What is Pyth Network And How Do You Stake Pyth?
What Is Pyth Network (PYTH)?
Pyth Network serves the decentralized finance (DeFi) apps by aggregating data sourced from various providers, making it a key player within the blockchain oracle space. Notably, it yields the real-world data necessary to build innovative and secure Web3-based and DeFi applications.
Pyth Staking
$PYTH staking involves the active participation in validating transactions executed within the Pyth Network. The participants lock up $PYTH to secure the blockchain and process transactions, actively participating in the decentralized finance ecosystem. In return, the stakers earn passively from the additional $PYTH rewarded for maintaining the network's security by holding $PYTH in a staking wallet.
How Was the Pyth Network Developed?
Pyth Network emerged as an incubator program of Jump Crypto - the arm of the Chicago-based Jump Crypto Group. It would launch in April 2021 as a Solana-based protocol. Pyth mainnet unveiled on the Solana in August to offer price feeds for 30 crypto within Ethereum, Solana, and Terra blockchains. It scaled by the end of 2021 by onboarding over 40 data providers.
August 2022 saw Pyth launch its proof-of-authority (POA) Pythnet blockchain - forked from the Solana codebase. By December, Pyth scaled the price feed support via integration with Wormhole to eight networks.
The Pyth team would establish Douro Labs in 2023, seeking to oversee the development. The team announced in November 2023 airdrop of the PYTH governance token as it launched the on-chain governance system. The airdrop targeted active DeFi users, community, and protocols utilizing price feed. By December of that year, Pyth had 100 data providers.
The development team prioritized transforming Pyth into a cross-chain solution by the end of last and the onset of 2024. The focus saw the team allow support for multiple blockchains, including Hedera, Avalanche, and Arbitrum.
How Does Pyth Network Solve Issues Faced by the Blockchain Oracles?
Blockchain oracles act as intermediaries linking external systems with blockchain platforms. Doing so facilitates smart contract execution on the real-world inputs and outputs.
Oracles facilitate blockchains' interoperability by linking them to off-chain data and computation in a foundational role within the verifiable web. Nonetheless, legacy oracles encounter data manipulation, latency issues, and missing decentralization, which erodes trust in the ecosystem.
As blockchain technology realizes advanced usage, access to robust oracles that guarantee highly reliable data feeds and ultra-low latency becomes vital. As such is Pyth Network in solving issues that blockchain oracles face within the financial sector:
- Guarantees ultra-low-latency data
The financial market involves a highly time-sensitive sector where a few seconds of delay yields significant implications. Pyth Network delivers ultra-low latency to ensure up-to-date financial data. Such is ideal for time-sensitive operations, particularly in high-frequency trading.
- Accurate and reliable data provision
Access to up-to-date and accurate data is essential to maintain integrity within DeFi services. Outdated and erroneous data can cause incorrect smart contracts execution, thus resulting in potential financial loss. Pyth Network commits to resolving such risks by delivering reliable data feeds.
The effective functioning of the Pyth Network is reliant on several key features:
- First-party publisher Oracle allows Pyth to provide highly accurate and timely price feeds by sourcing data directly from the primary source.
- The confidence intervals feature enables users to ascertain price and uncertainty levels surrounding price movement, which is ideal in volatile markets.
- The multi-chain integration feature allows Pyth Network to offer solutions to non-Solana blockchains via integrations such as Wormhole.
How Does Pyth Network Function?
Pyth network's unique design ensures it is a highly accurate and efficient oracle. Such is critical to feed asset pricing data on non-crypto and crypto assets into the on-chain DeFi protocols.
Through high-frequency updates, Pyth guarantees correct data to the end-users, namely smart contracts and traders who leverage them quickly.
Two-Participant system
The Pyth network realizes the above objective by utilizing a two-participant system:
Consumers involve smart contract users who pull pricing feeds from and incur charges on flat rates relative to the request. DeFi and CeFi applications are data-reliant in executing their purposes and securing the blockchain applications.
Publishers involve market participants, including trading companies, exchanges, and financial institutions offering the network price data. The participants are data owners legally allowed to distribute unique data sets and collect fees as consumers utilize their services.
Aggregation Algorithm
Pyth Network utilizes a sophisticated weighted median algorithm to aggregate data. The method derives the median of prices, prioritizing publishers with a reputation for accuracy and higher staking amounts. The approach safeguards against potential manipulation, thus guaranteeing data integrity and reliability.
Economic Incentives
Pyth motivates publishers to deliver high-quality data via rewards connected to the quality of the price feeds. The publishers share the data fees users pay, aligning their interest with Pyth's objective to guarantee accurate data provision.
Real-Time Data Updates
Pyth Network offers a rapid data refresh rate key feature that suits applications that need current information. The feature positions Pyth Network as a leading provider of real-time financial data within the blockchain space.
What is a $PYTH Token?
The PYTH token refers to the native cryptocurrency and governance token of the Pyth Network. Holders of PYTH tokens can participate in network governance through staking.
The $PYTH token is critical in coordinating participants' activities via crypto-economic incentives. Besides, the $PYTH tokens are fundamental to aligning the interests of multiple stakeholders within the network, including publishers, delegators, and consumers.
PYTH token holders participate in the network's governance via staking. The mandatory participation within the Pyth staking program allows the holders' right to vote on various governance proposals. The governance utilizes a 1:1 coin-voting mechanism where each staked token represents a single vote during community governance proposals.
How to Use the PYTH Token?
PYTH token is primarily oriented to the governance of the Pyth network. As such, community members use their PYTH tokens to participate in voting, directing the network's development, setting fees, and guiding rewards for the data publishers.
Additionally, the PYTH token holders vote on decisions to guide rewards for the data publishers, approve updates, and define the asset listing on the Pyth network.
PYTH Token and Distribution
PYTH token supply has a 10 billion unit cap since its unveiling in November 2023. The launch saw 1.5 billion PYTH enter the circulating supply. The supply captures airdrop where 90,000 wallets benefitted from 255 million PYTH.
With only 15% of the PYTH tokens in circulation during launch, the distribution of the rest featured an elaborate unlock after the 6, 18, 30, and 42-month intervals following the initial launch till 2027. The period will feature a defined distribution where 52% of the supply is allocated towards ecosystem growth. The distribution identifies 22% for publisher rewards, 10% for protocol development, 6% for community during the initial launch, and 10% for private sales.
What are the Recent Pyth Network Developments?
Innovative Airdrop Campaigns
Pyth Network has garnered attention within the DeFi space community, particularly during the PYTH token airdrop. The airdrop saw over 250 million PYTH tokens distributed to early users, valued at $77 million. The event significantly grew the Pyth protocol's market cap to highlight the PYTH's increasing importance within the DeFi space.
Multi-Chain Expansion
The Pyth network team has recently focused on expanding its reach into multiple blockchain platforms. Doing so is considered critical to enhance versatility and utility within the ecosystem.
The expansion facilitates the strategic integration of Pyth's services to various blockchain networks and applications. Today, Pyth runs permissionless price feeds, which developers access on over 40 blockchains.
Besides Solana, the services are available on Ethereum, Optimism, Arbitrum, zkSync Era, Base, and BNB Chain. Over 380 Pyth Price Feeds are accessible on the Pyth-supported blockchain to guarantee rapid multi-chain expansion for smart contract protocols.
Market Capitalization Growth
The PYTH token has witnessed market fluctuations indicative of growing interest and the speculative nature of the tokens within the DeFi space. Despite the fluctuations, PYTH's market valuation is commendable, ranking 69th largest per CoinGecko data.
The PYTH tokens tap into the growing investor confidence in Pyth's long-term potential. Today, the Pyth Network is the fastest-growing first-party Oracle network. From the present 3,624,988,847 circulating supply, PYTH price is down 6% to exchange hands at $0.283, translating to a $1.025 billion market cap per CoinGecko data.
Governance and Token Supply Plans
Pyth network has an elaborate roadmap to guide the token supply. The network has inflation incentives in check till the release every six months to decentralize governance. The approach targets balanced token distribution to ensure a decentralized governance structure for the Pyth network.
Detailed Guide to Staking PYTH Tokens
The permissionless mainnet unveiled in November 2023 allows the PYTH token holders to participate in network governance. PYTH holders can stake their tokens within the official staking program as vital ecosystem members.
Staking PYTH allows the holders to undertake collective decision-making via on-chain voting, thus steering the Pyth Network's course.
Participation in the on-chain governance process grants the PYTH token holders a voice in pivotal decisions:
- Changes in reward structures for the data providers.
- Ascertaining size, term, and denomination of Oracle fees.
- Data fee list changes, and data providers support them on the Pyth network.
How to Stake PYTH?
Staking involves a straightforward process rather than holding onto your PYTH token deposit on balance. Earn interest by delegating your PYTH to the Bitmart as the platform of your choice.
Step 1. To begin, you need to visit the official staking Pyth Network's official staking website. The webpage user interface allows you to choose among the below actions with a simple click.
Step 2: Connecting your Bitmart to the staking dashboard.
Step 3. Specify the amount of PYTH tokens you intend to delegate to initiative staking.
Step 4: Confirm and approve the transaction following the pop-up in your wallet.
Step 5: Track the amount you stake and corresponding voting power within the "Staked" window.
The staked tokens appear in parentheses within the second line. They become eligible for governance voting in the subsequent epoch starting on Thursday when they occur within the first line.
How do You Stake PYTH Using the Bitmart Platform?
Alternatively, you can stake your PYTH tokens from the Bitmart.com.
Step 1: You begin by obtaining PYTH tokens by purchasing it from leading exchanges such as OKX and Binance.
Step 2: Choose the Bitmart, and from it, select the PYTH token from the list and click ‘Stake’
Step 3: Decide on the PYTH amount you desire to stake. You will require a minimum of 10 PYTH token.
Step 5: You can earn 1% APY for the PYTH tokens for a flexible duration of 3 and 30 days.
How to Unstake PYTH Tokens?
Initiating unstaking is a straightforward process by navigating to the UNSTAKE tab and input the PYTH tokens you desire to unstake. Next, you need to approve the transaction using the popup prompt in your wallet.
The amount you unstake appears within the unstaked window. The amount is available for withdrawal within the first line after the cool-down period.
How to Withdraw PYTH Tokens?
Initiating PYTH tokens withdrawal requires navigating to the 'WITHDRAW' tab. Here, you should enter the PYTH amount you desire to withdraw. Next, you should confirm the transaction via the popup prompt in your Bitmart wallet. The confirmation enables PYTH Tokens to return to the wallet.
What are the Pros and Cons of Pyth Network?
Pros Explained
Democratizing Financial Data - Pyth Network's greatest benefit is facilitating access to high-quality data to the audience. The network breaks down the traditional barriers to allow small entities and individuals access information previously privileged to large financial institutions.
Supporting DeFi Applications - Providing reliable data feeds makes the Pyth network a critical component of DeFi applications. The enhanced efficiency and reliability facilitate more complex and diverse financial products on the blockchain.
Decentralized and Transparency - The decentralized nature of the Pyth network guarantees fairness and transparency. It yields trust and accountability within the transactions and applications.
Advanced Technical Framework - The Pyth network utilizes sophisticated aggregation algorithms blended with rapid data refresh rates that are technically superior to the peers. The exceptional technical excellence is ideal for real-time decision-making within the financial markets.
Cons Explained
- The technical complexity within the Pyth network poses barriers to entry for several users who lack expertise.
- The network is heavily reliant on honesty and effectiveness within its two-participant system. It is vulnerable since data accuracy and reliability depend on the information quality publishers provide.
- Pyth network confronts emerging technology risks that obligate continuous adaptation to the changing market dynamics.
Pyth Network Comparison to Chainlink
While both Pyth Network and Chainlink are oracle networks, they have apparent differences.
Data Sources
Pyth utilizes first-party data from financial institutions, trading firms, and exchanges. Chainlink relies on exchanges for data sources alongside third-party aggregators, including CoinGecko and CoinMarketcap, for the price feeds.
Data Transparency
Data on the Pyth network is verifiable on-chain. Such differs from Chainlink since data exists off-chain and is verified individually.
Data Fidelity
Pyth offers the aggregated price alongside the confidence intervals for the price feeds. The latter represents the 'true' price, given the price differences across venues. In contrast, Chainlink portrays the median price once the minimum number of nodes report the price.
Update Frequency
Pythnet price update occurs every 300ms. The users can have permissionless on-chain updates pushed at every slot, creating feed updates at blockchain speeds.
Chainlink portrays the push model trait. It accommodates price updates once every hour on Ethereum or during 0.5% and 1% price deviation. While updates on Solana occur every 5 seconds, on BNB Chain, they occur during 0.1% - 0.5% price deviation or after every minute.
Final Thought
Pyth network offers verifiable data on-chain while guaranteeing price feed updates at the native blockchain speeds. The network must continuously adapt to the changing market dynamics amid the emerging technology risks. Such is necessary since the network relies on the participant integrity for data accuracy and reliability.
