Dimecoin Staking Explained
Overview
The Dimecoin blockchain uses a hybrid mechanism for its consensus algorithm which leverages both Proof-of-Work (PoW) and Proof-of-Stake (PoS). This document will serve as a guide for the process of minting , often referred to as staking, with the Dimecoin Core Wallet. We will start with a quick overview of the Proof-of-Stake model and how it functions. It’s vital for those unfamiliar with minting to comprehend the procedure and its importance in bolstering the security of the Dimecoin blockchain.
Eco-Friendly & Efficient
The implementation of Proof-of-Stake (PoS) minting in Dimecoin stands out for its efficiency and eco-friendliness, as it significantly reduces the reliance on singular energy-intensive mining processes. In this model, participants contribute by holding and staking their coins. This is effortlessly achieved by simply launching the wallet application, transferring coins to a specific address, and allowing them to remain there. Periodically, these staked coins are chosen by the protocol to mint new blocks. Furthermore, Dimecoin’s approach is not exclusively tied to a single consensus mechanism. All these factors assist in providing additional security enhancements and operational flexibility.
A Global Network
This method not only conserves energy and reduces operational costs but also provides the ability for more users to participate as network validators. Due to the lower operating costs of running a PoS node versus mining, PoS nodes can be set up anywhere there is an internet connection. Thus, participants are no longer restricted by regional electricity rates.
Consequently, Dimecoin can increase its decentralization rate and further expand upon its global network with the implementation of PoS into its network.
Guide
Step 1: Download the Client
First, download the latest version of the Dimecoin Core wallet client from GitHub ( https://github.com/dime-coin/dimecoin/releases).
Step 2: Install and Sync
Once downloaded, install and sync the blockchain. The process of syncing the blockchain typically takes about 6 hours, on average. Sync times are dependent on internet speeds and your individual hardware specs, however. Once the wallet is fully synced, the coins you send to your receiving address will reflect in your balance.
Step 3: Send Coins to Wallet
Generate a payment request by clicking on the “Receive” tab. Fill out any desired label , or leave it blank, then press the “Request payment” button that is highlighted in the image below. Now, double click on the label and select, copy address. You now have an address to send coins to for this wallet.
Note: Each unique transaction is eligible for minting, as long as the coins remain unspent while they mature.
Step 4: Unlock Wallet for Staking
If your wallet is unencrypted and holding coins, there is nothing that needs to be done for the wallet to begin minting.
However, if you previously encrypted your wallet (which is highly recommended you do) you will need to navigate to the top menu, click “Settings” and then “Unlock Wallet..”.
There will be an option to select “Unlock for staking only”. Check this box and provide your password and click “Ok”. You are now staking! There is an indicator on the bottom of the wallet for staking status. After a few minutes it will turn green, which indicates staking is active, as long as the minimum thresholds for staking are met.
Staking Logic
In the context of cryptocurrency wallets, each transaction of coins create inputs and outputs. Inputs essentially refer to the origins of the coins that you have available to spend. Each input provides record of a previous transaction that sent coins to your wallet address, which serves as proof that you “own” those funds. Depending on the amount you are sending, these inputs are combined and referenced in new transactions to validate and send cryptocurrency from one address to another. When it comes to staking, each individual input the wallet contains, is eligible for minting as long as it meets the minimum threshold.
Minimum Thresholds
Outline below are the rules and minimums required for inputs to stake:
- Participants are required to hold their coins within their wallet for 450 confirmations. The time it takes to reach maturity is approximately 6–8 hours.
- Each input needs to be a minimum of 100,000 to be eligible for staking.
Coin Age and Days Explained
Time and weight determine each inputs ability to be chosen for minting and creating a new block within the network. The chances of an input being selected to mint a new block and receive a staking reward increase with the number of coins it holds and as it ages.
For instance, if you have 100,000 dimecoins that have reached maturity (at least 450 confirmations), they will start to accumulate what is called “Coin Day”. As “Coin Day” accumulates, the likelihood of producing a new block on the chain increases.
After approximately 30 days, individual inputs will hit their maximum minting power, and coin day accumulation will end. Coin Day will no longer increase after this period passes as a limit is imposed on an input’s coin age to discourage periodic staking.
Additional Parameters
- Blocks created through PoS can become orphaned, similar to PoW blocks, if multiple participants mint a PoS block within the same timeframe. The core wallet will automatically clean up your orphaned inputs
- Coins that have minted a block will automatically have their coinage reset. The coins will also be locked for 450 confirmations (~ 8 hours).
- Staking rewards are directly added to your transaction record where the stake occurs.
- Spending coins, combining inputs, will reset an inputs coinage to zero.
Network Difficulty Explained
Network difficulty is a measure used to indicate how difficult it is to find a new block. Network difficulty adjusts dynamically each block to ensure that the time it takes for block creation remains consistent, regardless of the network’s hashing and minting power. As more participants join the network, the difficulty increases. Alternatively, when few participants are on the network, the difficulty decreases.
Final Thoughts
Users who run a full node are encouraged to stake their coins. Staking significantly contributes to the health and security of the blockchain. By participating, users help to validate transactions and create new blocks, thereby enhancing the blockchain’s decentralization and resilience against attacks. This collective participation not only secures the network but also supports its overall performance and stability, making it more robust and trustworthy for all users.
Originally published at https://www.dimecoinnetwork.com on February 11, 2024.
Important Links
Web: https://www.dimecoinnetwork.com
X: https://twitter.com/Dimecoin
Telegram: t.me/Dimecoin
Discord: discord.gg/JqcKF4v
Facebook: https://www.facebook.com/dimecoincommunity/
