Decred PoS process explained
We strongly recommend new users to use a voting service provider (VSP). Unless you are able to keep wallets online 24/7 for a longer period of time, it is wise to use a VSP. They are only used to delegate voting power. The operator cannot steal your funds, the locked ticket price will remain in your wallet. There is an updated list of VSPs that has been audited by the Decred developers.
1) If you are completely new to Decred, make sure to read the documentation.
2) Download one of the wallets from the Decred website. Recommended wallets are Decrediton or the Command-Line wallet. Your wallet will need time to sync itself to the latest block. This may take some time. It will do so automatically in the background.
3) Send your DCR to your wallet. Funds will show up if the wallet is synced to the latest block (sometimes a restart is required).
4) Pick a VSP and sign up on the website. Copy the API key they will provide to you. A list of VSPs and their websites can be found on the Decred website. The API key can be found in the settings page on their website.
5) Go to the Tickets tab located within the Decredition wallet. Click Import Script and input your API key and password. Now you are connected to the VSP.
6) Enter the number of tickets you would like to buy. Click Purchase. You will be asked to enter your password to complete the transaction. You should now see a ‘Success!’ message and the ticket hash.
7) Your ticket will enter the mempool and wait there to be mined.
8) After your ticket is mined it will go to immature status. You can see this in the Tickets tab. You will have to wait 256 blocks (about 21 hours) for your ticket to mature and go live. Once the ticket is live, you wait for your ticket to vote.
9) After a vote, your funds will need another 256 blocks to become spendable again. You receive the original ticket price plus the PoS reward minus the VSP fee.
10) On average, live tickets vote within 28 days, but it can take as long as 142.22 days (40960 blocks) to vote. If a ticket does not vote within this window, it expires, and the ticket fee is lost (don’t worry, the cost price of the ticket is refunded). There is a chance of less than 0.5% that this will happen to you.
The estimated ROI is ~7% per year.
How to pick a VSP?
Important factors to consider when picking a VSP: security, support channels, proportion of the network, current fee.
Security: which kind of measures do they take to prevent downtime? Is the VSP software hosted on different machines and spread across different continents?
Support: how do they respond to issues? Do they have dedicated communication channels for troubleshooting?
Network proportion: it is important to keep the network decentralized. For this reason, VSP that have less than 5% of network votes are the best choice.
Fee: pick a service that charges reasonable fees. Operators make a significant investment to host the VSP software. Paying 3% of your reward to support the upkeep of the VSP is totally reasonable.
The importance of voting
The term vote is used because you will be voting on different proposals to change and improve Decred. It is the heart of the Decred governance model. You will notice there is a Governance tab in your wallet. This is where you can decide on your votes. Apart from voting, the PoS process is used to validate blocks from the PoW miners.
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