**VESTS** are something that a regular Steemian, now Hiver rarely thinks about. Yet they are the core feature at the blockchain and the essence of it. They determine how inflation will be distributed, rewards allocated, witnesses elected, projects funded etc. They are the point system on which the blockchain works.

The Hive blockchain is really a complex thing. Here I will try to go in short about *vests*, in a simple manner, assess their function with a focus on the staking rewards.

 ![01.png](https://files.peakd.com/file/peakd-hive/dalz/BOBZtYEg-01.png)

# What are VESTS?
Many of the users know VESTS for their second name **Hive Power**. You see the HP really don’t exist on a blockchain level, but just on the frontend level. VESTS is a unit, another token if you like, that you *buy* when power up. VESTS have value in HIVE with a certain ratio that is being used to show the HP on the hive.blog or peack.com frontend wallets as HP. Behind the HP, it is VESTS. 

Just like if you have euros in your account that you have locked and put in savings, and the bank is showing them as dollars using a standard conversion value. 

These VESTS units/points are used by the blockchain to calculate most of its fundamental mechanics, like author and curation rewards, voting for witnesses, DAO and *inflation*. VESTS are also referred as a share of the network. There is a lot of posts about VESTS, you can google them for more information.

The focus that I want to put here is **STAKING**.

# HIVE VESTS Staking | How does it work?
Probably most of the users are familiar with the fact that HP generates staking rewards to its holders. 

**These staking rewards are not very visible.**

The inflation distribution on Hive at the moment is like this:
•	Authors 32.5%
•	Curators 32.5%
•	HP holders 15%
•	Witnesses 10%
•	DAO 10%


 ![02.png](https://files.peakd.com/file/peakd-hive/dalz/UAiNohii-02.png)


Currently the HIVE inflation is around 9.5%. 15% of that is going to the HP holders or around 1.43% interest. This number is dynamic and compounding so its bigger than 1.43% and some estimated it around *2%* on a yearly basis. 

The thing it you don’t actually get any transfers to your account as usually, for let’s say some delegation. The HP value just magically increases. You can notice this for some large HP holders accounts, where it is visible in a short-term period. The reasons why it magically increases is because of the VESTS value to HIVE. Remember HP on a blockchain level doesn’t exist. What you are seeing in your wallet as HP is VESTS converted to HP with some conversion ratio/value. 

The HIVE per VESTS value according to hiveblocks.com, at the moment of writing this post is 0.0005117. Meaning 1 VEST is equal 0.0005117 HIVE. But the thing is that at blockchain level this value is dynamic and increasing all the time. I remember in the past the value of VEST was lower than this something like 0.0004800. Sometimes VESTS are referred as MVESTS and the value then is 5117 MV per HIVE. 

**Increasing the value of VEST per HIVE is what gives the HP holders interests.**

Since the HP that a user holds is actually VESTS, when the value of VESTS increases the frontend wallets then show a higher number of HP.

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Now I guess there have been a good reason to make a totally different token/unit that will represent the base layer of the blockchain, the rewards and voting mechanisms etc. but it is a *bit* confusing, especially when it comes to *staking rewards*.

I don’t know what the exact reason is for a different token/unit to be introduced. If someone has a more information on the topic, please comment below. 

From my point of view, one of the obvious things is that VESTS have bigger precision and are more accurate in allocating rewards for the voting mechanism and overall. This can be achieved if we introduce more decimals to HIVE. 

# VESTS make staking rewards hidden and not visible/meaningful
One of the biggest cons of the VEST system is that they are hiding away the staking rewards, so to speak. You may say its not a lot, something in the range between **1.5% to 2%**, but it’s not an amount that should be ignored at all.

Staking is a **huge** part of the cryptocurrency industry and so many projects go trough a lot of marketing to make it visible. 

**Why would a system that is hiding away the staking rewards should be supported?**

It’s totally opposite of any economic logic. Furthermore we are now seeing discussions on the staking topic, like the one from @therealwolf about [Hive Staking Rewards](https://hive.blog/hive/@therealwolf/hive-staking-rewards), and some brainstorming happening. I personally fully support more brainstorming about this. 

Although I believe that the overall trends in crypto and Bitcoin have a larger effect on the Hive price and the project in general, than the little tweaks that we are doing here. But still this doesn’t mean we should not improve as much as we can.

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For starters let’s make visible the staking rewards that we have now. The psychological effect of having even a small income in your wallet in a form of daily transaction as a staking reward can do a lot. 

Removing the concept of VEST from the blockchain is probably a significant operation, having in mind that a lot of the core operation of the blockchain revolve around VEST, but I guess there is a way for this to be done. 

I personally would like to see VESTS removed in total, but if this is not possible or there is no consensus around it, some addition that will make staking rewards visible as a daily transaction, similar to the curation rewards. 

Then we can continue the discussion about staking rewards, curation and author rewards. For starters lets make visible the staking rewards that we already have.

**What is your opinion on this?**

All the best
@dalz