Our first trip to NEM and its many advantages will require us to take a closer look at its specifications and features. Many other cryptocurrencies opted for proof of work (PoW) or proof of stake (PoS), while NEM has a unique proof of importance (PoI) consensus algorithm. Proof of work requires a lot of hashing power, and proof of stake always favors the largest stakeholders.
NEM explained How to gain passive income
NEM`s proof of importance algorithm is designed differently and rewards those users who actively transact XEM and enables users to run their nodes. Because of this very different approach, the algorithm is believed to best all other options. The best part of PoI is that participants with a smaller stake can receive a real benefit. This is very different from usual PoS coins because with a small stake, you won’t see any significant return on your initial investment.
Supernodes can make Banks superfluous
Supernodes are essential for the whole network, and the reward structure reflects this fact. Such a node requires a minimum stake of 3.000.000 XEM, roughly $400.000, and, therefore, only affordable for a few investors in industrialized countries. Once your Supernode is set and running, you’ll get a 4.71% reward per year, translating into an adjusted reward of 4.14%. Try to get those interest rates from your local bank.
They sure will take your savings, but you won’t see any returns. Swiss leading banks UBS and Credit Suisse, are charging their wealthy private and corporate clients currently a negative interest rate of 0.75% for cash saving above 2 million francs. Chances are very high that consumers have to pay globally their banks a negative interest rate for safekeeping their money at some point in the future.
Setting up a node is very easy because there are already a couple of infrastructure providers offering a full, but non-custodian service to their users. Setting up a Supernode on Allnodes doesn`t require any coding skills and won`t take you longer than 30 minutes. That being said, you will sacrifice some of your rewards to run the node with such a company.
On the other hand, you don’t have to worry about mandatory updates of hard- and software. Therefore, running the infrastructure with a third party is reliable, and the best thing is that you will keep control over your XEM. Most and largest NEM Supernode owners are based in Japan, where NEM`s largest community is based.
Earnig XEM with Harvesting
But what to do if you lack the necessary funds for running a Supernode? In this case, you might be interested in harvesting your XEM, which means that you still get rewards by either delegating XEM to a Supernode or only harvesting in your wallet. Harvesting considers how much XEM you hold, how long it has been sitting in your wallet, and how many transactions you had within the last 30 days.
This makes it a lot easier to gain rewards since you are only required to have at least 10.000 XEM in your wallet. Everything else you need to do is using the NEM network and its native currency. Suppose you liked this short introduction to the NEM consensus algorithm and staking. In that case, you might be interested in the next part in our series of articles where I will show you how easy it is to develop something within the NEM ecosystem.
NEM`s Supernode and Harvesting Reward Program will be extended for at least six years, after Symbol launch according to an announcement by the team. As every XEM holder will get Symbol`s cryptocurrency XYM assigned in a ratio of 1:1 – every NEM Supernode owner will likely run a Symbol Supernode. By the way, it`s still not to late to join NEM`s community platform NEM HUB and earn XEM with Social Mining, more about this kind of XEM earnings in an upcoming article,