This article provides basic information on WAVES staking (LPoS leasing). What it means and whether there are any disadvantages. Also find out what returns are achieved through WAVES staking.

What does staking mean (LPoS Leasing) at WAVES?

The WAVES ecosystem is based on LPoS (Leased Proof-of-Stake), and not Proof-of-Work (PoW) like the Bitcoin consensus mechanism. In contrast to PoW, PoS is not based on the consumption of computing power, but on how many WAVES coins a node holds in the network and uses to validate transactions. A node is a server in the network of a crypto ecosystem.

The more WAVES a node owns or is allocated or leased, the higher the probability of creating a new block (mining power) and thus mining Waves coins. This is the consensus mechanism for PoS or LPoS. In addition, the amount of staking determines the voting power of the node in the Waves ecosystem. This means that nodes with more coins in staking also have more votes when a change is voted on in the ecosystem.

LPoS (Leased Proof of Stake) means that every WAVES owner can allocate/lease their WAVES coins to a node, thus giving the node more mining power and more voting rights. In return, the lessor earns money from the staking of this node. In return, the node operators pay out the coins (waves) generated (mined) to the staker/leaser.

However, the stakers should make sure that they only lease/stake their WAVES coins to nodes that make positive decisions for the entire WAVES ecosystem. This means that the WAVES community has the power over the future of the WAVES ecosystem by leasing WAVES to appropriate nodes.

Are WAVES safe when they are staked?

Yes, blockchain secure. Your WAVES remain your property. Leasing does not mean that your WAVES have been handed over. Leasing means that you “assign” or “lease” your WAVES to a node (another WAVES address). However, the node does not have access to your leased WAVES coins. The access remains with you.

What are the disadvantages?

From a technical perspective, there is no significant disadvantage. The only minimal disadvantage is that the WAVES cannot be sold or shipped during the leasing/staking period. However, leasing/staking can be terminated at any time. This takes a maximum of 1 minute (Waves block time). Immediately afterwards, the sale and dispatch of your WAVES is possible again. You can find instructions on how to end a lease/staking here: WAVES staking/leasing Guide

How much return does WAVES Staking generate?

This depends on the percentage of WAVES generated that the node operator distributes to the lessors. As of April 2024, node operators distribute 85-95% of their generated WAVES.

Thanks to Feature 14 (Community Driven Monetary Policy / Block 1700000), which was activated on 10.09.2019, all nodes generate around 6% p.a. even in a bear market. In addition, the node operators also receive the transaction fees for a mined block. This means that as the transaction volume in the WAVES ecosystem increases, the return on the nodes also increases. Accordingly, it can be assumed that the return on nodes is around 6% in a bear market and around 7-12% in a bull market.

Staking in a WAVES node with a 90% payout yields around 6.3% p.a. (as at November 2019). In a bull market, the yield can also be ~10.8% p.a. or higher.

From how many WAVES does staking make sense and why?

Each node operator must pay out the mined WAVES to the stakers, taking into account the transaction costs (TX). In most cases, the TX fees are borne by the stakers. This means that for each TX, the node operator must deduct 0.001 WAVES from the return on TX fees.

For example, if you currently lease just 10 WAVES, you will earn around 0.0525 WAVES per month with a return of 6.3% p.a. After deducting the TX fees, the yield is ~0.0515 WAVES/month. At a current price of 2.36 USD per 1 WAVES, the monthly earnings are 0.12 USD.

At this point, everyone can see and decide for themselves whether leasing/staking with 10 WAVES makes sense or whether it is better to increase to 25, 50 or more WAVES in order to generate more significant returns. You should always remember that WAVES is a value asset, i.e. the price can rise, but also fall. Staking and selling in the bull market is the best strategy.

Further example calculations, based on 6.3% return p.a.:

At 50 WAVES => 0.2625 WAVES/month, this currently results in a monthly income of: (0.62 USD)
At 100 WAVES => 0,525 WAVES/month, this currently results in a monthly income of: (1.24 USD)
At 500 WAVES => 2,625 WAVES/month, this currently results in a monthly income of: (6.19 USD)
At 1000 WAVES => 5,25 WAVES/month, this currently results in a monthly income of: (12.38 USD)

If you also consider staking interesting and you want to increase your WAVES through staking, then you can find here a detailed WAVES staking/leasing Guide