This is the second of a four-part mini-series to explain what you can do with your XNS on Insolar MainNet.

What is XNS

XNS is the primary coin powering enterprise blockchain adoption. Staking is just one aspect of XNS, but a vital one as it allows to strengthen the security of the network as a whole.

XNS is Insolar MainNet native coin. Its value is used in staking as a guarantee that computation of transactions will take place fairly and non-maliciously. Infrastructure (node) providers can stake their own coins or ask the community to stake theirs. When the community stakes their coins they receive a share of the fee paid to infrastructure providers for transactions computed.

What is staking

Staking is when the responsibility of actors in a network is collateralized. In Insolar MainNet, this takes place through the use of XNS as both a medium of exchange and a store of value. Node holders can compute transactions of higher value and receive increased fees for providing the computation power. However, they must stake a number of XNS coins per node in order to participate. This amount is used as a guarantee that the node will compute the transaction fairly.

The total value locked up in the staking system represents the aggregate commitment to the security of the network. The value is also an indicator of the total revenue that can be accumulated by nodes participating in consensus.

Stake size determines the value of transactions the node is allowed to process. More expensive (and, therefore, more profitable for the node owner) transactions require a bigger collateral, connecting the profit potential of the node with the size of the financial responsibility of its owner. Bigger stakes translate into greater revenues from processing transactions.

Example: proxy staking

An infrastructure service provider (node holder) in Insolar MainNet wants to compute transactions of higher value. To do so, they need more coins than they currently hold.

The node holder advertises that they need coins from the community to post more collateral against the transactions. The community can study the offer and XNS holders can decide whether to stake their coins.

An XNS holder assigns some of their coins to be staked on the node for a fee. These coins do not leave the holder’s wallet; instead being designated as a sign of faith in the security of the network.

When the node executes or validates transactions, the node holder receives a fee in coins.

The XNS holder who stakes some of their coins receives a share of the fee for the computation.

Should the XNS holder wish to stop offering their coins to be staked, they can simply do so and cash out their coins at any time.

Up next

The next explainer in our XNS mini-series will explain how governance takes place on Insolar MainNet and how coins can be used in network governance.

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