Lisk is a blockchain application platform built from the ground up - and not on another protocol like Ethereum's ERC20 or NEO's public ecosystem. Building from scratch means a lot more work, but also complete control over fundamental protocol features like the consensus algorithm and code development language (both of which are strong points for Lisk). In this guide we will go over the Lisk project, what it is, why we like it, and then a detailed + screenshotted guide to buying LSK, setting up a wallet, and voting for delegates which will earn additional LSK over time. If you have any questions or suggestions for improvement, please post in the comments!
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Table of Contents
- What Is Lisk
- Pros and Cons of Lisk
- Buying Lisk
- Setting Up Wallet
- Voting for Delegates
1. What is Lisk
In July 2016 the Lisk team wrote up a great piece of what Lisk is and isn't. You should read that as it comes straight from the source. Additionally their official FAQs give simple and straightforward answers. I will try to summarize everything here based on what I've gathered.
- Its own blockchain protocol which means Lisk is built from scratch and not on other protocols like Ethereum or Neo
- A cryptocurrency that uses Delegated Proof-of-Stake (DPoS) as its consensus algorithm to verify transactions on the Lisk blockchain
- A decentralized network of voters and delegates that allows anyone that owns LSK, the Lisk token, to help validate transactions by either voting for delegates or becoming delegates themselves, which thereby earns them a portion of transaction fees
2. Pros and Cons of Lisk
I won't get into any of the technical details, but the practical application of DPoS is that transactions are fast and anyone with LSK can contribute to validating transactions. The economic incentives to "staking" your LSK to vote for delegates is that many will have fee-sharing, earning you a nice return over time.
What gives Lisk the power and control for how they implement certain fundamental features is also what could be their ultimate downfall. There is a reason why Ethereum is the second most valuable cryptocurrency by market cap, and most new tokens are built on the ERC20 protocol; maturity and community are super important for a successful project. I'm a believer of Lisk's approach but there is a sizable incumbent(s?) already atop the throne.
Less Experienced Team
There is nothing wrong with a younger team (Vitalik Buterin, founder of Ethereum, was born in 1994) but a previous advisor brought up a few critical points about weird legal entities, lack of hiring, and too broad of focus. While concerning, the post was also from February 2017 and as of the time of this post, the project has progressed just fine and has a bigger team behind it.
3. Buying Lisk
Now it's time we got ourselves some LSK! The best place to buy LSK right now is on the Bittrex Exchange as it has the highest volume which means there are more LSK being bought and sold; more volume usually means we will get a better price.
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 we will usually have to pay in Bitcoin. There are tons of ways to get Bitcoin, but the easiest way is to use the most established crypto platform in the USA, Coinbase.
Help me help you! Sign up for Coinbase using my referral code (already linked) and we both get $10!
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. I'll wait here while you buy some.
A few days later...
Okay great! Let's get those BTC over to Bittrex now. Tab on over in your Coinbase account to "Send" and pop in the deposit address from your Bittrex account with all of your new Bitcoins.
Fund Bittrex Account
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 Coinbase.
Buy Lisk (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", or use this link directly. 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.
4. Setting Up Wallet
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. For the rest of this part we will be on the Windows platform. 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.
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.
5. Voting for Delegates
The Lisk DPoS voting methodology is a little complicated so bear with me on this explanation:
- Only the top 101 delegates by vote stake (# of LSK) are allowed to validate transactions on the network. This means only those 101 delegates will receive a cut of the transaction fees.
- A voter can "stake" the LSK in their wallet to support delegates, but each vote "batch" costs a fee of 1 LSK and can only include 33 delegates. A voter can also vote for up to 101 delegates. This means a voter needs to vote in 4 batches (3 x 33 = 99, then 1 more batch of 2) to vote all 101 times.
NOTE: 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.
You can read more about Lisk Delegates on reddit or the official faqs. The best way to vote that I've found so far is to sign up for the two biggest and most established Lisk "Pools" and vote for their delegates. The pools were formed to create coalitions that helped boost core delegate members to the top 101 and share the earned fees across everyone participating in the pool.
Lisk GDT - Vote for everyone on their list to attain "Gold Reward" status
Lisk Elite - Sign up at the site, vote for everyone on their list, and verify your address
By voting for everyone in the above two pools, you will get to about 90 ish votes. The remaining to get you to 101 can be figured out through using sites like DPoS Tools which will help you analyze your votes and recommend delegates to vote for based on their fee sharing.
Consider this guide as a starting point, and as always do your own research. Get ready for the mass mainstream developer adoption!!
Like this tutorial? Any tips are greatly appreciated!