Can Average Users Benefit from Modern Web3 Staking?

Blockchain, like any advanced technology, has a tendency to get–complicated.

This is just a natural part of the life cycle for any new tech that evolves, in part because of its core structure and in part because of those people who first embrace it.  The most fascinating part is just how predictable this life cycle is.  At this moment you have the rare opportunity to see not just one key technology in this early evolution of the life cycle; you can see three.  Blockchain, AI, and quantum are all in those early stages of growth where few people understand it completely, few people can see the possibilities, and a limited number of people can actually make use of it.  

While AI no doubt has seen the most success at jumping into the hands of the average user, this has only really happened in the last few years.  Why?  Because those big-brained scientists were able to connect with the business developers who saw ways to incorporate AI into our daily lives.  Note that none of this strategy involved educating the average user about AI.  None of the strategy involved showing how the AI works and what the moving parts are.  Quite the opposite, in fact.  AI is now used by 8 year olds and 80 year olds alike because it has become simple and invisible.  Behind the scenes, AI is more complicated than it’s ever been.  But the real magic to AI is the same magic used on all complicated things:  getting to the simplicity on the other side of complexity.  Users can talk to Siri, Grok, or whatever AI assistant they have at hand.  The devices in their house can be voice activated or simply work in the background to deliver insights.  Streaming algorithms provide recommendations without seeking acknowledgement that they are insanely complex neural networks mining vast amounts of personal data–that would create some serious issues.  Instead, they come across as helpful suggestions, providing value to the user in a way that is easy to understand.  In this way, AI has become involved in a large part of our daily lives.

Quantum is definitely in a much earlier state than AI, and we won’t see that behavior for another 5-10 years.  But what about blockchain, and the Web3 ecosystem that runs on it?  Are we using Web3 daily without realizing it?  Well, not really.  While there are a few exceptions, most people using Web3 are well aware of it and had to educate themselves on the basics.  Web3 has faltered in its goal of mass adoption, and this is likely the biggest reason why.  Instead of showing the value and minimizing (or hiding) the use of Web3, the industry is still focused on users who are technically savvy.  Many Web3 platforms still require you to access a whitepaper or Github repository to fully understand and use it.  That doesn’t work, at all, for the average mass adoption user.  Web3 is gaining momentum with more applications that push Web3 into the background, but we have a ways to go.

Based on that, you’d think that something as complex as staking would be completely out of reach for the average user.  For many platforms, you’d be right.  But there are a number of platforms building staking programs that are elegant in their simplicity, creating value without the need for complexity at all.  Yes, blockchain is a central component to staking.  However, if you remove as much complexity as possible and replace it with simple transparency, the average investor sees a very clear opportunity.  Let’s look at the basics of staking in today’s Web3, and show how the average non-Web3 investor can actually participate with zero additional knowledge.

Staking:  The Building Blocks

We don’t need to go into the details of staking, as there are many resources for that, but it’s important to show how minimalistic the process could be.  

At the end of the day, staking is a way to incentivize validators.  Validators are necessary to operate a blockchain.  The operation of the blockchain earns money through transactions.  Part of those earnings go to validators as a reward for a job well done.  And the staked tokens that have provided that stability earn a reward as well.

This is staking in its simplest form.  Yes, you could make the process infinitely more complex, and many platforms have done exactly that.  Some have done so in order to create additional financial instruments and programs.  Others, sadly, have done it to cloud the fact that they were scamming their investors, putting a trust strain on the entire industry.

But staking is simply an investment that represents your faith in a network to grow over a period of time.  You stabilize the token by locking supply, the validators make the network run, and this encourages the community to make use of the network.  If all goes well the network performs and the community gets value through the many possible dApps on the network.  Validators earn their piece, and that growth goes back to those staking as their reward.  This then encourages all the parties to keep up the good work and repeat the process indefinitely.  At its base, staking is quite simple.  It may seem strange to those unfamiliar with blockchain basics, but non-Web3 investors understand creating stability in a currency, in a stock, or in any other type of investment.  The success of the network means that people use it and pay for the privilege, another straightforward concept to investors.  The return on an investor’s “faith” in the system is also completely standard behavior.

Bringing Staking to The Masses

Based on this, blockchain is seizing a true opportunity to attract not just TradFi investors, but average users who want to place a reasonable risk on a nice return.  To do this, the best of the Web3 providers have done two things.

First, the new generation of staking protocols have created an easy to understand program.  There are only a few choices that have to be made, only a few moving parts, and a clear understanding of risk and return.  For example, the ENSO Network has been notable in its clear cut staking program.  The community wishing to stake can set up their stake to one of the platform validators.  They choose the amount of $ENSO to stake, pick the validator, and lock in their stake for 1-36 months.  That is literally all there is to it, and even though concepts of validation and crypto tokens are involved, the mechanisms are clear to non-Web3 players.

The second thing that platforms like Enso and others have done is to build trust through transparency.  After a user sets up their stake, they have a simple dashboard that can track the performance of their validator (along with all other validators), they can see historical performance as well, and they can track their returns in real time.  Given this transparency, it’s easy to see that there is still risk in the investment to gain the possible reward, but in that regard, this is the case for any investment in any industry.  User stress goes down because they can see all the moving parts to what is actually a fairly simple puzzle, and exactly zero whitepapers or repositories were analyzed to make that happen.

Final Thoughts

If all goes well, Web3 will see more platforms adopting this approach–not just to staking, but to all aspects of Web3.  We are past the need for a master’s degree to understand how to use a Web3 platform, and the technology is mature enough to move the complexity under the surface where it belongs.  If we can accomplish that, then Web3’s value and participation will become a massive movement, benefiting billions without making a splash.