Mainnet — The value of staking

By Kardiachain CFO , Mr Anthony Vo

As the Kardiachain mainnet approaches, our community has continually wondered which staking amount of KAI yields the highest possible return. Indeed, this is also a fundamental question in any proof-of-stake token economy as to whether the staking process falls under investing rules. In order to address this matter in the most quantitative approach, our research team, led by CFO Anthony Vo, has been conducting extensive research on staking rewards and valuation framework. Today we are excited to present the very first report that provides better insights to our staking model.

In this report, Mr Vo provides a thorough overview of a valuation framework in cryptocurrency staking contract that is built upon the Stock Option Theory. Through this report, crypto holders will be provided with a thorough view of a tool to fairly compare between blockchain projects as well as their offering staking rates. Furthermore, such a tool is needed to allow investors to know whether the rate they are receiving is fair to account for potential risk/movement in the underlying tokens.

The report highlights

Firstly, the report demonstrates the benefit of PoS Staking Reward as well as an energy-conserving approach to achieving consensus, since it removes high-powered cryptocurrency miners from the equation. Instead, mining practices are replaced with nodes that stake coins or tokens to participate in the block creation process. Hence, the number of PoS blockchains are growing rapidly.

Secondly, Mr. Vo discussed stock options and the fundamentals of the staking process. Moreover, he also shows the comparison between The similarities of European Call Option and Staking Rewards are as follow:

  • The two contracts are designed with underlying securities — stocks and tokens — that have unknown future value and directionality
  • Investors hold stock and sell the option to receive an upfront premium from those who expect that the stock will go up more than the value of current stock price and premium combined.
  • Crypto holders participate in staking rewards to receive a premium (in the form of locked APR) from project owners
  • Both investment vehicles have set contractually expiration period

Finally, after a discussion on the function of cryptocurrency staking, he attempts to value a hypothetical staking reward program. In the report, he cited specific numbers and equations to support his argument about Lock-and-Earn (or Staking) programs. It provides figures of the return the investor can make from staking versus saving. It also helps investors to have good judgment of KardiaChain mainnet launching.

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About Anthony Vo

Anthony Vo — KardiaChain CFO — is the First VP of the Bank of Hope, the largest Korean American commercial bank in the US. He is leading a quantitative team to directly support the CFO with various financial analyses, profitability reporting, M&A analysis, and regulatory examination.

Mr. Vo comes to KardiaChain with a unique academic background in Financial Engineering. Not only is he well-versed in financial analyses and accounting practices, but he is also comfortable with working in the fintech culture, especially with the cutting-edge technology that KardiaChain offers.

His past experience was with KPMG Advisory in a Manager role for Risk Management Analytics, where his team developed and validated a range of financial models for a number of Wall Street banks such as CitiGroup, BoA, JP Morgan, and Wells Fargo. His projects consist of index fund or single company valuation, pricing strategy development, capital planning, and others to help clients with better economic value, improving process controls, reducing risk exposures, or maintaining capital adequacy level.

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