Kickstart your Lisk addiction with all the knowledge we've documented for you.
Use this quickstart guide if you are new to the platform.
Lisk doesn’t utilize Proof of Work like Bitcoin, or Proof of Stake like Nxt. Lisk uses a simplified implementation of BitShares’ original consensus algorithm called Delegated Proof of Stake. That means every LSK holder can vote for mainchain delegates which are securing the network. There are only a maximum of 101 active mainchain delegates which always got the most votes on the whole network, and only they can earn block generation rewards, that means there is a financial incentive to become an active delegate. Every other delegate is on standby awaiting to become elected, or alternatively, securing a Lisk sidechain.
It really depends where you are from. We’ve made a list of the most common places to buy Lisk (most are exchanges that will have many cryptocurrencies to trade). For a complete list you can take a look at CoinMarketCap markets.
The following guide was originally published on Aeto’s blog. Simplified steps reproduced here for easy-to-follow instructions.
The first thing we have to do is get ourselves some transacting cryptocurrencies. In the digital currency world Bitcoin is king, and any time we want to buy a lesser-known token like LSK we will usually have to pay in Bitcoin, unless you are able to use one of the fiat pairs from the websites we’ve listed above. There are tons of ways to get Bitcoin, but the easiest way is to use the most established crypto platforms. For Europeans this is Bitstamp, Bitonic or Litebit, and in the USA this is Coinbase.
For this guide we will use Coinbase as an example, but all the websites work pretty much the same way. If you need any help with other websites, please let us know by contacting us.
On Coinbase, you will be able to purchase BTC using conventional fiat methods including PayPal, Bank Account (US), and Credit/Debit Card; each has different buying times and limits, generally the longer the buying time the higher the limit.
For this guide we will be using Bittrex as the exchange. Let’s get the BTC you just bought over to Bittrex now. Tab over in your Coinbase account to “Send” and pop in the deposit address from your Bittrex account with all of your new Bitcoins.
What Bittrex account address, you ask? If you haven’t already, make an account on Bittrex and go through the process of enabling Basic and Phone verifications (we need this to withdraw LSK). If everything is set up correctly,
then your “Settings” tab should have a check mark next to “Digital Token Trading” like the following:
Now you can head over to your “Wallets” tab and click on the “+” next to “Bitcoin”. Clicking on that
will pop open an address that represents your personal online wallet that Bittrex holds for you. This address is where you should be sending your BTC that you bought from Bitstamp or Coinbase.
There will be a small “Commission” that Bittrex takes, but after we hit “Confirm”, then our order will be placed to buy LSK! Remember though that we’re not done yet – our order needs to be executed in order for the
LSK to come through. Watch the “Open Orders” area to see how much volume is still left to be filled. Once the trade completes, then we can check our “Wallets” and see our new LSK.
When your Bitcoins are successfully deposited into your account, then your wallets will show an “Available Balance” of Bitcoins. Now we are ready to buy some LSK! Navigate to the BTC-LSK page under “Markets”. You should see a big page like this one below:
Briefly, the top left chart shows a “candlestick” chart of the price over time; these are pretty standard when looking at asset prices. The top right table shows all of the basic stats of LSK including the “Last” traded
price, the “BVol” volume in the last 24 hours, the best “Bid” and “Ask” prices, and the “24H High” and “24H Low” prices. The bottom left form box that says “Buy LSK” is what we will focus on.
In the above three screenshots, we first select the “Price” at which we want to buy LSK. Of the three options “Last”, “Bid”, or “Ask”, the last one “Ask” has the highest chance of our order being successful due to the
fast-changing prices and markets. After we select the price, we hit “Max” for the number of units we want to buy. You can see that with my amount of BTC available, I can buy 3.16331 units of LSK. At the bottom under “Total” it will then show us how many
BTC we will be paying in total to execute the trade. Finally, we can hit “+ Buy Lisk” which will then submit our order.
There will be a small “Commission” that Bittrex takes, but after we hit “Confirm”, then our order will be placed to buy LSK! Remember though that we’re not done yet – our order needs to be executed in order for the LSK
to come through. Watch the “Open Orders” area to see how much volume is still left to be filled. Once the trade completes, then we can check our “Wallets” and see our new LSK.
Now that we have some LSK, let’s move them to our local wallet so that they are 1) more secure and 2) able to be used for voting for delegates. Remember that we can earn more LSK by “staking” our LSK through voting for delegates who in turn validate transactions.
Download the latest “Lisk Nano” wallet from the official site and install it. Always use the wallet from Lisk.io and only this one! There are a lot of scam websites nowadays so beware! For the rest of this part we
will be on the Windows platform but on Mac it’s pretty much the same. When we first launch Lisk Nano, we’ll see a login screen. Create a new account on the “Mainnet” network.
After creating a new account, you should see your new Address, Peer network, and Balance.
NOTE: Make sure to save the passphrase that you got from creating the address. This is your sacred key and should never be lost or given to anyone. Write this passphrase down on a paper or use something like a ‘Cryptosteel’ and don’t save it in a .txt file on your computer.
Head back to your Bittrex wallets and withdraw your LSK to the Address that is shown here. If all goes well, then you now have all of your LSK securely in your local wallet. Note: the processing can take up to half
an hour but most of the time it only takes a few minutes.
There are two big reasons to vote for delegates:
The Lisk DPoS voting system works like this:
Since it costs 1 LSK each time you want to vote or change votes, make sure you have enough LSK in your wallet to justify spending on votes; getting up and running will require 4 LSK, and anytime you change votes it will cost another 1 LSK. Rewards are 1-1.5% per month and most delegates payout when you’ve collected at least 1 whole LSK token.
Use your votes carefully, use batches or use the vote manager from Lisk.builders:
Total: 101 delegates voted for, costing 4 LSK
You can read more about Lisk Delegates on reddit or the official faqs. Make sure to do your own research on which delegates align with your beliefs on how delegates should be contributing to the platform and community.
For a more comprehensive explanation about the voting system, check out our ‘voting explained’ knowledge base.
Everything you need to know about the voting system.
You don’t have to vote but you can earn rewards by voting for delegates.
Lisk is utilizing the Delegated Proof of Stake consensus (explained in the quick start guide): the network is secured by 101 active delegates confirming transactions on the blockchain. The delegates are voted in the active spots by Lisk holders who hold the LSK tokens in their wallets. Delegates are forging LSK: confirming transactions and creating blocks. For each block they forge, they earn 4LSK. Most delegates share a percentage of their income. This is your voting reward.
There can only be 101 actively forging delegates at any one time. There can be an unlimited number of delegates in reserve, however, they require enough voting weight to become an ACTIVE delegate. To know how much voting weight a delegate needs to become active, check the explorer and check the voting weight of the delegate currently on spot #101.
LSK equates to “voting weight”. Your voting weight is equal to your LSK amount. Your voting weight is applied to each delegate you vote for INDIVIDUALLY and not shared across the group. Therefore it is in your best interest to use the full 33 votes per 1 LSK fee.
1000 LSK = 1000 Vote weight (VW)
User votes for 1 delegate = delegate has 1000 VW
User votes for 33 delegates = delegate 1 has 1000 VW, delegate 2 has 1000 VW, delegate 3 has 1000 VW and so on and so on. So it’s NOT 1000/33 = 30.3 VW per delegate. All the vote weight from all the voters is the total vote weight of a delegate. To get in the top 101 you at least need 21 million vote weight (31-12-2017). The see the actual vote weight check out the Lisk delegate monitor.
You can vote as many times as you want. However, to achieve the maximum number of supported delegates (101) you should vote 4 times. Each voting round will cost you 1 LSK and is for a max of 33 delegates:
* 33 for 1 LSK
* 33 for 1 LSK
* 33 for 1 LSK
* and 2 final votes for 1 LSK, gives a total of 101 votes for 4 LSK.
You only have to cast your votes once and they are set for life. They can be changed at any time (at a cost of 1 LSK as per usual) if you desire to. Use the vote manager from Lisk.builders to automate this process.
If you plan to hold your LSK for a long period of time, then it makes sense to maximize your ROI by having the full amount of reward sharing delegates. If you are holding LSK short term it may not be worthwhile as (depending on your total LSK holdings) it could take months to see 1 LSK returned.
You will not receive any LSK rewards from them as they will no longer be forging. They may end up back in the 101 in time so it may make sense to keep your votes as is. You could, of course, always swap your votes.
No, your vote weight is updated in real time with your LSK holdings. The beauty of this is that you will see compounding interest over time. As your LSK holdings increase, the reward returned to you from delegates should also increase as it based on percentages.
The way delegate reward sharing works is based on two things: the amount a delegate shares and the percentage of the vote weight you make up.
Lets say Delegate X has a total vote weight of 1,000,000 and is actively forging. They share 90% of their forging rewards per day to their voters. Delegate X forges 900 LSK a day (not accurate figure) and shares 810 LSK with their voters. Delegate X keeps 90 LSK.
Delegate X’s voters SHARE the 810 LSK based on their % contribution towards the vote weight. Someone with 100,000 LSK will get 10% of 810 (81 LSK) and someone who holds 10,000 LSK will get only 1% of the 810 LSK (8.1 LSK). Someone with only 100 LSK will 0.01% of the 810 (0.081 LSK) and will take approximately 12.34 days to see 1 LSK returned to them from this delegate alone.
It is worth noting that at present to get into the active 101 delegates you would need a total vote weight of more than 21 million LSK (31-12-2017) and as such, if you are holding 100 LSK as a voter, even for a 90% pay out pool would take almost 200 days to see a return of 1 LSK from that delegate.
So you can see, the more LSK you hold the more your vote weight contributes to the delegate and the better % return you will receive.
Taking into account the last question it can take time to see returns on your votes. Some delegates share daily, others weekly or monthly. If you’ve ‘earned’ enough Lisk to get rewarded, you will see LSK coming into your wallet soon enough.
Each delegate will have stated how much of their forged LSK they plan to share with their voters. Some share 100%, some don’t share anything but use the forged funds to support projects built on Lisk. You could argue that helping further develop Lisk (and therefore see greater adoption) is more profitable in the long run than just voting for pure network nodes.
The majority of delegates pay out to their voters based on a threshold basis. For example, you will not see a return from Delegate X until your reward balance hits 5 LSK, they will then send you this amount. Use our pending tool to calculate pending payouts from all known Lisk individual and group pools your Lisk address has earned. Please keep in mind that it does not represent all pending payouts, as some delegates do not offer a tool to view pending payouts. Use our total payouts tool to see how much LSK you’ve earned so far by voting for the delegates.
We would like to thank /u/HomePhysique for writing this guide as a blueprint for the guide on our website. We made some minor changes and added some lines.
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