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Originally published on 05/12/2021 on wax-io.medium.com
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Blockchain mechanics and specifics can tend to get confusing, even on WAX. Have you been having issues with buying, selling or trading your favorite NFTs? This PSA is designed to explain and clarify how CPU usage and fluctuations impact your WAX experience.
Understanding the Basics
WAXP tokens are, as most of us know, used to buy, sell and trade NFTs. However, it is also used to power the WAX Blockchain. Powering the blockchain simply means using tokens to make all kinds of transactions. This means your tokens are a vital part of helping the servers run smoothly. Customers spend their WAXP when purchasing NFTs, however, more of their supply is used to create the transaction itself. Here’s the twist: These tokens used to power the transaction are not actually “spent” and remain on your account, in your wallet. This is where we introduce the concept of “staking.”
What is staking, you ask? Staking allows customers to apply varying amounts of their tokens to the WAX blockchain’s available CPU and NET pools. Once these funds are staked, they are no longer liquid and will take 72 hours to turn back into liquid tokens if they are unstaked (making them usable again). This allows you to apply tokens as needed in order to operate on the blockchain and remove them when you no longer need the extra boost.
Here is a quick overview of what CPU, NET and RAM is for:
- CPU and NET go hand-in-hand when processing transactions. They allocate processing power to various areas of the blockchain. This directly affects processing speeds, and if there are insufficient amounts available to use, the transactions will fail.
- RAM is storage needed for your personal information and collectibles to be stored on the blockchain.
Each new WAX Cloud Wallet begins with 1 additional WAX being staked for CPU. This means that every time a fresh account signs on, additional CPU storage is being staked. With the recent influx of new customers, the entire pool is continually being diluted through growth. The CPU “pie” does not get bigger; it stays the same size, though the “slices’’ get smaller. However, having these tokens automatically staked allows customers to immediately begin buying, selling, and trading NFTs, in addition to exploring other parts of the blockchain. CPU and NET quantities in percentage let account holders know how many more transactions they can make. Once the CPU and NET numbers max out, customers will have two available options:
- Wait for the blockchain to replenish your resources the following day — it takes roughly 24 hours to replenish your consumed resources for any given transaction
- Stake more tokens to claim more resources for your own transactions
*As more customers join the WAX community and start using the blockchain, the price per resource will increase — supply and demand*
Staking is a rewarding and effective experience. This allows customers to continue transacting on the WAX Blockchain without running out of CPU and NET resources, rather than waiting for the pools to be replenished the following day.
Similar to reserving a hotel room, the more you stake, the more “rooms” you get. Previously influential customers in the space reserved a large amount of “rooms” that they did not use every day, so new accounts got extra resources for free. However, now these extra resources are taken up by a larger user base, so customers are only allocated the resources that automatically came with the account.
When WAXP tokens are staked for CPU or NET, the customer gains access to all staked tokens from customers across the globe — at the same time, for the same purpose — proportional to the amount of personal staked tokens. Not only does staking allow additional usage on the WAX Blockchain; it also rewards the customer for taking part in this action.
Note: CPU and NET are not required to be staked in a 1:1 ratio. Often a transaction will require more CPU than NET in order to be processed.
Staking also opens up the opportunity for customers to earn WAXP staking rewards and vote on community proposals. There are three types of voting for customers to take part in, as well as varying “vote strengths’’ to take into consideration:
- Guild Voting: Stake a fixed amount of your WAXP to vote for guilds. As an example, 1,000 staked WAXP Tokens would allow 1,000 votes to be assigned each for up to 30 unique guild candidates.
- Proxy Voting: customers can select a designated proxy who will then vote for you by using your staked WAXP. This earns you WAX Staking Rewards. Please note that a proxy cannot refresh your vote weight when they vote on your behalf; rather, you must refresh your vote for the proxy you choose in order to regain full vote weight capacity. Voting once per week is recommended to max out rewards.
- Proposal Voting: Staked WAXP tokens will allow you to vote on community proposals at WAX Labs (labs.wax.io). These proposals are submitted by others in the WAX Community in an effort to add features and improve the experience for everyone.
WAX is here to bring customers the smoothest, most efficient and all-around best blockchain experience possible; we believe education is a huge part of that. Stay tuned for more informational articles to further boost your WAX understanding so you can continue buying, selling and trading your favorite NFTs!
Share your thoughts on WAX Community Channels:28, May 2021