Impact of Staking on coin price
User Staking for projects using the PoS consensus mechanism is decisive for the entire Blockchain network. That is obvious.
But for projects that apply the PoS mechanism, when they start allowing Staking, how does it impact the price of that coin?
Some impacts on supply and circulation that you can see immediately: The amount of coins brought to stake will be locked during that period of time. This means that these coins cannot be circulated or bought or sold on exchanges. Therefore, it causes the amount of coins circulating in the market to decrease.
Basically, when the supply in the market decreases, meaning its scarcity increases, it will cause the price to increase. This is the basic law of supply and demand.
Let's take a specific example as follows with TOMO coin:
On December 10, 2018, TomoChain announced the program for candidates to run Masternode.
On December 14, 2018, TomoChain officially launched Mainnet and allowed Masternodes to stake TOMO coin. At the same time, let other users vote for these Masternodes.
On August 8, 2019, there are 39,851,005 TOMO (64.5% of total market circulation) being staked to participate in the PoSV consensus mechanism. TOMO price increased by 300% in the time since staking began.
Because Staking has the ability to increase coin prices, many projects default to applying this mechanism to "pander" to the community. Gradually, coin prices no longer increase, so people just consider this a form of savings if they want to keep coins long term.
