they’re dispersed to their selected and active operator nodes. Over time, these incentives can add up considerably, making participation in other aspects of Polymesh much cheaper. For example, staking POLYX may help to offset costs of paying network transaction fees involved in issuing security tokens or signaling on proposals in Polymesh’s on-chain governance. 

As POLYX token holders, stakers have a say in the network’s governance and can actively participate in shaping the future of the world’s best blockchain for security tokens.

What is the process for staking POLYX tokens on Polymesh?

Follow a few straightforward steps and you’ll be well on your way to staking POLYX tokens on Polymesh. First, you’ll need to acquire POLYX tokens either by using the POLY to POLYX Upgrade Bridge (closing January 31, 2024!) or by obtaining POLYX through an exchange. Find a list of exchanges on CoinGecko

Once you hold POLYX tokens, you can select which operator nodes you want to stake or bond your tokens to. Operator nodes play a pivotal role in Polymesh’s security, and the entities (Node Operators) who operate them earn rewards in exchange for the successful validation of blocks as per protocol rules. By staking or bonding POLYX tokens to an operator node, you’re actively contributing to the strength of the network – and you can earn staking rewards in the form of POLYX in the process! 

An easy way to see your staking data, including the current era and any staking rewards, is via the Polymesh Portal.

How does POLYX staking promote decentralization within Polymesh?

Decentralization is a cornerstone of blockchain technology, decentralized finance or DeFi, and the wider world of Web3. 

The fuel of Nominated Proof of Stake, POLYX staking enables decentralization on Polymesh. As Node Operators are licensed financial entities that manage nodes distributed across the network, no single entity can gain excessive control, and if they did there would be significant reputation risk. This decentralization ultimately promotes fairness and transparency of the ledger while minimizing the risk of central points of failure. 

As mentioned above, participants in POLYX staking can also participate in network governance as any POLYX token holders may signal in Polymesh voting. This helps to ensure that, as with consensus in transactions, ecosystem decision-making is collective and not dominated by any single entity. It’s a democratic approach that reinforces Polymesh’s commitment to bridging traditional institutional finance with advancements in decentralized technologies. 

How does POLYX staking align with the overall goals and vision of Polymesh?

Polymesh was designed with a clear vision: to become the premier blockchain for tokenizing regulated assets and finally make institutional tokenization on public infrastructure a reality. 

To do this, it’s essential for Polymesh to foster a regulation-compatible, compliance-capable environment for digital assets. 

POLYX staking aligns with these objectives because it bolsters network security and decentralization. As a result, it paves the way for a trusted and secure ecosystem for security tokens that provides institutions with the confidence they need to engage in public blockchain infrastructure. Staking POLYX isn’t just in alignment with the overall vision – it’s an integral component of achieving it. 

Are there any restrictions or limitations on withdrawing or transferring staked POLYX tokens?

POLYX staking offers numerous benefits, but it’s important to note the limitations. When you stake your POLYX tokens, they’ll be locked for a certain period of time (if you request to withdraw them, you’ll have to wait 28 days for them to appear back in your wallet unlocked). Similar rules apply on other blockchains, with varying lock-up periods depending on network parameters. You should always consider these factors before staking on any network and only proceed if the limitations won’t impinge on your needs or goals. 

What role do stakers play in the governance or decision-making processes of Polymesh?

Stakers play a pivotal role in Polymesh governance as they hold POLYX and can use it to signal voting preferences on important network proposals, upgrades, and changes. This democratic process ensures that the ecosystem’s direction for growth is one shaped collectively by those with a vested interest in its success.

To sum it all up…

POLYX staking is a way to earn rewards, sure, but it’s also a foundational component of Polymesh’s security, decentralization, and governance. 

By participating in POLYX staking, individuals contribute to the network’s attack resistance and resilience and can actively engage in shaping its future, while of course earning attractive rewards along the way. It’s a win-win for both the network and its participants and plays a key role in creating a robust ecosystem for security tokens. 

As Polymesh continues to evolve, POLYX staking will be increasingly important. By understanding the intricacies of the process, participants can take advantage of this exciting opportunity to become part of one of the leading networks in asset tokenization. 400M POLYX staked after only 2 years in operations proves it! 

For a deeper look at POLYX tokenomics, visit polymesh.network/polyx.

For more information on Nominated Proof-of-Stake, visit polymesh.network/staking.

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