Making money in Minter

Making money in Minter

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Aside from the advantages Minter offers, you can also generate some respectable earnings here. Below, we’ll talk about the ways you can make money in Minter.

Delegation

Delegation implies “tying” your funds to a validator. The coins/tokens are still yours, they’re just not immediately available from your wallet.

Delegation is a way to support a validator directly, along with everything it does on Minter. The DPoS consensus is referred to as a “democracy technology” since delegators — regular users — are responsible for a lot of decisions within the network by voting with their money. If validator’s actions don’t satisfy the delegators, if their mindsets don’t match, if a validator makes decisions that cause the network to stagnate, delegators can just unbond their stakes and the validator may be removed from the list of active validators as a result, meaning the end of its life within the blockchain.

The delegator activity is rewarded.

Out of validator profits, 10% goes to the DAO (decentralized autonomous organization), 10% goes to the developers, and the validator does also leave some money to themselves as a customizable fee — say, another 10%. The remaining 70% is distributed among delegators proportionally to their stakes.

At the time of writing (March 2021), the profitability of delegation is about 50% annually.

Example

BTC.Secure validator makes a profit of 50 000 BIP daily and has a 10% fee. There are 10 stakes, totaling at 325 000 BIP:

  • Ian delegated 100 000 BIP (~30.76% of the total stake)
  • Jack delegated 75 000 BIP (~23.08%)
  • Chris delegated 50 000 BIP (~15.38%)
  • Brian delegated 30 000 BIP (~9.23%)
  • Vincent delegated 20 000 BIP (~6.15%)
  • John, Matt, Jason, Michael, and Edmund each delegated 10 000 BIP (~3.08% each)

With a daily income of 50 000 BIP, 5 000 BIP (10%) is sent to the DAO, another 5 000 BIP (10%) is sent to the dev team, 5 000 BIP (10%) is sent to the validator, and the remaining 35 000 BIP (70%) is distributed among delegators proportionally to their stakes. It’s all automated:

  • Ian gets 35 000 BIP * 30.76% = 10 766 BIP
  • Jack gets 35 000 BIP * 23.08% = 8 078 BIP
  • Chris gets 5 383 BIP
  • Brian gets 3 230.5 BIP
  • Vincent gets 2 152.5 BIP
  • John, Matt, Jason, Michael, and Edmund get 1 078 BIP each

Validation

You can also launch your very own masternode and start validating Minter yourself. All the functionality on the network is maintained by validators. It’s a very responsible role that requires a lot of skill and knowledge. If a validator signs transactions and generates blocks with false data, it receives severe penalties to the amount of coins it has generated in total, and in case of double-signing, it also gets full unbonding (reverse delegation) of all of its coins, which become available again in 30 days.

To maximize masternode productivity and minimize penalties, you’ll need to use high-level computing, be able to set up and update the OS, as well as provide security and stability for the servers. If a network update is coming up, all the new changes must be tested for functionality before accepting the update (updates are only implemented if more than 2/3 of active validators accept it), for these tasks you have the testnet. Being able to understand the update code to have more confidence in its security and stability is also an advantage.

But that’s not all. To get on the list of active validators, you need to have an initial stake since the number of validators is limited and they’re determined by the size of their delegated stakes. To gather the required stake, you either need to delegate BIP to the node yourself or convince the participants that you are a competent, reliable, and safe validator who has plans to improve the network. That way, you can acquire the initial support you need to begin validating. Otherwise, you’d be wasting monetary and time resources.

Like we’ve said before, the validator customizes the fee they’ll be getting from total rewards. It can be anywhere from 1% to 100%. 10% automatically goes to DAO, 10% goes to the dev team, and the remaining 80% is up to you: you can have a 10% fee so that 70% can be shared among your delegators, or you can set a 100% fee and then your delegators won’t get anything (but that wouldn’t be a smart thing to do, would it?)

Validators get the opportunity to change their validation fee every 3 months.

Trading

Traders’ income comes from buying lower and selling higher. But these people are very important for the network, as traders specifically give liquidity to coins and assets.

You can start trading here:

Liquidity provision

Providing liquidity to a pool is another way to make money. On Minter, for trades (also called swaps), a 0.2% fee is taken and then distributed among liquidity providers proportionally to their share.

The list of existing liquidity pools, as well as approximate annual percentage yield (APY) values, can be seen at Minter Explorer and Chainik.

Don’t forget about the concept of Impermanent Loss.

More information on liquidity pools in DeFi can be found on a separate page, and more about liquidity pools specifically within Minter can be found here.

Farming

Farming means encouraging users to supply liquidity into a pool. Liquidity providers get an additional percentage for making trades happen. Terms, conditions, and payout tokens are announced by initiators and sponsors. Usually, project creators act as initiators or sponsors of a pair where their coin/token is traded.

Find out more about ongoing farming initiatives on Minter here.

Farming is not only an additional motivation for providers, but also a way to lower potential impermanent losses, which are unavoidable in pools with tokens that experience sufficient volatility. More about this concept here.

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