Helium (HNT) Mining Rewards Lowered! (HIP 55 Passed)
Unfortunately, for my helium mining friends out there, the rewards are going down after the passing of Helium Improvement Proposal (HIP) 55. I’ll be talking about the details, how these rewards are being shifted to validators, and what this consensus group is actually doing. Plus, how you could possibly become a validator outside of being just a miner.
The vote for this proposal just ended recently, and it was a landslide win, with 96.3% in favor of HIP 55.
Why with such a landslide?
When you look at the proposal itself, the gist of it is that the challenger rewards, which is around 0.9% of the total HNT that’s distributed, are being shifted from the miners to the validators. And when it comes to voting, the votes are weighed on how much you have staked, as well as how much you own in your own wallet. The people with the most helium, are going to be validators. Since this does help out validators in terms of more rewards, it makes sense that the vote is going to be a landslide.
Of course, the proposal isn’t just to screw over miners for no reason. The proposal itself was made in order to scale the network further and lower the complexity of computations for the hot spots (specifically for being a challenger). We have to remember there are three parts to the proof of coverage challenges.
We’re specifically talking about the first part, the challenger, the hotspot that constructs and issues the proof of coverage challenge. And then you have the transmitter and witness. Steps two and three aren’t changing. It’s taking the challenger aspect of these challenges and moving it from the miners to the validators.
As the network has grown, the computational overhead and complexity that’s being put on the hotspots have increased. So originally the miners did block production, but eventually, they came out with validators. So the network continues to change as the network has gotten bigger. This is one of those things where the amount of data that’s being used by hotspots is getting also bigger. I know my monthly data usage has gone up, ever since I started using the Helium miner, and I wasn’t really paying attention to it until December when there was a pretty decent spike in data usage.
I do have a pretty high data cap, and it seems like it’s gone down which is good. Unfortunately, with Xfinity, I don’t have an exact breakout of the device used (they got rid of that because Xfinity and Comcast are evil).
As the network gets bigger and bigger, the amount of data that is being used also increases. And if you haven’t personally looked at your data usage, it’s probably something you should do to make sure that you’re not getting overage charges. Because if you are, it’s obviously eating into your profitability and there does reach a point where if you’re getting charged for so much data usage then it may not even be worth it to be a miner.
The other issue is if the complexity of computations is higher and the requirements for the hardware within the miners themselves also increase. So if they move the complexity away from the miners to the validators (which are already set up with more powerful hardware), it takes the stress off the miners themselves. And in the future, hotspots could be created at a cheaper cost and it’d be easier to implement miners truly across the entire world.
This does suck for people that are buying into Helium miners now and getting the ones with better hardware because that hardware isn’t needed as much in the future and therefore the cost of the equipment is higher than it needs to be.
In reality, in terms of drawbacks, the first one is that it’s a pretty big change, so it may be disruptive to the network during implementation.
The second drawback is probably why you clicked on the article. The rewards are being shifted from hotspots to validators, which is going to rub people the wrong way because the miners have continually lost rewards over time. So yeah, it’s going to piss some people off. To give things a little perspective though, the rewards being down 0.9% from 70.1%% to 69.2% is around a 1.2% reduction. So is it the end of the world? No. Does it still suck? Yeah.
If you want to go through the details of the technical side of things, here is the link.
Some of you may be saying “hey, where are these validators and where are the rewards being shifted to them? How can I be a validator myself? And what are the rewards for becoming one?”
Validators simply secure the network, which means they verify transactions and add new blocks to the blockchain. In order to do that they need to stake HNT. The total number of validators out there right now is around 3,471 and the estimated APR for being a validator is around 5.31%. So if you had 100 HNT staked, you’d be expecting to get 5.31 HNT after a year (while keeping the 100 staked HNT).
In order to run your own validator node, you would need to deposit 10,000 HNT (a measly $200,000 in USD :)).
So not everyone is able to do that, but there are ways to get involved through a pool. Helium has a FAQ page around validators, but there’s a whole list of staking providers and which ones allow pooling. So if you don’t have 10,000 HNT just lying around, you’d have to look for one of these validators that accept pooling, and then you’d have to look at the costs to join.
So for instance, Helium Rising has a 5% Commission, so you would basically join this pool and on their website, they say with as little as 100 HNT, you could join the pool. What would they get in return? They would get a percentage of the payout for running the service and that’s how pools work. The structures are all slightly different based on which pool you want to join.
If you can’t tell by now, most proposals are about the scalability, reliability, and sustainability of the project for the long term. It doesn’t necessarily care about who it impacts in the short term and the helium network is in a tough situation because there are a lot of miners. You’re talking about close to 600,000 versus a smaller group of validators or people on the helium team. Anytime there’s a change to miners, the helium team is going to get the most backlash.
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This article was generated from the following Youtube Video: