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 Validator Dashboard on Mintscan. 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 Celestia, 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 Celestia Ecosystem. By delegating to a validator that is strongly dedicated to the Celestia Ecosystem, you are supporting their development that indirectly impacts the value of your TIA investment beyond the rewards from staking.

We strive to make staking as safe and transparent as possible, however, it's important to consider factors that may influence whether a particular staking option is appropriate for you.

Slashing risk: TIA delegated to a validator can be partially slashed if the validator misbehaves. On top of getting slashed, a validator can also be jailed, during which time you will not be earning any rewards. You can get slashed up to 2% for double signing events.

Unbonding risk: When staking TIA tokens, there is a lockup period of 21 days. This means that investors will not be able to sell their tokens immediately, but instead need to wait 21 days after initiating unbonding before they can be traded again. This is something to keep in mind when deciding to stake, as crypto markets are highly volatile. Consider keeping funds liquid if you do not intend to hold TIA long-term. 

Dropping out of the active set: A validator could drop out of the top 100 validators, meaning they no longer earn any rewards. Ensure you check back frequently to ensure your validator is active, not jailed and has not unreasonably raised their commission fees. 

Protocol security risks: There is an inherent risk that the protocol could contain unknown bugs, this risk applies not only to staking but also the investment in TIA.

Please note that this is not an exhaustive list of all the risks related to staking.

TIA is the native token of the Celestia ecosystem that is used to carry out the key functions of the platform as detailed below:

Token Utilities

• Gas token: Each transaction processed by the network requires a small fee to be paid to the validator. 
• Governance: TIA is used to vote on governance proposals on the network. TIA holders (not just stakers) can propose and vote on governance proposals to change a subset of network parameters. The amount of voting power is measured in terms of stake.
• Staking: Users can temporarily lock TIA up to contribute to the security of the Celestia ecosystem.

Celestia is powered by Tendermint BFT. Tendermint BFT is a Byzantine Fault Tolerant (BFT) consensus engine developed by Tendermint. 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.

Celestia launched with a total supply of 1,000,000,000 TIA at genesis. TIA inflation starts at 8% annually and decreases by 10% every year until it reaches the long term issuance rate of 1.5%. Starting at genesis, Celestia’s community pool receives 2% of all Celestia block rewards. TIA stakers may vote to fund ecosystem initiatives as in many other Cosmos SDK chains.

Initial token distribution:

• 20% is allocated to the public via a genesis drop, incentivised testnet, and future initiatives.
• 26.8% is allocated to research and development
• 19.7% is allocated to Early Backers: Series A&B
• 15.8% is allocated to seed investors
• 17.6% is allocated to the Initial Core Contributors