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Passive Income with Cobo Wallet: How to Stake DCR

In the revolutionary world of cryptocurrency, there are a number of new and innovative ways to generate passive income. In this article, we’ll explain the Decred model and how you can stake Decred (DCR) with Cobo Wallet.
Cobo Wallet • November 30, 2018

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What is Decred (DCR)?

Decred (DCR) is an autonomous digital currency that aims to be truly decentralized, with autonomy as their key principle. Development decisions are decided based on a consensus voting model, empowering all DCR’s stakeholders. DCR’s source code is also 100% open-source and anyone can contribute to the DCR project.

What consensus mechanism does DCR run on?

DCR uses a hybrid Proof-of-Work (PoW) and Proof-of-Stake (PoS) consensus voting system.

Each new block reward is split accordingly in the following proportion: 60% for PoW Miners, 30% for PoS Voters and 10% for Decred Treasury.

Similar to Bitcoin, DCR transactions are grouped into blocks where PoW miners use computing resources to validate these blocks with the right hash.

Next, PoS allows DCR users to vote on suggested network changes. Voting tickets on the network can be purchased using DCR. In every block, five tickets from the pool of live tickets are chosen at random to vote on the validity of the previous block. The newly mined block will be written in the blockchain if 3 or more randomized tickets are approved.

How do I take part in the consensus mechanism?

For PoW, if you have the required computing resources, you can join DCR mining pool like F2Pool.

Did you know: F2Pool is the world's largest mining pool and was co-founded by Cobo's CEO!


For PoS, Cobo Cloud Wallet offers a custodial solution, allowing Cobo users to easily stake their DCR.

How?

  1. Tap on Finance tab and choose the amount of DCR you want to stake.
  2. Store your DCR into Cobo Cloud Wallet.
  3. That’s it! Note that there is a lock-down period of 30 days.

What are the rules?

-DCR staking is available every day.

-Once a Cobo user stakes their DCR, the lock-down period effectively begins 3 days after deposit. This is to facilitate the operations for DCR staking. Essentially, one staking period is 33 days. (30 staking days and 3 buffer days to support operations).

-After 33 days, Cobo user can either withdraw their initial DCR along with the rewards or enter the next staking period automatically.

-A minimum of 1 DCR is required to participate.

-Any outbound transfer of DCR will incur a fee of 0.03 DCR (transferring DCR from Rewards Wallet to Cloud Wallet).

Penalty for Early DCR Withdrawal:

There will be DCR penalty for DCR withdrawal before the maturation of the staking period. Users will also lose any rewards generated during the days staked.

In addition, early withdrawals are liable for: -0.1% of initial capital penalty if withdrawal is made before or on 15 effective staking days. -No initial capital penalty if withdrawal is made after 15 effective staking days (16 days onwards)

For example, Samantha staked her DCR on Nov 28. 30-days DCR staking begins on Dec 1. If she were to withdraw any time before and on Dec 15, she will be liable to pay the 0.1% initial capital penalty. However, if she were to withdraw on Dec 16 but before the expiration of DCR staking period, she will not have to pay penalty.

In both situations, Samantha will lose any staking rewards earned during the period.

The table below shows the DCR payout:

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Why is there a difference in the rewards earned with respect to the DCR staked?

As previously mentioned, voting tickets have to be bought using DCR in order to participate in PoS. At the time of writing, the ticket price is about 103 DCR. As such, Cobo must leverage on its own DCR capital to match the ticket price. Therefore, more rewards are given to users who stake more DCR.

How does Cobo charge?

Cobo takes a small management fee from staking your DCR. Holding your assets in Cobo Wallet will always be free.

Is there any other charges that I am not aware of?

No other charges. No voting fees. No inbound fee (DCR transfer from Cloud Wallet to Reward Wallet). Only 0.03 DCR fee for outbound transfer. (DCR transfer from Reward Wallet to Cloud Wallet). Also, in order to maintain stability in Cobo voting system with DCR, there will be early DCR withdrawal penalty under the circumstances mentioned above.

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