Decred Staking – Everything You Need to Know



Decred staking is an innovative solution, as is the coin itself. Rather than being a simple collecting of currency and holding it, DCR’s network operates based on a hybrid Proof of Work and Proof of Stake solution. The gist of it is that you either mine or buy Decred coins and use those to purchase tickets. In essence, you buy into increasing your chances to win the “lottery” and be chosen to validate a block.

Furthermore, during the stage of staking, validators control and prohibit unwanted behavior in the network, even if it conforms to the mining consensus, for example – mining empty blocks. Stakeholders also receive the ability to vote on proposed changes on the network.

Locking your funds into DCR will also allow you to benefit from a developed network that supports Smart Contracts and Atomic Swap.

In this article you’ll learn all there is to know about staking Decred (DCR), how to do it most efficiently and configuring your wallet.

How to Stake Decred


What makes Decred an interesting prospect for staking, is the fact that stakeholders also secure the network with their actions. Having the PoS element embedded alongside PoW pretty much makes a 51% attack extremely unlikely and difficult to achieve. Even if miners somehow collude or centralize mining power, they cannot change the consensus rules on their own. Even so, if a hard-fork does occur, the old chain is abandoned really quickly, as there won’t be any stakers to validate transactions.

To get started with staking Decred, I’ve prepared a step-by-step guide for your convenience. Before we get to that, what we should do, is cover the minimum hardware requirements for the job. Afterwards, I’ll shortly go over ways to buy your DCR tickets and/or get some Decred coins and installing the needed wallet.

Minimum Requirements
  • Compatible systems include Windows, MacOS X, and Linux
  • Install the Decrediton Wallet
  • 5GB of free HDD space
  • 1GB of RAM
  • Reliable, 24/7 internet connection for your wallet
  • At least 100 DCR coins to buy a ticket for staking, based on current prices

Initially obtaining DCR for staking can happen three ways – either by mining it, straight up buying from an exchange, or swapping some other crypto you already own for Decred. To ease the process, you have two alternatives for buying DCR – Bittrex and Okex. Both work with fiat money.

Once you’ve decided where you’d buy your coins from, you will need a wallet to hold them. As previously mentioned, I’d recommend choosing the official one, Decrediton. In the upcoming section, I’ll go over the details of to set it all up, perform backups and unlocking your wallet for staking.

You are presented with two options in general – using a wallet with a GUI (Graphical User Interface) or a Command Line variant. The former is best for people who are just getting started in the world of crypto, while the command line interface is for advanced users.

DECREDITON WALLET SETUP (GUI)

Step 1: Download & Install the official Wallet

Before we begin, you first need to download the wallet from the link provided and simply run the installer. Before we begin, you first need to download the wallet from the link provided and simply run the installer.

For Windows

Download the latest Windows Installer. Double click the exe file and follow the instructions. After it’s done, Decredition will automatically start up and begin downloading Decred’s blockchain. You’ll be presented with the configuration options too. You will also have an icon added to your desktop to launch Decredition next time you use it.

For macOS

Download the .dmg installer. Double click to mount the image once it’s downloaded. Next, drag the decrediton.app into the link to your Applications folder within the disk image

For Linux

Provided you’re running Ubuntu, download the .tar.gz file. Navigate to the download location and extract the file.

Using the Ubuntu file browser – simply right click the file and select “Extract here”.

Terminal: use the tar -xvzf filename.tar.gz command

Both of these should extract the tar.gz into a folder that shares the same name. (e.g. tar -xvzf decrediton-v1.2.1.tar.gz should extract to decrediton-v1.2.1). If successful, this new folder should include a Decrediton executable.

Launch the program, select the desired language and continue. Read through the upcoming steps carefully as they explain the Decred blockchain, wallet, keys, staking/governance and also provide safety tips.

At the next stage, the wallet will start downloading the entire Decred blockchain. You can continue with the setup process while this continues in the background. If you decide to stop the download at some point, it will remember the state and resume from there the next time you run Decredition.

You can manage multiple wallets by creating different names for each. As such, you’ll need to provide one, so you can easily identify them.

Click “Create a New Wallet” if you’re a first-time user or on “Restore Existing Wallet” if you already have a wallet seed.

The upcoming part is critical to your security and safety of your funds. While you’re in the process of creating your wallet, you’ll receive a 33 words sequence known as a SEED phrase. It serves as the private key for your wallet and allows you to restore access, should the need arise.

To secure access to your account and make sure, that you’re able to recover your funds, you need to store the SEED securely, in an encrypted document or flash drive. I cannot stress enough how important this is.

Once you’ve saved your SEED, continue with the next step. You’ll be asked to enter the missing words from your SEED, to confirm you’ve stored it correctly.

Afterward, you can create a private passphrase which will unlock access to your wallet, when you operate with it.

When you’ve entered the necessary information, press “Create Wallet” and you’ll be done. The program will return you back to the blockchain download progress bar. When it’s completed, it will open the Overview page for your new wallet and you’ll be good to go!

Step 2: Back Up the Wallet

Pay special attention to the SEED phrase section of your setup process. Once you have it, I suggest you back it up in multiple locations, as it will ensure that you can restore access to your wallet, in the case of a software or hardware failure.

Step 3: Transfer coins to the wallet

Once you’re done with the setup process, you’ll need to supply your wallet with coins. As I mentioned previously, you can do that using a variety of methods, but in any case, you’ll need to use your wallet’s address to receive any coins. Do keep in mind, that for your funds to show up, you’ll need to be synced up to the latest block in the network.

Step 4: Unlock the Decrediton Wallet

Provided you’re funded, it’s time to buy some tickets for staking. To do so, you’ll need to take part in a Decred Stakepool. A list of available options can be found on the official website and you’ll need to copy/paste the API key of the pool you chose.

By joining a staking pool, you’re able to delegate your voting rights to the pool, without ever giving anyone access to your funds or tickets. This way, even if you’re offline, you’ll be able to receive a reward if your ticket gets called for validation, at the price of a certain fee to the pool.

Once you have done this, the “Purchase Tickets” and “Voting Settings” pages will become active. All tickets you currently own will be displayed at the top of the window. There are three different types:
  • Mempool Tickets – Tickets waiting to be mined by PoW miners (only 20 new tickets are mined into each block)
  • Immature Tickets – Mined tickets which cannot vote until a 256-block maturing period has passed (around 20 hours)
  • Live Tickets – Mature tickets eligible to be called to vote
The purchase tickets panel enables you to buy more tickets. Most settings are already entered, you just have to select which account to purchase tickets from and how many tickets you want to buy.

The automatic purchase panel allows you to continually buy tickets based on certain criteria, as long as you keep it running. You can configure it using the advanced options:
  • Balance to maintain – If your balance is lower than this number, you will not buy tickets. The default of 0 will use all the funds in your account to buy tickets
  • Max Price Absolute – If the ticket price is above this value, you will not buy more tickets. The default of 0 turns this off
  • Max Per Block – Do not buy more than this number of tickets per block. A negative number means buy one ticket every “n” amount of blocks. e.g. -2 would mean buy a ticket every second block
  • Max Fee – Tickets are entered into the mempool in order of their fee per kilobyte. This sets the maximum fee you are willing to pay
  • Max Price Relative – If the current window price is significantly higher than the last few windows, do not buy any tickets. E.g. With the default value of 1.25, if the average price of the last few windows is 50DCR, you won’t buy any tickets if the current window is over 62.5DCR
Congratulations, you’ve reached the end of the GUI setup! Having gone through all the steps, you’re ready to stake and earn some rewards. If you don’t plan on running a CLI wallet, you can skip the next section and jump straight to the details of Decred staking rewards and how to maximize your profits.

Decred Staking Reward

I previously mentioned that to be eligible for staking, you need to wait for 256 blocks to be found after you’ve funded your wallet. Once that period has passed, you have a chance to be chosen as a validator.

On average, you are presented with this opportunity once every 28 days but it can take up to 142 days or 40960 blocks. Once that moment in time is passed and you’re not chosen, you’ll lose the fee that you paid to receive the ticket, but its initial asking price will be refunded to your account. The chances of this happening, however, are less than 0.5%.

Stakers as a whole, receive 30% of the current block reward. In each block, you have 20 tickets included which depending on your investment, could mean that you’re participating with 1 or more tickets. Either way, you’ll receive a proportionate amount.

The return on investment or ROI is roughly 0.6% per ticket but varies in accordance to the ticket price and the PoS reward. Yearly, you can expect around 7.2%.

How to Maximize Rewards

The way Decred staking works is by exchanging your coins for tickets, which serve as “chances” to win the staking lottery and earn a reward. Expanding on that concept, tickets are not divisible units and as such, there’s no way to optimize your earnings. Aside from buying more tickets and trying your luck, you’re left without other options. However, this fact can be viewed as beneficial – there’s no fiddling with wallet settings and transaction optimizations. Decide on an amount you’re willing to invest and simply reap the benefits.

Useful Weblinks

Website: https://www.decred.org

Announcement Page: https://bitcointalk.org/index.php?topic=1290358.0

GitHub: https://github.com/decred

Block Explorer: https://mainnet.decred.org

Whitepaper: https://decred.org/research/buterin2014.pdf

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