Wyoming, in the United States, has already welcomed cryptocurrency banks and blockchain investments. Now, the US state is becoming even more involved with the sector.
In a bill signed by the governor last month, Wyoming set aside $ 4 million for a cryptocurrency staking program to be administered by the University of Wyoming, the state's only public institution of higher education.
Staking, which is tantamount to blocking cryptocurrency so that it can be used to validate blockchain transactions and coin new tokens, is a popular way for cryptocurrency holders to put their assets to work and make a profit. The ‘University of Wyoming’s Cryptocurrency Stipulation Program’ offers insight into possible alternative sources of revenue for public universities, which – even before the coronavirus pandemic – faced budget constraints.
After the state approves the university's spending plan, the institution will have $ 4 million to spend on operational nodes (computers that are connected and supporting the blockchain network) and accumulating cryptocurrencies to develop “staking pools” – which allow users of cryptocurrencies to place tokens and start betting without themselves needing any technical knowledge – in at least three cryptocurrencies.
The revenue generated will first go towards the payment of operating expenses, with up to $ 4 million in profit going to the university's investment and strategic projects account. Any profit beyond that amount is earmarked for “blockchain programs and activities at university and community colleges across the state”.
The state used the investment account to finance construction projects, including an expansion of the university's law school.
To perform staking, the bill also establishes a “cryptocurrency advisory council” to be co-chaired by leaders of a state committee focused on blockchain, financial technology and digital innovation technology. Members include the state's chief investment officer, three blockchain experts to be appointed by the governor, and one member appointed by the president of the University of Wyoming.
A staking pool is similar to a mining pool, but specific to proof of bet (PoS) blockchains, which rely on token holders to block their currencies to verify transactions. Staking pools refer to users who combine their resources to validate new blocks, thereby increasing their chances of earning associated cryptocurrency rewards. Depending on the blockchain, staking pools may require users to block their currencies in a digital wallet, which means that they cannot use the tokens for a certain period. Cardano (ADA), which uses delegated betting proof, allows users to participate in a betting pool and maintain control of their tokens, for example.
As for which of the three PoS chains will be chosen, Cardano's ADA token seems like a logical choice. The creators of Cardano, from IOHK, established the ‘Wyoming Advanced Blockchain Lab’ on campus last year. The site, with the support of the faculty, is using $ 50,000 in funds to create and maintain a Cardano staking.
Wyoming has long been ahead of the curve when it comes to blockchain technology. In 2019, the state passed a series of bills creating a welcome regulatory framework for cryptocurrencies. In 2020, Kraken and Avanti received state licenses to establish “crypto banks” in the state, allowing them to maintain cryptocurrencies on behalf of customers and provide other specialized financial services. And just last month, the U.S. state explicitly legalized decentralized autonomous corporate organizations that use tokens on a blockchain to facilitate decision-making.
* Translated and edited with authorization from Decrypt.co.