MatPool to Run NEO Node, 2019 The Year of Staking Economy
There’s a concept in economics called the “Lotus Pond Effect” – suppose one day a lotus leaf emerges in the pond, the next day there are two, and on the third day there are four… till certain point, the lotus leaves will cover half the pond. After that day, the pond will be all covered with lotus leaves overnight. It means things grow slowly in early days but will see blistering growth after certain point. This is exactly the same case with Bitcoin.
Since its inception in 2008, Bitcoin and the crypto world have undergone rapid growth. In the aspect of bitcoin mining, BTC.com and F2Pool have risen becoming the mining giants over the decade. In 2018, EOS was launched; In 2019, Ethereum stepped to switch from PoW to PoS, star cross-chain project Cosmos launched on March 14, public chains based on DBFT, PoS/DPoS and VBFT like NEO, IRIS, Ontology and more are gradually opening up community governance. In such a context, Staking economy is becoming the recent most talked about topic in the crypto sphere. But when will PoS mining pools see rapid growth like aforementioned lotus leaves?
Regarding this, we have the opportunity to talk with MatPool COO Li Zongcheng and NEO project about the trend of PoS mining, potential industry leaders in PoS mining, as well as obstacles for PoS mining.
MatPool to run NEO node, NEO testnet now has six participants
Founded in 2014 by early blockchain evangelist Da Hongfei, NEO is the first public chain born in China with the consensus mechanism DBFT. NEO founder Da Hongfei has said in an interview with 8btc in August 2018 that the team’s influence will continue to decline as votes are distributed over the next few years, and they do act this way.
Recently, China-based crypto mining pool MatPool has been voted by the community to run the NEO test node after completing technical docking and will become a consensus node after six months’ stable operation. Prior to it, the consensus nodes of NEO testnet are maintained by NEO Foundation, NEO Global Development, CityOfZion, KPN and Swisscom.
MatPool was launched in September 2018 as a mining brand under China’s first and oldest bitcoin social media site 8btc. Jin Lei, a former Facebook engineer, served as project leader and CTO of MatPool, Li Zongcheng, a partner of 8btc, served as its COO. According to Li, MatPool is aiming to integrate computing, consensus as well as value, and build a benchmark and platform for blockchain computing and supernode service, providing a stable and secure environment for all consensus mechanism participants of various blockchains.
Speaking of the reason for MatPool to run for NEO node, Li said, one of the reasons is that NEO is a well-established public chain in China with technology strength and big user base, running for its node is a recognition of the project and its technology implementation; for another reason, MatPool is optimistic about NEO ecology and willing to join in its ecosystem construction.
Who will take the lead in PoS mining? These three factors are crucial
From the evolvement of leading PoW mining pools, the reasons how they stand out can be summarized as follows. First, it starts early and builds its brand advantage, take F2Pool for example, it is currently the third largest bitcoin mining pool with more than 14% of bitcoin hashrate; Second, take the advantage of advanced mining equipment, for example, BTC.com, a mining pool of crypto miner maker Bitmain, which enables the pool to be equipped with highly competitive machines in the first time.
So, what qualities are required for a PoS mining pool to stand out? Li summed up three qualities.
First comes capital advantage. The mining pool with capital advantage has the opportunity to get low-price tokens via participating in the early investment of high-quality projects. In the early stage of the project, it has the opportunity to participate in the PoS mining of the project, and generally, the earlier it participate in the mining, the more it can earn.
The second is resource advantage. The mining pool that is more close to holders of the token could more easily attract these token holders to vote for it. And exchanges, wallets and media are undoubtedly the closest to token holders in this industry. As a brand under 8btc (the oldest bitcoin media in China), MatPool has this advantage.
Last but not least, technology is the third crucial indicator. PoS mining has challenges such as DDoS attack, intrusion attack, software and hardware downtime, key leakage, etc. Technical strength can ensure the security and stability of nodes and the chain.
“MatPool has all the three advantages.” Li Zongcheng said, supported by 8btc which can provide comprehensive brand promotion services and assist in the community maintenance of the main chain; Timestamp Capital (a fund of 8btc) could exert its capital strength to find, explore and enhance the value of the mainchain; and the mature public chain and wallet tech dev team can provide continuous technical services for the mainchain, monitor and timely adjust the node operating environment.
MatPool currently supports PoW mining of BTM, SIPC, QKC, ZEN, etc, and runs the consensus nodes of NEO, ONT, GXC, and IRIS.
Obstacles of PoS mining?
Since the inception of bitcoin, the PoW mining algo technology has progressed from CPU to GPU then FPGA and ASIC, miners compete against each other to complete transactions on the network and get rewarded by contributing hash power. While “tragedy of the commons” and the waste of resources have been the focus of the debate in PoW mining. Under such backdrop, in 2011, the consensus protocol PoS was born, which makes the entire mining process virtual and have verifiers instead of miners. Since then, more variants have been derived from it, such as DPOS, DBFT.
Since 2016, PoS has gradually moved from a concept to actual implementation. During 2018-2019, as a plurality of PoS coins launched their mainnet, the corresponding node services are in urgent need. According to incomplete statistics, the past two years have seen nearly 80% of the new public blockchains start to adopt the consensus mechanism POS and DPOS.
“POW mining has been a red sea market, while POS is the blue sea. (In such a context) we need to set new requirements for our team and business model.” Said Li.
As per the data from QKL123, POS coins account for less than 10% of the market cap of all cryptocurrencies.
In this sense, the market of POS mining seems to be small compared to POW. While in Li’s view, Bitcoin keeps track of account asset data, Ethereum keeps records of contracts, and public chains like EOS record more complex contracts, which means the crypto sphere has been and will be more flourishing with the new-gen blockchains adopting POS mechanism.
The stable operation of bitcoin in the past ten years has proved the value of the POW consensus mechanism. With the gradual landing of public chains like Cosmos, NEO and ONT, the public chain adopting POS consensus has begun to practice the irreversibility of the ledger and the complexity of contract.
“From logic to practice, the ‘car’ has started its journey, as for what the ‘car’ can carry, this is what all of us are exploring.” Li said.
Is POS mining only a niche market in the blockchain sphere? or the first lotus leaf in the pond? Time will tell.