Restructuring passive income streams in traditional crypto!

Crypto is at a crossroads, the Ukraine conflict has, due to its impact on energy pricing, exacerbated the POW (proof of work) vs POS (proof of stake) debate to unreasonable levels, the only two things clear from that debate seem to be:

A), Proof of stake proponents have generally lost the plot and live in a land where the SEC and FTSC and their interventions in staking and lending programs don’t mean dire things are on the way for “interest bearing / staking” products.

B), Proof of work maximalists focus exclusively on being the drivers of innovation in terms of power from gas flaring as well as scalable solar and hydro systems. This leaves them open to real and valid criticism of how they run things in less innovative environs.

This whole “Muh coin betta bra!” debate has toxified the space as well as lead focus away from innovation and on being a self regulating space opposed to any and all governmental intervention. This is one of the founding and driving principles of the crypto space, losing sight of it demeans it through pointless maximalism.

Why not both?

Well, it depends on the form, pure POW/POC combinations, usually Peercoin or forks of Peercoin have for the last many years been an attractive alternative for holders who have some mining equipment and do not mind holding and staking the coins for a while. This provides a limited return on staked coins 

The next branch of this evolutionary ladder came along with some of the early pure POS coins starting off with an initial POW phase to ensure a decentralized distribution of early coins for staking, BLK and POT were reasonably successful models based on this, the model was however not that successful in that lack of publicity at launch would often centralize coins on relatively few hands.

The third branch of this tree is where it gets interesting with Dark/Dash entering. The implemented the masternode protocol where holders of a specific amount of coins could earn a share of block rewards for collateralizing a node and keeping it online. This is in many ways a valid option particularly as there is significant legal analysis carried out by several noted law firms in that space that this alternative POW can not be considered “interest bearing” or “profit from hired/shared labor” as per the US Howey test.

Masternodes or collateralized nodes, why not?

There have been several more or less effective adaptation of this protocol, the two longer lasting of these are Dash and PivX, the problem with them was that from launch they both ended up with a severely skewed distribution, in Dash’s case from a difficulty bug in the first version of the Dark Gravity Wave difficulty adjustment and in PivX’s case from issues during its DarkNet phase.

So which coins in this category are interesting and look to have solid future prospects?

To put it simply, the ones that are switching away from a fully passive income structure towards more of a “the network paying nodes for services” type of structure. This can take quite a few different forms and this reporter has examined three of them, those three projects being HoriZen, Firo and Raptoreum. Dash are to some extent looking to do this but are severely hampered by their non-transparent budgeting system controlled by a few early masternode owners. 

HoriZen has a two tiered node system used mainly for network security tier 1 and tier 2 being aimed at hosting a smart contract solution from how we read it. Both are reasonable both in terms of collateral and in terms of the percentage of the chain rewards the receive. 

However if we start looking at ROI for the year, the secure node tier is currently not paying for a low level VPS from a quality provider and the secure nodes are in a similar position for a quality higher end VPS. Hopefully ZEN holders and node operators will see a significant increase in node income from their upcoming deployment of EVM on chain!

Firo is another very interesting prospect focused on privacy, they have recently switched from an old style Masternode system to a deterministic one with chainlocks mitigating the risk of 51% attacks. On top of that they have recently reworked their reward structure to reflect a more mature network as well as provide their community with options for supporting various activities.

With both a refined budget, community fund as well as an upcoming token layer and own VM solution for contracts, Firo is a sleeping giant we expect to see juggernaut through a lot of the competition.

Raptoreum are the new kid on the block and are taking the paying nodes for services down a significantly more hardcore route of consensus enforced fees for certain on chain operations, for example the sending of time-locked transactions, the creation and dispersal of assets, NFTs and publishable information as well as the coming upload and operation of contracts in common programming languages.

However, Raptoreum is unlike the two other picks a less mature network meaning that the base ROI is considerably higher and with their planned vendor platform where small businesses can make use of blockchain services without needing to enter “crypto” per say, the earnings potential for a node or via a shared node is one of the most lucrative yet feasible ones in the current market.