Who doesn’t like passive income? More and more blockchains are implementing mechanisms so their investors can earn some passive income, and among them is Neblio, a blockchain platform for enterprise solutions.
Neblio has made the generation of passive income possible by employing the Proof-of-Stake consensus algorithm on their blockchain platform. Even though Neblio’s platform is business-oriented, their staking model is open to everyone. There is no minimum staking amount and the average expected returns are estimated to be 10% per annum, which makes it one of the best Proof-of-Stake coins for earning passive income.
So if Neblio’s staking model has drawn you in with its promise of lucrative expected returns and you’ve been looking for a beginner’s guide on how to get started, just keep reading.
To ensure that all members of the Neblio network behave honestly and their transactions can be trusted, Neblio employs a Proof-of-Stake (PoS) consensus algorithm.
PoS algorithms are becoming increasingly popular, mainly due to the fact that they are much more energy efficient than Bitcoin’s Proof-of-Work algorithm. There are other cryptocurrencies that employ the Proof-of-Stake algorithms such as Decred and Stratis.
Instead of requiring large quantities of electricity and computing power to validate transactions, the Proof-of-Stake consensus algorithm requires network members to hold and stake their cryptocurrency holdings to validate transactions.
This works kind of like a lottery, in which your chances to win increase with the more tickets you own. In PoS, the odds of a user being appointed to verify transactions and receive the accompanied reward is based on the number of coins you stake.
The more coins a user stakes, the bigger the chances are that your wallet is picked to solve a block.
Neblio’s PoS consensus algorithm also follows this logic, but with some customizations. A new staking “winner” is appointed through the algorithm roughly every 2 minutes, after which the appointed wallet validates the submitted transactions and receives newly-created Neblio coins.
A key requirement to be eligible for staking rewards is that your wallet has to be online. This has been implemented to motivate active staking (instead of depositing your coins in a staking wallet and checking the balance every now and then) which makes the network more secure.
You can only receive staking rewards in the period that your wallet is online. This means that if I were to open my wallet right now and leave it open for only a few minutes, I can only ever be selected to validate transactions and receive the rewards based on the few new blocks created in that period (approximately every 2 minutes).
To establish how long specific coins have been in a wallet, Neblio has implemented something called coin age. This refers to the time that a coin has been in the same wallet.
Say I’ve bought 100 NEBL from an exchange and send them to my Neblio wallet on a Monday (13:00). On Thursday, the coin age of these 100 NEBL is 3 days. Coin age starts when the coins enter the wallet and stops when they leave the wallet.
In the Neblio staking system, coin age is important because it is the basis of your “weight.” This weight is the number submitted to the staking pool and is the total number of coins you have plus a bonus for your coin age.
The weight starts increasing after the coins have been idle in a wallet for 24 hours and increases up to 7 days, after which the weight remains the same as long as the amount of NEBL doesn’t change.
So someone with 100 coins that have a coin age of 7 days has a larger weight than someone with 100 NEBL with a coin age of 2 days, but the same weight as someone with 100 NEBL and a coin age of 50 days.
The chances of your wallet being picked for validating transactions is based on this weight relative to the the total network weight. Even though the selection process is randomized, the more weight you have, the bigger the chances are of your wallet being selected.
Say the total network weight is 100,000 and your weight is 500. Then you have a 0.5% chance of receiving a staking reward. Again, to be eligible at all, you need to ensure that your wallet is open and online.
It’s important to know that once you’ve received a staking reward, the coin age of the staked coins that caused the rewards will return to 0.
How to Stake NEBL
In order to stake, make sure your wallet is open, unlocked and online. If you do this, your wallet will stake automatically.
After these few initial steps, staking Neblio is actually passive. For extra security, encrypt your wallet in the wallet options. Just make sure you never lose the password for encryption.
Here’s the step-by-step process to stake Neblio:
- Get your NEBL coins.
- Download the Neblio wallet.
- Sync your wallet with Neblio’s blockchain (may take a while).
- Encrypt your wallet. Do this by checking “settings.” Choose to encrypt the wallet, then create a secure password and store this safely.
- Send your coins to your Neblio wallet. We suggest trying first with a small amount.
- Unlock your wallet to start staking!
On the Neblio subreddit, one active user shared this excellent guide on how to stake Neblio for those who want to keep their wallet online all the time but want a separate device for it. In this guide, the writer recommends getting a cheap Raspberry Pi 3 to use for staking your Neblio tokens instead of having your personal computer switched on 24/7.
Some important reminders when staking NEBL:
- Coin age is very important for staking Neblio. A new batch of coins need 24 hours to become part of staking and after 7 days they’ve reached their maximum weight (and thus maximum returns potential).
- Remember to leave your wallet open for staking.
- Encrypt your wallet for extra security.
The estimated return on investment is 10% per year (as long as your wallet is open), which is quite a good return relative to Neblio’s PoS competitors. There’s no minimum amount of NEBL coins required to stake. You can estimate your exact returns here.
As soon as you’ve sent your Neblio tokens to your own wallet, it takes 24 hours for your coins to mature after which your staking returns will start coming in. Happy staking!
Related: 5 Reasons to Keep An Eye On Neblio