(Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.)
More and more, people are discovering the benefits of owning digital assets. It could be a great way to diversify your portfolio and earn yield on an appreciating asset. People running nodes are even envied as the blockchain equivalent of landlords collecting rent.
For those with the gift of foresight — a storm is coming. The technological advancement of robots and artificial intelligence is giving rise to a machine race which will progressively obsolete human jobs. Meet the iBot 22 — he doesn’t eat, doesn’t sleep, doesn’t get sick, doesn’t make mistakes and doesn’t need to get paid. He will simply work with ruthless efficiency 24/7. In fact, he’s just finished another task — here’s your letter of redundancy. With mass unemployment on the horizon, it makes sense to try and own assets if you can. The rich don’t have jobs, they have assets. Join the club now, and you will one day be able to join the citadel and live like a king. Wagyu steak and Swedish models every day! The passive income will lube your booty up so you slide smoothly into an ethereal paradise.
Sorry for the scifi dystopian intro. *Ahem*. This article offers strategy tips for earning rewards from Zenon; hopefully this helps people avoid mistakes, have a more positive experience and help them reach their goals.
Disclaimer: This article is not financial advice and may contain speculation.
Zenon | ZNN | Governance and collateral for nodes
Current Supply: 9 122 275 | Current Inflation: 4 320 ZNN minted per day
Current Max Supply: 90 019 055 (because ~50k has been burned so far)
Earn By: Delegating | Provide Liquidity | Pillar | Sentinel | (Sentry?)
Quasar | QSR | Tx throughput and collateral for nodes
Current Supply: 29 401 624 | Current Inflation: 5 000 QSR minted per day
Current Max Supply: 79 137 247 (because ~ 11M has been burned so far)
Earn By: Staking | Provide Liquidity | Sentinel | (Sentry?)
** stats taken from Zenon Tools in January of 2023
A Tale of Two Degens
The power struggle between Brazen ZNN Zealots and Quack QSR Cultists has historically been settled by a socially agreed upon 1:10 price ratio for ZNN:QSR. This reflects the distribution of QSR in the lock-drop event. The introduction of a market for QSR will of course allow the free market to decide the ratio, but it’s worth recapping some of the arguments here for anyone interested as well as for those speculating on the future.
QSR allows for transaction throughput and complexity for all of the apps that will be built on the NoM, and for all of the users using it. This sounds like extreme utility, and from utility comes value, and from value comes price. Furthermore, every pillar erected burns a significant amount of QSR, making the remaining tokens increasingly scarce and therefore valuable.
“QSR is gonna moon HARD! It’s basically Satoshi’s Ethereum!”
“Damn, I’m gonna have to stake for 2 years to get my sentinel.”
“That 1:10 ratio is the biggest throw by the devs. We’re going 1:3 longterm.”
“QSR is a meme token not even needed lmao, just do PoW!”
ZNN allows for a governance system whereby a pillar’s socially assigned value determines the amount of ZNN it can mint, incentivising good behaviour from validators. As the network matures into a bitcoin-powered network state, the role of politics will intensify. Furthermore, you use ZNN to generate QSR, so an increase in demand for QSR should cause an increase in demand for ZNN.
“ZNN is on a rocket to MARS brah! Buy ZNN instead of QSR; it’s like owning the oil rig vs the oil.”
“It’s called Zenon Network for a reason. Validators (super important) are only rewarded in ZNN for a reason. ZNN is the chad play.”
“Buy Zenon. Quasar is a runaway mega scam bro.”
“Sure, I might swap my ZNN for some QSR. When the ratio swings to 1:30!”
Staking & Delegating
With staking, you lock up ZNN for multiples of 1 month (up to 12 months) and in return you earn daily QSR rewards. With delegating, you choose which pillar to delegate your ZNN stack to and you earn a share of that pillar’s rewards. For choosing which pillar to delegate to, click here. Delegators are the core of the Zenocracy and are gifted with the ability to siphon pillar magic to their heavy pockets. Stakers are sorcerers capable of planting a seed which bears fruit every day until the core stack is unlocked.
Delegating and Staking are both easy to do because there is a low entry barrier; you can do it with as little as 1 ZNN. Staking is also great if you’re lazy, there’s not much that can go wrong (unless a huge amount of ZNN is added to the staking pool, diluting the rewards for everyone else … but even then, there’s nothing you can do apart from wait for your stakes to expire. Or the DAO could vote to reduce the % of QSR allocated to the staking rewards pool, but again all you can do is wait for your stakes to expire and perhaps be cautious before you do lock your funds as there is a risk this could happen). But with delegating, you may want to check it every week or every day for two reasons:
- i) The rewards may change. There’s always a chance a pillar goes down or they drop their reward-sharing percentages or perhaps a big whale moves their weight to that pillar and dilutes the rewards for others. You gotta check to make sure you’re still earning from that pillar
- ii) It’s ideal to compound your rewards. You can arguably avoid doing this if you don’t care about a few extra coins in a year, but the based among us will collect their ZNN every 24 hours such that their delegation stack is increased by the collected reward. It can be a hassle frequently syncing SYRIUS, and stressful if you have a 2015 macbook air that overheats if you try playing youtube and checking facebook at the same time
In saying that, staking isn’t a lot of fun for everyone. As we’ve established, there’s no need to collect your QSR every day. This sucks for people who love the vibe of chucking on a playlist, opening and syncing their SYRIUS, seeing the magical internet beans arrive, clicking collect and then seeing Tx receive. For people who consider it a fun ritual, better to stick to delegating. But are you a whimsical person? A fickle b*tch? A mercurial A-hole? Don’t trust yourself to hold all the way to 1k per coin? A long staking contract is a way to do forced hodling — can’t sell even if you want to!! Most wise a decision for those with paper-hands. All those spaghetti-armed tards who sold their BTC at $100 wished they could have staked it in 12-month cycles until they reach $100k/coin, then $1M/coin, then 1 BTC/coin.
The good thing about delegating is that your funds are liquid. If your self-driving car goes rogue and you cop a $2000 fine, you could sell some funds and pay for it. But suppose everything is stuck in a staking contract? Then Johnny Law is wheeling you off to share a cell with a 6 footer hairy beast — not fun. Or what if we moon and unfortunately all your funds are locked up, then after it corrects you’ve missed the big green dildo we’ve all been waiting for? A way around this could be staking for less than 12 months; but the tradeoff is your earning bonus will decrease in proportion to how much you shorten your staking duration. Or maybe Spiral will finally start selling the Puppet-Jack mugs which say ‘hang in there!’ as he’s hanging from a pullup bar. Delegators can quickly swap their ZNN into BTC and buy a Puppet-Jack mug before they’re sold out — the primary motivational force driving the atomic swaps project.
Sentinels n’ Pillars
The man of power will have a big, thick pillar with two meaty, sweaty sentinels dangling alongside it. Unfortunately, it’s really tough to accumulate enough coins to run a sentinel. It’s even harder to become pillar royalty. In 2030, you’re going to need even more privilege than Prince William and Prince Harry to be in this group of elites. But you should still try! Here’s for the investors willing to live and die by the sword in the glorious pursuit of a coveted Zenon node.
Sentinels are loved by both Brazen ZNN Zealots and Quack QSR Cultists alike. Why? Because they give both! Those beautiful floating orbs are basically magical money printers. They require 5k ZNN and 50k QSR, which is a fixed amount thank god. Earning yield is important, especially during a long bear market. While ZNN can earn yield through delegating or staking, QSR can’t earn yield on its own … unless you use it to run a sentinel. Having multiples of 50k QSR therefore allows you to earn yield off of your QSR as long as you have 5k ZNN to pair it with. The QSR is not burned, simply locked for 30 day cycles where there’s about 3 days to unlock it. For the early community, sentinels are expensive enough to be prestigious, but cheap enough to be attainable (with a lot of effort). Running a sentinel is a great goal to keep the community slurping during the bear. Right now they do not partake in the consensus, so stay tuned for their implementation and associated step-by-step, noob-friendly tutorials for running them remotely without having to leave your computer on if that is your wish.
Pillars. Validators. Giant, cypherpunk phallic monuments erected to appease our alien overlords. As the backbone of the network, expect these to always be handsomely rewarded. It’s interesting that they only earn ZNN — this along with the dual-coin system ensures progressive decentralisation over time, opposed to the centralisation of validators typical in single coin proof of stake systems. There is a large amount of QSR that gets burned, sure. This selects for investors with a longterm mindset. Imagine 10–30 years of pillar rewards at an average APY of say 3k coins per year, as well as price appreciation with the NoM’s adoption? That’s a veritable fortune by anyone’s standards. Enough to secure your lineage so your grandchildren can live and work in the citadel, even if all they do is pluck ripe strawberries from the garden. Snagging a pillar now is a huge opportunity. He who dares, wins.
LPs are the guys who provide pairs to the pool such as ETH-wZNN or ETH-wQSR, being rewarded in both ZNN and QSR. They provide the capacity for the healthy movement of tokens in the ceaseless buying and selling and buzzing of the NoM. When and if the prices of the assets changes, there is the risk of impermanent loss, which would occur on trying to exit the pool. This fear of impermanent loss can discourage people, but first of all there are ideas in place for getting insurance protection against such an outcome (stay tuned to hear more about this). Second of all, no one said you had to put all of your funds into this … perhaps do a small amount, such as 5% or 10% of your holdings, and commit to LPing for 2–3 years? Or do a blitz operation where you commit to only 1–3 months? It could be a great way to get a lethal QSR injection to help with your sentinel or pillar goals. The very high APY is an attractive proposition to anyone, and just how lucrative it is remains to be seen with the upcoming orbital program, so keep an eye out!
Throughout this guide we haven’t discussed two things: How much ZNN/QSR is minted per day and the rewards pool allocations. For example, currently 4320 ZNN is minted per day, and 50% of that is allocated to the Pillar rewards pool. It hasn’t been discussed yet because it is subject to change. I am guessing a proposed emissions schedule & rewards pool allocations will be formed and voted on by the DAO at some point. For this reason, a good strategy could be to keep yourself flexible, so you can adapt to changes especially if you know there is a conversation about this scheduled. This could be a reason against staking a large amount, as your ZNN will be locked and you can’t adapt to the new status quo until stakes expire. It’s also a reason against erecting a new pillar, as that QSR is burned and it’s too late to change your mind, you can only get your ZNN back.
What if the DAO decides that there aren’t enough pillars, therefore we need to incentivise people to spawn more of them? They could do this by either increasing the amount of ZNN minted per day (which would benefit other actors too such as sentinels, and decrease the price of ZNN via inflation so perhaps this is counter-productive) or they could just increase the % of ZNN allocated for pillars from 50% up to 60% (which would discourage sentinels, not necessarily a bad thing if the sentinel pool is saturated while there is a dire need for more validators). The DAO could then reduce it from 60% back down to 50% to mitigate centralisation … a sneaky move, because this likely won’t result in those new pillars disassembling because the QSR burn forces skin in the game. No way back now b*tch!
***Will update this when and if info becomes available***
There’s multiple ways you can participate in the network and earn rewards from it. The optimal strategy will be dependent on your goals, your risk-tolerance, your timeline, your investor’s thesis and so on. Think carefully about it to avoid mistakes, have a more positive experience and reach your goals sooner. Stay strong during the bear my ZNN Bros.
Take care and WAGMI!