Update: Part 2 (7 months later) is here.

Disclaimer: This is NOT financial advice and should not be taken as such. Not guaranteed to be correct or continue to be correct. Do your own research.

This is a stripped down cross-post from my original on Medium.

Background

Ontology staking round 1 started in mid Oct 2018. As an experiment, I staked 500 ONT on Dubhe node from Round 1 (mid Oct) till end Oct. One component of the staking returns is distributed monthly and the first distribution came in on 1st Nov 2018. The staking ROI was therefore unknown until now.

Details

I’m using 1 stake (500 ONT) on Dubhe node. I started staking from Round 1 till present. At pixel time, ONT is worth USD 1.65 and ONG worth USD 0.88. That is, my stake is worth 825 USD.

What are the components of the staking returns?

By staking, you earn rewards from:

[a] Regular ONG generation (this is the same even if you’re not staking)

[b] Fees from basic consumption of the entire chain network system (network fees, storage fees, smart contract fees, and fees from other services)

[c] And for the first 3 years, additional ONG from the Ontology Foundation Bonus.

Actual Returns

Based on my stake, starting from Round 1 I collected:

[a] + [b]: ~8 ONG (7.04 USD)

[c]: 10.78 ONG (9.49 USD) [This part differs based on node. See below for the returns of each node.]

Given that ONG generation [a] is about 8% annually, reverse calculation would put [a] for my stake to be: 825*0.08/12 = 5.5 USD

That would place [b] to be 7.04–5.5 = 1.54 USD

Therefore, for a 825 USD stake, the returns breakdown is:

[a]: 5.50 USD

[b]: 1.54 USD

[c]: 9.49 USD

Now, Round 1 started on block 534,299, in the middle of Oct 2018, around 12 Oct. That’s 20 days till end of Oct. Extrapolating to a full calendar month, the returns for a 825 USD stake would be:

[a]: 8.53 USD

[b]: 2.39 USD

[c]: 14.71 USD (assuming this was also pro-rated for Oct)

The total returns for a full calendar month: 25.63 USD

This gives a annual ROI of 25.63*12/825 = 0.373 or 37.3%! Not a bad deal compared to hodling ONT(8%), NEO (3%), or BIX (15.6%).

Analysis

This means that the ONG Foundation Bonus [c] forms the bulk of the ROI so be sure not to miss it! This component alone gave 21.4% ROI (more than half of the total ROI).

Also, even though returns from fees [b] is currently minuscule, this is the only component that scales with the usage of the Ontology network and is so more “future-proof”. As the Ontology network grows, we can expect [b] to increase as well. If you believe in Ontology’s future, this is the component to watch!

In contrast, components [a] and [c] scales based on your stake amount, and [c] even has a end date.

Disclaimer

The returns of course depends on the node. Not all nodes are equal. In general, you’d want to choose the node that has higher reward proportion (so that the pizza is bigger) and lower current total stake (so that each slice is bigger). If you have 2 or more stakes, telegram community members have recommended splitting them between different nodes to average out the returns.

The node I used (Dubhe) is currently suggested by the Telegram community to provide the lowest returns out of the nodes. Your mileage may vary.

ONG Foundation Bonus for each node

ONG per 1 stake (500 ONT)

October 2018: (Credits to @andreidita on Medium)

Dubhe — 10.7

Mixar — 43.1

Alkaid — 46.01

Megrez — 46.17

Phecda — 46.5

Alioth — 48.1

Merak — 54.9

Warning: Returns fluctuate, and it would have changed since this article was published. In fact, since then, a lot of people started staking and returns have fallen. Please take note if you do start staking!

FAQ

What is the Ontology Foundation Bonus/Reward/Airdrop?

This is [c].

Nodes will receive a bunch of ONG per year for the first three years from the community incentives allocation. This will be distributed to stakers. However, there is a requirement:

Stakers must maintain their stake in a node for the entire calendar month to receive Ontology Foundation rewards for that month. You will receive this portion directly to your wallet.

That means you will have to be staking continuously from the 1st of the month to the 1st of the next month (ie, a full calendar month). In practice, this means you have to enter the round before the month starts and stay on until the month ends or beyond.

Where will I receive the staking rewards?

For the ONG Foundation Bonus [c], it will be sent directly to your wallet.

For the other 2 components [a] + [b], it will be in the Stake Authorisation screen, in the screen after selecting a node. You will need to click on Redeem.



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