How many rewards APY do you get for staking XEP and why?

All proof-of-stake blockchains offer staking rewards to their users, also Electra Protocol. This is a consequence of the consensus mechanism, which needs users to pledge their coins for the network being able to stay online and be robust. Some blockchain projects offer high staking rewards, sometimes even a double-digit percentage per year. On one side every user likes to get high return, but many investors do not have their negative consequences in mind.

The Problem: Devaluation

Every crypto currency comes with a given set of technical specifications, such as the maximum supply, the total supply, or the number of transactions it can perform. The unique composition of these specs makes each blockchain project unique and ready to tackle specific challenges.

The problem with high staking rewards is that all the new coins have to be issued. By issuing every single coin, the circulating supply of the given blockchain increases resulting in high long-term inflation.

The Solution: Moderate Rewards

Electra Protocol has been designed with sustainability and long-term usefulness in mind. As a result, the focus is not to attract investors by through offering high interest through staking. Instead, the focus of Electra Protocol is to become utility for payments. In order to achieve stability and to meet deflationary aspects, 3% rewards APY have been selected for staking as a feasible compromise.

The core team believes that it has the right ingredients to make Electra Protocol the perfect solution for many payment-driven use cases.

Staking Rewards Calculation

For Electra Protocol, once a single transaction containing coins has matured and remained unspent for 12 hours, that transaction is eligible to be selected to earn a block and therefore a staking reward. Once selected for a block and reward, a user’s reward is determined by a separate calculation specific to Electra Protocol. Currently the reward is set at 3% annually. Calculation method:

Staking reward = ((3% * # coins in the transaction selected) * (days unspent) / 365).

Staking Considerations

The more XEP you hold and stake, the better it is for the network to stay online and robust. Participants pledge their XEP coins to the Electra Protocol blockchain. From those pledging participants, the protocol chooses validators to confirm blocks of transactions. The more coins a users pledges, the more likely he is to be chosen for validation, as all staking participants compete for the staking rewards. You should currently stake at least 1 million XEP to be chosen by the algorithm. If you stake with less XEPs, the likelihood to be chosen significantly decreases. For example, to be chosen for validation during the staking process with just 45,000 XEPs is very unlikely.