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Helium Validator Mainnet went live on June 23rd, 2021. As outlined in HIP 25, validators are a crucial improvement to the Helium network. Instead of hotspots performing consensus work on the blockchain, that job now falls upon the validators. Unlike hotspots, validators are not physical hardware. They are meant to be run on cloud-based platforms such as Amazon Web Services. This provides more security and reliability while allowing the network to scale. This was a necessary step in paving the way for light hotspots.
Before Mainnet went live, it was possible to run validators on testnet. Though there was no monetary reward for those running these experimental validators, many were happy to pay for the hosting in order to help the project move forward. It also acted as a dry run for those hoping to run their validators in production. I participated myself. This stage lasted months longer than expected, but on June 23rd mainnet was launched.
Earnings and ROI
The most compelling aspect of Helium validators is that there is a potential for those who stake 10,000 HNT to receive a large ROI. Pre-halving, the ROI was as high as 360%. Today, the effective ROI is 8.5%. There are over 2100 validators. Each validator requires a fixed amount of 10,000 HNT. Considering there is a circulating supply of roughly ninety-five million HNT, that means that nearly 23% of the supply has been staked. That’s an unbelievably high number that has surprised many in the community. Surely, there aren’t 2100 individuals who each accumulated at least 10,000 HNT. How is this possible?
Partial staking services are the reason that so much HNT has been locked up via staking and that the ROI is “so low.” In exchange for relinquishing custody of coins and sacrificing some portion of earnings, partial staking services allow users with less than 10,000 HNT to earn rewards as if they ran their own validators. These services offer a further benefit in that they provide liquidity pools with the goal of allowing users to unstake while not having to wait the full five months (or, forever, as would be the case if there was only one shared validator and no liquidity).
Some service providers also offer fully-managed staking services, in which a user can retain custody of HNT while paying a flat monthly fee. These solutions will be seen as attractive to those who don’t have experience deploying apps to the cloud.
Did Any Issues Arise?
The mainnet rollout went smoothly. The only issues were likely on the client side, as missing some steps in the validator setup guide could cause problems for individuals. While it is easy to debug for those who have technical expertise, the staking experience is still geared toward technical users. The layman may feel pressured to purchase a plan from a staking-as-a-service provider. The good news is that one of Helium’s goals for 2021 is to make the staking process significantly easier. The team is planning to make it possible to stake directly from the app, and is also exploring overstaking/slashing based on community feedback.
Will Staking Helium Continue to be “Worth it?”
The current ROI of 8.5% is broadly appealing. While it’s not as high as many who rushed to get to 10,000 HNT envisioned, it’s a return that will continue to motivate people to stake. It’s still higher than many other more-established staking reward systems, though it comes at the cost of having a lock-up period of roughly five full months. During the cooldown, the validator will not earn rewards.
How one measures worth can be highly subjective. Currently, aside from devising a scheme to provide market liquidity, staking HNT is one of the only productive things one can do with the currency. Committing to running a validator requires adjusting a time horizon to one that includes the five-month cool down. Many are of the opinion that the direction of the project is positive, and with that comes the confidence to make a long-term commitment in helping the network run more efficiently.