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Leased proof-of-stake (LPoS), explained

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Understanding leased proof-of-stake

LPoS is a type of PoS meant to increase mining power, address inherent issues found in PoW, and improve other types of PoS, such as delegated proof-of-stake (DPoS).

Regular cryptocurrency users have probably come across the term proof-of-stake (PoS) when dealing with crypto staking, but what is leased proof-of-stake (LPoS), and is there a connection between the two?

Yes, they are related, as LPoS is simply a variant of the PoS system. Proof-of-stake is a key element of the blockchain consensus mechanism, where validators participate in staking to generate and validate transaction blocks.

Validators on proof-of-stake platforms typically have to stake more cryptocurrency to improve their chances of block generation, and here is where LPoS comes in handy. Tokenholders who don’t have the technical know-how or financial muscle can lease their tokens to validator node operators, enhancing the validator’s chance to receive the opportunity to create new blocks. In return, they will earn a share of the transaction fee paid to the validator.

In an LPoS environment, tokenholders can lease their stake or run a full node. However, the more tokens staked by a node, the better its chances of being selected to generate a new block. LPoS allows users to acquire the proceeds of mining without going through the mining process.

How leased proof-of-stake works

 LPoS operates on the same premises as a lottery in that more stakes increase someone’s chances of winning rewards.

So, how does leased proof of stake work? The LPoS system follows a series of set processes:

  • Create a lease transaction: Tokenholders lease coins to a node, specifying the amount and recipient address. Leases can be canceled at any time.
  • Wait for block generation: Leased funds join a node’s pool, increasing the chance of winning the next-block lottery.
  • Consensus participation: LPoS lets leasers join the consensus process; larger nodes have better odds of generating the next block.
  • Generate blocks: Winning nodes validate transactions, compile them into blocks, and earn transaction fees as rewards.
  • Share rewards: Node operators distribute rewards to leasers based on their investment, with higher stakes leading to more substantial rewards.

Please note that the leased tokens never actually leave the leaser’s hardware wallet and remain in total control of the tokenholder. The holder only links the chosen node(s) and doesn’t transfer the tokens to the said node.

No party can trade or transfer the tokens, including the holder. The holder can only transact or spend the allotted coins upon canceling the lease. 

Key features of leased proof-of-stake

Some of the features of LPoS include decentralization, balance leasing, fixed tokens and scalability. 

The main features of LPoS include:

Balance leasing 

Leased tokens do not transfer to validators, nor can they be traded. Users can lease out their tokens and money from cold storage or wallets.

Decentralized

LPoS divides rewards based on the staked amount, doing away with the need for a mining pool. It’s also great for blockchain governance, as it uses a peer-to-peer protocol to prevent third-party intervention.

Unpredictable block generation

There’s no way to predict who will win the right to generate the next block. The only thing worth noting is that the bigger a node’s economic stake, the greater its chances of winning the right to generate the next block.

Fixed tokens

Mining does not add more tokens to LPoS, as the system only allows token leasing.

Scalability

Developers of LPoS prioritize high-on-chain scalability over second-tier apps.

Rewards

Other blockchain systems offer block token rewards, but LPoS issues transaction fees to reward successful node operators.

The role of LPoS in blockchain validation

LPoS is a type of PoS used to validate cryptocurrency transactions in a blockchain network. 

LPoS utilizes nodes or network devices to verify and validate blockchain transactions. Node-based validation uses computational randomness, hinged on the financial stake of a node, to assign rights to validate blockchain transactions.

A PoS consensus algorithm relies on these factors to determine what node is best fit to validate transactions at any given time:

  • Age of tokens: The longer the staked tokens remain unused on the LPoS platform, the better the chances of being selected to validate the next transaction. The instant the stake verifies LPoS transactions, its age resets to zero.
  • Size of stake: The greater the stake, the better the chance of validation selection.

PoS uses passive cryptocurrency deposits rather than the raw computational power in mining hardware used in proof-of-work (PoW) systems, making PoS more resource-efficient than PoW.

Currently, two leading blockchains use LPoS. The first is the Waves blockchain, which uses the LPoS consensus algorithm to verify the blockchain’s state by allowing users to lease tokens to generating nodes and receive rewards distributed by these nodes. Finally, Nix utilizes a permissionless staking mechanism that allows users to stake through a different third-party wallet, with the third party responsible for the staking.

NIX LPOS wallet

Benefits of leased proof-of-stake

The many benefits of LPoS stem from gaining rewards without actively trading, increasing your chances of receiving rewards by joining a larger node, and the inherent security features hard-baked into the LPoS process.

One can realize several benefits from engaging in LPoS:

Passive investment 

Users can participate in block generation and receive some rewards without actually participating in the block-generating process.

Allows smaller investors to participate

LPoS protocols contain a minimum investment requirement for network participation. For instance, Waves only allows a node to participate in block generation if it has a minimum of 1,000 Waves (WAVES). Investors with less than this can lease cryptocurrency tokens to more prominent nodes for a chance at gaining rewards.

Difficult to manipulate

The LPoS generating balance rule calculates the lowest balance after considering leasing in the latest 1,000 blocks, thwarting manipulation attempts by moving funds between accounts.

Increases chances of winning rewards 

The LPoS works in a way that rewards nodes with the most significant economic stake in the network. Therefore, leasing tokens to a bigger node increases the chances of receiving rewards than if the leaser decided to go solo.

Retain ownership

No one can trade or transfer the leased tokens (which won’t even leave the wallet), minimizing the chances of loss.

Low barrier to entry

It does not require mining hardware to participate in validation.

LPoS crypto mining alternatives

Alternatives to LPoS that utilize PoS include delegated proof-of-stake, pure proof-of-stake and proof-of-validation.

While technically not a way to mine cryptocurrencies, PoS allows users to validate transactions and create new blocks on a blockchain. LPoS enables users to lease crypto tokens to nodes that validate LPoS transactions.

Several alternatives to LPoS allow users to make use of the PoS consensus mechanism:

Delegated proof-of-stake (DPoS)

Users can delegate the production of new blocks to delegates or witnesses through a democratic voting system, with votes weighted by the number of tokens held on a platform.

Pure proof-of-stake (PPoS) 

This one is mainly used by the Algorand blockchain for the development of decentralized applications (DApps). Users can cast their votes to select representatives who vote on proposals and propose new blocks.

Proof-of-validation (PoV)

This aims to achieve consensus through staked validator nodes. The number of tokens staked with each validator determines the validator’s voting numbers. When a validator with a minimum of two-thirds of the network’s total voting submits a commit vote on a block, that validates the new block.

Hybrid proof-of-stake (HPoS) 

Some LPoS protocols leverage the power of PoS and PoW. They use PoW to create new block housing transactions and use PoS to validate the blocks.

Cryptocurrency

New Investment Opportunities in the Web3 and AI: BYDFi Launches VIRTUAL, CLANKER, and GRIFFAIN

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[PRESS RELEASE – Seychelles, Seychelles, January 2nd, 2025]

Amid the deep integration of Web3 and AI technologies, the BYDFi cryptocurrency exchange has recently launched three forward-looking AI concept tokens—VIRTUAL, CLANKER, and GRIFFAIN—providing global investors with the opportunity to tap into emerging markets.

VIRTUAL: A Leader in the AI Agent Ecosystem

VIRTUAL, the native token of Virtuals Protocol, has been recognized by Grayscale as one of the “Top 20 High-Growth Potential Tokens.” Currently, VIRTUAL has a market cap of $3.4 billion, ranking 43rd in cryptocurrency market capitalization. According to data from GMGN, it always tops the ranking among tokens on the BASE blockchain. Currently, the price of VIRTUAL is $3.49, with a 30-day ROI of 117% and an increase of 23,757.6% in the past year. Lookonchain monitoring revealed that 19 days ago, an investor purchased 4.25 million VIRTUAL tokens for 10 million USDC at an average price of $2.39 per token. Tokens that are now worth $21.5 million.

The market performance of VIRTUAL is largely driven by the rapid growth of the AI Agent ecosystem. As a leading project in this space, Virtuals Protocol is emerging as a “production factory” for decentralized AI Agents, providing robust support for their development and deployment.

Jansen Teng, co-founder of Virtuals Protocol, stated: “We have launched over 11,000 AI agents to date, with more than 140,000 Virtuals token holders and cumulative revenue exceeding $35 million. We are exploring various use cases for autonomous AI agents (Autonomous Agents), including applications on social media platforms like TikTok.”

CLANKER: The “Dark Horse” of the Token Market

Clanker is an AI token issuance platform based on Farcaster. It simplifies the process of issuing token assets. The project was developed by Jack Dishman, a full-stack engineer at Farcaster, and ecosystem developer @proxystudio.eth. The first meme token issued by Clanker is CLANKER itself. As of the time of writing, its price stands at $73.96, with a market capitalization of $73.33 million.

Previously, Clanker co-founder @proxystudio.eth responded to MetaMask co-founder Dan Finlay, stating that the team is upgrading the Clanker smart contract to allow users to directly claim a 40% revenue share (including ETH and tokens).

GRIFFAIN: An AI Solution on the Solana Blockchain

Griffain is an innovative project in the Solana ecosystem, leveraging the unique synergy between cryptocurrency and artificial intelligence to theoretically perform almost any task. Based on use cases shared on the social platform X, Griffain’s capabilities go beyond those of traditional chatbots. Users can directly purchase alcoholic beverages via Griffain and complete transactions using cryptocurrency or other payment methods—all, within the chat interface. Additionally, Griffain can assist users in selecting and purchasing Christmas gifts, offering a seamless, one-stop shopping experience without leaving the chat window.

Being one of the closest projects to the “Agentic APP” concept, Griffain has received the support of many different influencers in the Solana ecosystem. According to the latest market data, its native token once reached a market capitalization of $400 million, pulling back a bit now, with a token price of $0.289.

Accessing BYDFi for Trading AI-Concept Tokens

Currently, BYDFi enables users to easily trade many well-known AI concept tokens by visiting BYDFi website or through the BYDFi app, like some of the newly launched popular tokens: GRIFFAIN, VIRTUAL, and CLANKER. Other highly sought-after AI concept tokens such as AICell, MONKY, FROG, and LUNAI are now also available for trading on the BYDFi platform.

About BYDFi

Founded in 2020, BYDFi has earned the trust of millions of users worldwide through its commitment to optimizing user experience and continuous innovation. Recognized by Forbes as one of the Top 10 Best Global Crypto Exchanges , the platform offers spot trading for over 600 cryptocurrencies as well as flexible leveraged trading options ranging from 1x to 200x. By partnering with internationally renowned payment service providers such as Banxa, Transak, and Mercuryo , BYDFi has simplified the crypto purchasing process, enabling users to buy crypto with ease and at low costs .

BYDFi is dedicated to building a world-leading crypto trading experience for users. BUIDL Your Dream Finance

For inquiries and support, users can reach via the following:

  • Website: https://www.bydfi.com
  • Support Email: CS@bydfi.com
  • Business Partnerships: BD@bydfi.com
  • Media Inquiries: media@bydfi.com

Users can stay connected with BYDFi through their social media platforms:

Twitter( X ) | LinkedIn | Facebook | Telegram | YouTube

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Double-Digit Gains From These Alts as Bitcoin Price Eyes $96K (Market Watch)

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Bitcoin’s start of the new year was painful as the asset slumped toward $93,000 once again, but it has reacted well and now sits a few grand higher.

Numerous altcoins have produced impressive gains over the past 24 hours, with ETH surging past $3,400 and XRP gaining 12% of value.

BTC Eyes $96K

Following its latest all-time high of over $108,000 on December 17, BTC went into a full correction mode, dumping by $16,000 within just days by December 20. It bounced off in the next week or so and even challenged $100,000 on a few occasions, but to no avail.

The subsequent rejection from the second attempt pushed it south hard to $91,300 on December 30, which became its lowest price tag in over a month.

The bulls finally stepped up at this point and propelled a run toward $95,000, where they were stopped, and BTC slipped beneath $92,000. More volatility ensued at the end of the calendar year, with a surge to $96,000 and another drop to $93,000.

The past 24 hours have been more positive for the largest digital asset, as it now stands close to $96,000 once again. Its market capitalization has risen to $1.9 trillion on CG, while its dominance over the alts has taken a hit to 53.8%, as most have registered impressive gains.

Bitcoin/Price/Chart 02.01.2025. Source: TradingView
Bitcoin/Price/Chart 02.01.2025. Source: TradingView

XRP, XLM on the Rise

Most altcoins dumped hard yesterday, but the landscape is entirely different today. Ethereum slipped below $3,400 but has reclaimed that level after a 2.5% daily surge. Similar increases are evident from BNB, TRX, and TON, while SOL, DOGE, ADA, AVAX, LINK, and SHIB have unlocked gains of up to 11%.

XRP has stolen the show from the top 10 alts, with a surge to $2.38 (12% on a daily scale). XLM is the top performer from the larger-cap alts, gaining 22% and trading above $0.42.

The cumulative market cap of all crypto assets has added over $130 billion overnight and is up to $3.53 trillion on CG.

Cryptocurrency Market Overview. Source: QuantifyCrypto
Cryptocurrency Market Overview. Source: QuantifyCrypto
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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.

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Pump AI Challenges Virtuals, Focuses on Solana AI Agents with Meteora

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[PRESS RELEASE – Dubai, United Arab Emirates, January 2nd, 2025]

Pump AI aims to be a major driving force for adopting Meteora via its advanced AI-powered token generation ecosystem. The protocol enables anyone to create, manage, and issue tokens with a few AI prompts. This approach eliminates technical roadblocks like coding and blockchain adoption. Similar to what Virtuals and Pump Fun have already accomplished.

Pump AI Has Major Backers and Integrations

Industry leaders support Pump AI. The protocol has secured backing from Meteora, Ape Terminal, M3M3, and Cherry so far. Additionally, the project works directly with multiple bots including Photon, Maestro, and Banana Gun. These partnerships ensure new user flow.

Pump AI is the New Meta for Token Launches

Pump AI is the first and only AI-powered launchpad in the Meteora ecosystem. This liquidity layer for Solana has 300K+ active users and has helped the network expand its performance and developer community. Notably, Meteora is more than just integrating Pump AI, it’s one of its main backers.

Due to this positioning, Meteora will help funnel its hundreds of thousands of daily users to Pump AI. This user flow will operate similarly to how PumpFun drew users from Raydium. The support from Meteora will drastically lower the average per-user acquisition cost for Pump AI and provide Pump AI with a major user catalyst and on-ramp.

Pump AI is a Bonding Curve Launchpad

Pump AI provides additional features for new projects seeking to enter the market. For one, it has variable bonding curves, or set marketcaps needed to open on Meteora. This structure allows token issuers to determine a preset value for their pool to hit before going live on the Meteora exchange. Notably, Pump AI can handle thousands of token launches, potentially equaling hundreds of millions in fees generated daily.

Pump AI Leverages Meteroa’s DLMM and M3M3’s Staking Tech

Pump AI integrates Meteora’s unique DLMM system for potential liquidity. The system pays out rewards generated from slippage and spreads derived from token liquidity.

Additionally, the M3M3 stake-to-earn protocol rewards namecoin stakers for their potential liquidity and encourages long-term staking.

What’s Next for Pump AI

Pump AI plans to accelerate development and expand its ecosystem. Key upcoming milestones include its Token Generation Event, the release of the AI powered Launchpad, partnerships with more industry leaders, and collaborations with AI developers across the tech space.

$PUMPAI Token has Multiple Streams of Value

$PUMPAI is a versatile digital asset that operates as the main utility and rewards token for the ecosystem. Notably, trading fees from Pump AI go towards buybacks that get added to treasure troves. This strategy allows stakers to secure Pump Points, granting access to treasure troves containing $PUMAI tokens.

Additionally, Pump AI will use a portion of all fees collected on the platform to buy back and burn $PUMPAI tokens.

About Pump AI

Pump AI is a leading Bonding Curve (set marketcap) Launchpad on the Meteora ecosystem, enabling projects to launch with customizable curves, high-throughput capacity, and integrations with Meteora’s advanced DLMM for optimized liquidity and user incentives.

Pump AI leverages M3M3 staking technology to allow projects to easily enable staking and LP farming on Meteora’s DLMM. Meteora’s DLMM system allows people to earn $SOL rewards from the liquidity around their token as long as it’s paired with $SOL.

Website: https://PumpAI.ag/

Twitter: https://x.com/pumpdotai

Telegram: https://t.me/PumpdotAI

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