How Much Skin Does Everyone Else Have In The Game?

tl;dr: Proof-of-Stake algorithms offer the potential for long-term commitment and investment yields. They also give you an opportunity to see how dedicated the other players in the game are about the network. A new investment criteria emerges.

Nearly everyone realizes that Proof-of-Work consensus algorithms, such as the one that secures the Bitcoin network, are expensive to run and energy intensive.

Though there is reason for optimism that the need for energy in PoW will drive innovation among lower cost renewables, there’s been a push to look for alternatives consensus mechanism.

The primary candidate, for now, is Proof-of-Stake. In PoS, ppl “stake,” or “lock up” their tokens as a sign of commitment to the network’s security.

In return for their stake commitment, they receive some portion of the block rewards and/or transaction fees. Different networks have different rules.

For a deeper dive on all of this, see the post, When ARK’s Delegates Pay, You are the one Getting the Service

PoS is still new and relatively unproven, at least compared to PoW, but it seems like it is getting the bulk of the attention among those focused on this particular area of crypto.

One thing that is valuable about Proof-of-Stake networks is that, thanks to the blockchain, it is possible to get a read on how other token holders feel about the long-term prospects.

Staking as a Sign of Network Commitment
Since staking is a true “skin in the game” signal among token holders of their willingness to think long-term, one metric that I think may be worth looking at is “% of Network that is Staked.”

That is…of all of the token holders out there, how many of them have signaled this commitment?

Perhaps the best research site in all of crypto right now is Messari.

As I was flipping through their site, I came across the “PoS Staking Yields” chart, ranking the various networks according to their yields.

I sorted the chart by “Network % of Scaling” and was (admittedly) excited when I found that ARK was #1.

As you may know, I’m a former adviser to ARK and the thing I recognized (and others have as well) is just how passionate their community is for the project.

[Note: screenshot may be a bit dated, please check for yourself]

Now, we have quantifiable evidence of this passion.

As the investment community becomes more involved in crypto-assets, I think this will be one lens through which possible allocation of capital will be viewed.

Investors will want to know….

do a large percentage of the other members of this network believe strongly enough in the future that they are willing to stake?

The fact that others are (or are not) may be a point of differentiation.