When you have $EOS staked in your decentralized wallet, it gives you the authority to select up to 30 validators. On EOS, the validators are called Block Producers, and staking is called "voting." The BPs who receive your stake (vote) would earn rewards from 1% of the network's inflation if they acquired enough stake to end up in a paid BP position (Position 1 to position 66 are paid at the time of the writing). Stake (Votes) are recorded, and rankings are updated in real-time.

BP pay is based on the amount of stake (votes) received and blocks produced. The top 21 BPs who receive the most stake (votes) are the only ones who produce blocks for the chain. BPs outside the top 21 (until position 66) are paid "standbys." Because the top 21 BPs produce roughly the same amount of blocks, their pay disparity is based on stake (votes). From 21-22, there is a more significant pay gap because 22+ does not produce blocks. From 22+ resumes, the gradual decrease is based on stake (votes) until pay stops around 70th place, depending on various factors.

The incentives around block producers result in stake buying ("vote buying"). Many outside of EOS incorrectly state the vote buying "problem" is uniquely damaging to eosio chains. However, it is the same concept as mining pools that use their customer's computational and financial assets in exchange for mining rewards. Stake buying ("Vote buying") was not immediately apparent when EOS launched the chain. Within a year, however, cultural differences arose around stake buying ("vote buying"). The BPs who engaged in it climbed the rankings. It was part of the reason that caused a major BP shuffle (solidified as of 2021) and a reimagination of governance expectations.

Staking (Voting) for representatives using tokens (DPOS) allows exchanges to stake (vote) for themselves, sometimes using as well their customer's tokens. Because most $EOS holders are ignorant or apathetic to the staking (voting) mechanism, there is little incentive for the exchanges to develop a system that allows their customers to stake (vote) on their own.

Stake buying ("Vote buying") is not different from miners negotiating cheaper electricity or hardware. They need electricity to get block rewards; in EOS, the Block Producers need stake (votes). How a BP get them is up to their business skills, connections, value creation, and lobbying skills.

EOS staking (voting) is a free market, and there is no one strategy for obtaining stake (votes). BP's usually have a mixture of approaches.

1) some stakers (voters) stake (vote) and receive no rewards (this included block.one in the past).

2) some give staking (voter) rewards (pay for stake) using proxy rewards services like genpool and newpool.

3) Some have their own proxy (for example, genpoolproxy) that they trade stake (votes) with other prominent stakeholders.

Author: Jesse Jaffe

Editor: Randall Roland

Translator: -

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