But what is LSK? How is it used? Where can you get it? How should it be stored? Below we will answer those questions and more regarding the LSK token.

Table of Contents

• What is the LSK Token?
• Delegated Proof of Stake Consensus for LSK Token
• Lisk Voting Process
• How to Find Lisk Delegates?
• How to Buy LSK
• Where to Store LSK – Lisk Desktop and Lisk Mobile Wallets
  
  • Lisk Mobile
  • Lisk Desktop
  • Hardware Wallet Support
• How Big is the LSK Ecosystem?

What is the LSK Token?

LSK is the native utility token for the Lisk network. It is used to perform various actions on the Lisk blockchain. In order to send a transaction, vote for a delegate, or register a multi-signature wallet, you need to use your LSK in order to do so.

More functions will be possible as the Lisk platform is built. For example, a user will soon be able to register their blockchain applications, and will require the LSK token to do so. With an increasing number of entrepreneurs and developers wanting to build their applications on the Lisk network, the supply of LSK required to do so will vastly increase its demand.

Delegated Proof of Stake Consensus for LSK Token

Every blockchain uses a consensus mechanism to secure its chain. Bitcoin uses Proof of Work (PoW), Ethereum 2.0 will use Proof of Stake (PoS), Decred uses Proof of Authority (PoA), etc. The Lisk network utilizes a modified and more efficient version of Proof of Stake, called Delegated Proof of Stake (DPoS).

Similarly PoS users must stake their coins in order to secure the network. The main difference between the two is that in DPoS, users vote on delegate(s) to secure the network, as opposed to staking their coins to validate transactions and create blocks. Therefore, a voter does not need to run any additional software (a node), in order to participate directly with the network.

Delegates themselves earn block rewards for each block they forge. This block reward is currently 1 LSK per block and will remain that way forever. In the past, during the very early days of the chain, this reward was as high as 5 LSK per block, however, this was gradually reduced over time. Delegates also earn a small amount of transaction fees, although these vary depending on how busy the Lisk network actually is.

Voters may also earn rewards as well, although these rewards are not currently part of the consensus algorithm. In exchange for voters, some delegates pledge a certain amount or a percentage of their forged LSK tokens to be sent back to their voters. Each delegate is in charge of their own specific process and may administer special rules that voters need to adhere to.

Lisk Voting Process

The Lisk network has utilized DPoS since it first launched on May 26, 2016. The specific algorithm and the voting process that was originally deployed have changed.

In the beginning, the network was secured by the 101 delegates with the most vote weight. Each address could vote for up to 101 delegates at a time. While this implementation worked as a solid method of securing the Lisk network, it was evident there was room for improvement. It was clear that one of the main disadvantages was regarding the ability to vote for 101 delegates, as there was either minimal or no incentive to vote for non-forging delegates. Therefore, competition to enter into, or maintain a forging position grew stagnant over time.

Since August 2021, the Lisk network has been utilizing an updated version of this algorithm. Now, each LSK token may only be used to vote for a single delegate. However, each address may vote for up to 10 delegates. In addition, these votes do not have to be evenly distributed either. For instance, one address may vote for 1 delegate with 900 LSK, and another with only 100 LSK.

While the network is still secured by the 101 delegates with the most vote weight, there are now 2 stand-by slots available as well. For each block round these slots are chosen somewhat randomly. The more vote weight the delegate has, the more likely they are to be selected to forge for that round. This process gives users an incentive to become a delegate and directly participate in securing the network. It can also give voters an incentive to vote for a stand-by delegate knowing that they are more likely to forge with the added vote weight that they are providing.

For an even more in-depth look at the entire Lisk voting process, read our Lisk Voting Process blog post.

How to Find Lisk Delegates?

On the surface, it may appear somewhat confusing and overwhelming trying to figure out which delegate(s) to vote for. There are however a few places you can explore to give you some guidance before casting your vote. Also keep in mind that you may always update your votes for a very small fee, so your votes are not locked in stone.

Blockchain data is one metric a voter may use when determining their votes. Lisk Desktop itself offers the ability to monitor several types of network events, which could aid in voting. If these events are not enough, Lisk explorers (Liskscan & Lisk Observer) offer additional searching and sorting options within your browser.

Off chain information may be just as valuable to a potential voter. If you are looking to contact delegates directly, or maybe you want to view any proposals they may have, you should look at lisk.chat, which is the official platform for all community discussions. Finally, there are a few different tools created by community members that are dedicated to offering delegate information such as their sharing percentages and payout frequencies.

If you are still having trouble figuring out who to vote for, you could read our more in-depth How to Find Lisk Delegates? blog post

How to Buy LSK

Coins and tokens need to have viable methods to purchase and sell to be successfully distributed. Fortunately for those trying to acquire LSK tokens, it is listed on many exchanges. These include some of the most popular exchanges, such as Binance, Kraken, Kucoin, Huobi, and Crypto.com. These exchanges offer numerous different trading pairs, which include cryptocurrencies such as BTC, ETH, and USDT, and also fiat options such as USD, EUR, JPY, and GBP.

To find a larger list of exchanges for the LSK token, read our 12 Exchanges to buy LSK blog post.

Where to Store LSK – Lisk Desktop and Lisk Mobile Wallets

There are two official wallets where users may store their LSK tokens, these are Lisk Desktop and Lisk Mobile. Both may be downloaded at https://lisk.com/wallet.

Lisk Mobile

Lisk Mobile is available for both iOS and Android devices. It has a number of features, including the ability to create new LSK addresses, send and receive transactions, and create address bookmarks. In addition, users may opt for biometric authentication when logging in for convenience, although sending a transaction will require users to enter their 12 word passphrase.

Lisk Desktop

Lisk Desktop may be installed and run on all computers running Mac, Windows, or Linux operating systems. All features that are available on Lisk Mobile are available on Lisk Desktop as well, with a few additional extras. Users may also participate in voting on Lisk Desktop, allowing them to vote or unvote delegates, in addition to viewing delegate statistics that may aid them in deciding who to vote for. Users also have the possibility to monitor the network through Lisk Desktop, and are able to view a number of network related items, such as the most recent transactions.

Hardware Wallet Support

Hardware wallets offer many benefits, such as keeping private keys unexposed, additional pin verification, and additional protection against malware and viruses. It is therefore important for many users to store their LSK tokens on a hardware wallet. Currently, users may do so with the Ledger hardware wallet. Lisk Desktop supports the Ledger Nano S, and Ledger Nano X devices.

For more information on these official Lisk Wallets, see our Where to Store LSK Tokens blog post.

How Big is the LSK Ecosystem?

Currently, the LSK ecosystem is limited to just the Lisk mainchain, as the sidechain interoperability functionality is not yet implemented. Once this comes to fruition, the utility of the LSK token, and by extension the LSK ecosystem, will increase exponentially.

Even though Lisk sidechains are not active at the moment, there are still many projects that are currently in development. For instance, enevti is a decentralized social media NFT platform that helps fans create an authentic relationship with their favorite influencers. Kalipo is a platform to support Decentralized Autonomous Organizations (DAOs). A third example is idntty, which is an identity and public key infrastructure for developers.

In the future these projects will greatly benefit from Lisk’s interoperability solution. One of these benefits will be the ability to send cross-chain messages throughout the entire ecosystem. This will include mainchain to sidechain LSK transfers, as well as sidechain to sidechain custom messages. Another benefit will be having custom token standards. These standards will make utilizing custom tokens throughout the Lisk ecosystem easier and much more straightforward.

Many of these projects have received funding through the Lisk Grant Program. These categories include stablecoins, smart contracts, DAOs, Defi, and many more. If you are a Web3 developer and have an idea for your own blockchain application, be sure to check out the Lisk Grant program and apply.