Proof-of-stake networks are blockchain systems which, unlike proof-of-work networks like the Bitcoin blockchain, do not require massive amounts of computing power to maintain them.
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Instead, participants ‘stake’ their tokens as a security deposit, from which they receive a fee or yield for committing their tokens to help validate transactions. If the network is compromised, the staked tokens can be penalised by having their value reduced in a process known as ‘slashing’.
KR1, a digital asset investment firm, said that it had currently generated around 15,463 ATOM tokens - used on the Cosmos Network - for an average price of US$4.76, giving a total of US$73,671.
Going forward, the company said it expected to generate around 100,000 ATOM tokens each year, worth around US$476,000 at the previous average price, which would be used to provide additional working capital.
The company is estimating its annual net yield for its ATOM to be around 11.2%, although depending on conditions on the Cosmos Network this could rise to as much as 40%.
KR1 added that there was “similar revenue potential” from other proof-of-stake networks it is currently invested in, including Polkadot, Dfinity, RChain, Enigma and FOAM.
George McDonaugh, KR1’s chief executive, said that the company was currently the only publicly traded investment from generating revenues by staking tokens, adding that he expected its other major investments, particularly Polkadot and Dfinity “to follow suit” in terms of “significant yields”.
He added that Cosmos was becoming “a major platform for developers” and attracting high-end sector companies including Binance, the world’s largest crypto exchange, to build decentralised exchanges on the network.
In early trade on Tuesday, KR1 shares on the NEX exchange were chaging hands at 9.5p each.