The Waves platform uses leased proof of stake consensus protocol, based on PoS, in which users lease their balances to full nodes in return for a share in mining rewards. Leasers have an ability to return their balances back at any moment.
Like in general proof of stake protocol, nodes, who take part in the transaction validation process, are selected based on their balance. This possibility is open only to full nodes, who have downloaded the whole blockchain on their mining rig and have a stable connection. Ordinary users are not allowed to partake in the mining process and can only lease parts of their balance to miners.
To provide immutability to the blockchain, forming the platform’s distributed ledger, cryptography methods, similar to those in Bitcoin, are used. Namely, the classic encryption with an open key is used, and the token holder retains full control over their assets while their private key is not compromised. Waves tokens can be converted into fiat money, cryptocurrencies, or other tokens.
Any Waves platform user can issue their own digital assets for financing their projects, tokens, that can be sold on an open market as a crowdfunding measure. This process is called an Initial Coin Offering (ICO), and to some extent copies the process and principles of IPO. Project investors can purchase product tokens with U.S. Dollars, Euro, Bitcoin, and other supported currencies. The purchaser has the right to sell, give or exchange their tokens to any other digital asset on the Waves platform.
Waves Community Token
The Waves platform has introduced the Community token, as an instrument for Waves-based crowdfunding campaigns. This token was created as a stimulating instrument of long-term storage of digital assets in the Waves system, as it provides additional income from the constant re-balancing of the platform’s assets.
These tokens are also used for leasing in the LPoS consensus process, and as a voice in the votings on matters, that are essential to the whole platform.
Miners Reward Token
Participants of the Waves platform who support its operation, miners, are rewarded monthly with MRT, Miners Reward Tokens, which are freely convertible within the Waves ecosystem. Starting from 50 MRT in March 2017, each 50,000 blocks the miner reward decreases by 5 MRT. To become eligible to take part in the mining process, the node should hold at least 10,000 Waves. This requirement doesn’t relate to users, who lease their balances to others to support mining, and don’t run a full node.