The Solana Transition & The Staking Pie

Now that Heli­um is on Solana, what’s next? Let’s start with the big ones: All actions are now way faster than they were. Need to trans­fer tokens to some­one? Should take about 30 sec­onds. Want to update info on your Hotspot? Same time. No more wait­ing 40 min­utes or a few hours, or even a few days for actions you take to happen. 

Now, hav­ing said that, there are a few things that have a delay in when you start to SEE them, one of which is stak­ing rewards. 

Before we get too far into that, let’s rewind a bit and start with what stak­ing is, why hav­ing it is new and a big deal, and what the impli­ca­tions are. Let’s start with what stak­ing is, and why a project might offer it. In many cryp­to projects you’ll stake, or lock up, tokens in exchange for the right to con­tribute to the blockchain in some way and be reward­ed for that con­tri­bu­tion. One exam­ple of con­tribut­ing is run­ning a blockchain val­ida­tor. A val­ida­tor makes sure all the trans­ac­tions sub­mit­ted to the blockchain are valid. If you use your val­ida­tor nefar­i­ous­ly (to cheat by val­i­dat­ing bogus trans­ac­tions), you stand to lose your stake. If your val­ida­tors con­tributes to the net­work by help­ing val­i­date trans­ac­tions, you get paid in tokens. 

When you “stake” HNT, you’re doing some­thing dif­fer­ent: You’re buy­ing vot­ing pow­er. The more HNT you stake, and the longer you stake it for, the more vot­ing pow­er you get in return. That pow­er is count­ed in “veHNT”, or Vote Escrowed HNT, and you can read about it here.

You don’t get any­thing oth­er than vot­ing pow­er when you stake. If you’d like to earn tokens for your stake, you’ll need to take anoth­er step, which is to “del­e­gate” your stake.

When you del­e­gate your stake to a sub­DAO (cur­rent­ly IOT or MOBILE), you’ll earn tokens from that sub­DAO. The more you del­e­gate, the more you earn, BUT it’s a lit­tle more com­pli­cat­ed than that. Let’s start at the top, with look­ing at ALL avail­able HNT.

If we think of HNT as a giant pie split up into slices, the first split comes when we carve out the HNT set aside for HST, or Heli­um Secu­ri­ty Tokens. HST is what investors in the Heli­um Inc got when they put in their mon­ey, as recent­ly as 2021 and as far back as 2018 or so. HST is super valu­able, super rare, and not (as far as I know) for sale any­where. It’s good to know it exists, but it’s not real­ly worth focus­ing on.

The HST split of all avail­able HNT looks about like this (rough­ly a third).

Let’s focus on the HNT we DO get access to, which is the largest slice of that pie at 68%. If we cut that out and make it it’s own pie, here’s how it would look if MOBILE and IOT were per­fect­ly balanced.

In that sce­nario there are only 2 sub­DAOs, MOBILE and IOT. They each get exact­ly half of the pie, and each pays out 6% of the HNT it gets in the form of its native token to those who del­e­gate their HNT to the sub­DAO. Now, that’s not all how it’ll shake out. In the ear­ly days fol­low­ing the tran­si­tion, things went pret­ty lop­sided in favor of IOT, and at one point the pie looked a lit­tle like this:

Because the sub­DAOs pay out just 6% of the HNT they receive based on how many del­e­gat­ed votes they get, that pay­out slice can get mighty fine.

Of course, it could go the oth­er way, in MOBILE’s favor, which might look some­thing like this:

How­ev­er it shakes out, we’re in new ter­ri­to­ry here. As you can see, the more veHNT is del­e­gat­ed to a sub­DAO, the more pow­er­ful that sub­DAO gets. At the same time, the more veHNT goes to a sub­DAO that YOU are a part of, the low­er your indi­vid­ual del­e­ga­tion rewards. The whole thing is slight­ly more com­pli­cat­ed than the dis­tri­b­u­tion in a box of Chee­rios, although if you zoom out enough, it comes down to this:

The more valuable a network IS, the more value those who participate in it will receive. That’s it.

We haven’t scratched the sur­face beyond stak­ing and into the rest of what Solana brings, like a new devel­op­er ecosys­tem, light­en­ing the load on the Nova and Foun­da­tion blockchain teams so they can re-focus on build­ing wire­less net­works, and the impli­ca­tions of the advan­tages from com­bin­ing all that.

Just think, pret­ty soon there’ll be smart con­tracts revolv­ing around sen­sor data picked up from Heli­um based weath­er sta­tions that feed into giant insur­ance pools man­ag­ing risk across the globe that are sup­port­ed by DeFi prod­ucts, and it’ll all hap­pen on Solana. The ride is about to get wild! 

Before you get dis­cour­aged, remem­ber this: Those who learn fastest stand to see the most suc­cess, and right now there’s an awful lot of learn­ing to do! As a human you have a native abil­i­ty to learn, and the more you learn the bet­ter you get. Start new, don’t wor­ry if you make mis­takes at first, hang on, and enjoy the ride into the future we’re all cre­at­ing togeth­er. Rock ‘n roll!