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How to stake CANTO
There are several ways to earn a return on your CANTO, including lending them out to custodial providers or through decentralized lending protocols, running your own validator, or delegating your tokens to validators of your choosing.
For the best security and control over your funds, we recommend a compatible hardware wallet. To delegate your tokens, you should ensure they are stored on your hardware wallet or Metamask, and then follow these steps:
Step 1: Go to the Canto Staking Dashboard and connect to your wallet.
Step 2: Click on the ‘all validators’ tab to see a list of network validators and choose one. Check our FAQ on how to choose a validator if you are unsure who to delegate to.
Step 3: Once you have chosen a validator and decided on the number of tokens you would like to stake, click ‘Delegate’ and confirm the transaction in your wallet.
Do I need to maintain my staking in any way?
Once you have delegated your CANTO, there are things you need to consider going forward.
- Firstly, delegating from one validator to another can be done without waiting for the unbonding period. You might consider redelegating if your current validator raises their commission rate or gets jailed for misbehaviour on-chain. Once redelegated, you have to wait for 21 days before you are able to redelegate again.
- Secondly, rewards are not auto-compounded. To get the most out of your tokens, you should consider claiming and staking your rewards more frequently, but consider that each transaction will cost you some gas. By using our Canto staking calculator, you can calculate the optimal re-stake frequency for your amount of CANTO. Some tools, such as restake.app, will enable you to pick a validator who will auto-compound your rewards for you, so keep this in mind.
- You can only have 7 concurrent undelegations at a time for each validator. In other words, you can unstake 7 times from a given validator within a 21 day period.
- Lastly, as a participant in the Canto Ecosystem, once you have staked your tokens, you can vote on Canto Governance Proposals. While your contribution and vote are highly valuable to the ecosystem, participating does not affect the sum of your rewards.
How do I choose Canto validators?
It is essential for users to stake their PoS tokens with dependable and highly performant validators, which is why we have rolled out our Staking Rewards Verified Staking Provider (VSP) Program in June 2022. Through this program, we thoroughly scrutinize potential validators, evaluating factors such as security measures, their on-chain reliability, their provider setup, and value-added services for the whole ecosystem.
There are many metrics to consider when selecting a validator to delegate to:
Commission Rates: The commission rate a validator charges is the % of your reward that the validator keeps for themselves. A high commission rate means your rewards will be lower, whilst a low commission rate could mean that the validator is not profitable and could cause issues for them in the future. Keep in mind that validators can adjust their commission rates up or down over time.
Number of Users: A high number of delegators could indicate positive sentiment towards a validator.
Validators Self-Staked balance: A provider with a high amount of staked tokens likely has more incentive to continue operating their services as they have more to lose than those with low self-staked balances. This metric has some limitations as Validators can choose to delegate to their own validator from another wallet, which is done to increase security of their funds.
Current Status: To check if a validator is currently active, go to the Canto Validator Dashboard. The default view on this page is for “Active” validators, but you can also filter to view inactive validators in the top right corner of the page. Keep in mind that only the top 100 validators on Cosmos, ranked by balance, receive rewards.
Network Share: You typically don’t want to choose a validator with the highest or a low network share. Delegating to the most popular validators increases centralisation risks within the network as those validators will have more say in governance and produce a larger share of the blocks. A validator with a low network share might not be profitable, increasing the risk of them discontinuing their services. If a validator drops out of the top 100, they also stop earning rewards. However, if you are willing to put more time in, then delegating to a smaller validator helps support the decentralization of the network. You would just have to make sure to check regularly if the provider is still active and operating.
Performance: Make sure you pick a validator with the highest possible performance. Further, please check individual validators’ uptime, and our recommendation is only to pick those with a >=99% uptime and a long history of not getting slashed.
Value Add to the Ecosystem: Some providers offer extra services to their delegators, such as tax reporting tools or explorers. This can be another great way to filter for validators that are long-term invested in the Cosmos Ecosystem. By delegating to a validator that is strongly dedicated to the Cosmos Ecosystem, you are supporting their development that indirectly impacts the value of your CANTO investment beyond the rewards from staking.
How are the staking rewards generated?
Native staking rewards for CANTO are composed of:
Inflation on the Canto Network (Block Rewards): The maximum supply of CANTO inflates over time at a rate that is constantly decreasing. Network security emissions will start around an inflation rate of 200M Canto per year for the first 30-day period, minting ~16m new CANTO tokens. Every subsequent period will face exponentially decaying security emissions. For subsequent periods, the Canto DAO will vote to adjust emissions as appropriate. All tokens from inflation are distributed to CANTO stakers, proportionally to their stake in the network. This implies that CANTO holders who choose not to stake will get diluted over time.
In addition to this, Canto offers liquidity mining rewards of ~37 CANTO per block. While these rewards are not given to stakers, they make up a large portion of the inflation on the network. Medium-Term Liquidity Mining is expected to consist of six month-long epochs. The first epoch started at launch and distributed 5.83% of the token supply. The Canto DAO has onchain control over all liquidity mining schedules. As the first epoch concludes, the DAO may choose to pass a proposal to begin a second epoch.
Long-Term Liquidity Mining is expected to continue liquidity mining after the Medium-Term Liquidity Mining allocation is emitted. The Long-Term Liquidity Mining reserves may be emitted over the course of 10 years, or any other schedule the DAO chooses.
Please note that the total annual rewards are divided by all active stakers; hence, as the amount of staked tokens goes up, the reward rate goes down.
You are welcome to play around with our Canto Staking Calculator to get a better feel of how these metrics can influence your rewards.
What are the risks to staking CANTO?
Whilst we want to ensure staking is as safe and transparent as possible, there are still things to consider regarding whether a specific staking option is right for you.
Slashing risk: CANTO delegated to a validator can be partially slashed if the validator misbehaves. If a validator misbehaves, any tokens delegated to them will be slashed by 0.75% in the case of prolonged downtime and 4% in the case of consensus faults. Due to slashing, performing due diligence on validators before staking any tokens and splitting your stake across multiple validators is highly recommended.
Unbonding risk: The unbonding period for CANTO is 21 days. Crypto markets are highly volatile, and investors need to be aware that they cannot sell their tokens immediately once they have staked them. They first need to wait 21 days for the tokens to unbond before they become liquid. Please take note of this lockup before you decide to stake. Consider keeping funds liquid if you do not intend to hold CANTO long-term.
Dropping out of the active set: On top of potentially losing out on rewards if your validator gets slashed, a validator could also drop out of the top 100, meaning they no longer earn any rewards. Ensure you check back frequently to ensure your validator is active, not jailed and has not raised their commission fees.
Protocol security risks: There is an inherent risk that the protocol could contain unknown bugs. This not only applies to staking but your CANTO investment in general.
Please note that this is not an exhaustive list of all the risks related to staking.
What is CANTO?
CANTO is the native token of the Canto network that is used to carry out the key functions of the platform as detailed below:
- Staking: Users can temporarily lock CANTO up to contribute to the security of the Canto network.
- Gas token: Each transaction processed by the network requires a small fee to be paid in CANTO. Governance: CANTO is used to vote on governance proposals on the network. Only staked tokens are eligible to be used for governance voting. The amount of voting power is measured in terms of stake. Unlike many other networks, as a delegator, you are also able to participate directly in governance, rather than passing your votes to the validator.
What consensus algorithm does Canto use?
Canto is powered by Tendermint BFT. Tendermint BFT is a Byzantine Fault Tolerant (BFT) consensus engine developed by Tendermint. It achieves EVM compatibility through the Ethermint system, which enables an EVM execution environment, further facilitating the deployment of Ethereum smart contracts. It offers instant finality, is horizontally scalable and is secure against malicious actors. It is also open-source, meaning anyone can inspect and use the code. Additionally, it is simple to set up and use, allowing developers to quickly and easily build distributed applications. The active validator set consists of the 100 highest-ranked validators by staked tokens, from which 1 validator is randomly selected to propose a block with 66% of the remaining active validators being required to attest the block in order for it to become final. The higher the stake, the more likely they are to be selected.
What are the tokenomics of Canto?
At genesis, the initial total supply of CANTO is 1B tokens. Of this, the initial circulating supply of CANTO is 150M tokens. In order to maintain the security of the Canto network, the total max supply of CANTO inflates over time at a rate that is constantly decreasing. All tokens from inflation are distributed to CANTO stakers, proportionally to their stake in the network.
Initial token distribution
The Initial token distribution of CANTO is as follows:
- 13.00% is allocated to Contributors
- 2.00% is allocated to Settlers of Canto
- 5.00% is allocated to Future Grants
- 35.00% is allocated to Medium-Term Liquidity Mining
- 45.00% is allocated to Long-Term Liquidity Mining
From the Staking Rewards Journal