Contribute to network security & earn rewards.
Learn about Elastos Staking
How to stake ELA
To earn a yield on your ELA, you can either lend your tokens out to custodial providers, run your own validator or delegate your tokens to staking pools of your choice.
To delegate your tokens, you should ensure you have your ELA on your the Super Wallet and then follow the steps below:
Step 1: Download the Elastos Essentials app.
Step 2: Create your identity and navigate to the ‘ELA Staking’ page inside the app.
Step 3: Enter the desired ELA amount and confirm it before clicking ‘Stake‘.
Step 4: Finalize by clicking stake and confirming the transaction in your wallet.
Step 5: Navigate to the ‘BPoS Voting’ page inside the app to delegate your stake to validators.
Step 6: Select validator(s) from the list. If you are unsure which validator(s) to delegate to, refer to our tips on choosing a validator for guidance.
Step 7: Check the boxes beside your chosen validator(s), confirm your selection, and click ‘CAST VOTES’ at the bottom of the page.
Step 8: Enter the number of days pledged and votes for the selected validator(s), then click ‘Cast Votes’. Longer pledge durations increase your rewards according to the curve found here. Note that your ELA cannot be unstaked once votes are delegated. Votes will automatically expire at the end of the chosen duration (minimum 10 days), but otherwise cannot be canceled.
Step 9: After confirmation, go to the ‘BPoS Voting’ page and click ‘My Votes‘ to view your voting details
Do I need to maintain my staking in any way?
Once you have delegated your ELA, there are things you need to consider going forward.
- First, Elastos staking works differently than many other protocols. Instead of being staked in perpetuity until the staker initiates the unbonding process, ELA is continuously unbonding depending on the duration chosen. Accordingly, stakers may need to extend their delegations or redelegate if the pledge time expires.
- Secondly, rewards are not auto-compounded. To get the most out of your tokens, you should consider claiming and staking your rewards more frequently.
- Lastly, once you have staked your tokens, you can participate in the Elastos governance brand called the Cyber Republic DAO. This includes electing council representatives for the DAO on an annual basis and gives stakers the option to veto funding decisions made by the council. While your contributions are highly valuable to the ecosystem, participating does not affect the sum of your rewards.
How do I choose Elastos 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:
Rewards: Rewards are only paid out on nodes with at least 80,000 staking rights, however the higher the total staking rights, the lower the staking return. Stakers should select validators with relatively low staking rights.
Staking Rights Threshold: If a validator’s staking rights fall below 80,000, it becomes inactive. Therefore, it is unwise to select a validator whose total staking rights are close to this critical value.
Pledge Duration: Stakers should select validator(s) with the same or longer pledge time for most of the staked tokens on the node.
Performance: Rewards are not the only deciding factor. If a validator engages in malicious behavior, its stakers will not earn any rewards and may even be penalized. Therefore, the signature and block generation rate of the node is another important factor to consider. This helps to ensure that there are more high-quality nodes in the community.
Value Add to the Ecosystem: Some providers are actively building in the Elastos ecosystem. By delegating to a validator that is strongly dedicated to the Elastos Ecosystem, you are supporting their development that indirectly impacts the value of your ELA investment beyond the rewards from staking.
How are Elastos staking rewards generated?
Staking rewards are derived primarily from block rewards. Elastos has on-chain parameters which dictate how many tokens are minted as rewards for every block. Elastos adopted a Bitcoin-style halving model in 2020 which dictates the annual inflation rate (currently 2%) for ELA. The halving schedule can be found in the original proposal here.
The Elastos protocol then divides those block rewards into these pools. 35% of the block rewards goes to BPoS staking rewards (this program), 35% to the Cyber Republic DAO treasury for ecosystem development, and 30% to Bitcoin merge miners.
What are the risks to staking ELA?
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: ELA delegated to a validator can be penalized if the validator neglects to maintain their node or engages in malicious activity such as double signing.
Unbonding risk: The unbonding period for ELA can range from 10 to 1000 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 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 ELA 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 active status, meaning they no longer earn any rewards. Check back occasionally to ensure your validator is still active.
Protocol security risks: There is an inherent risk that the protocol could contain unknown bugs. This not only applies to staking but your ELA investment in general.
Please note that this is not an exhaustive list of all the risks related to staking.
What is ELA?
ELA is the native token of the Elastos project that is used to carry out the key functions of the platform as detailed below:
Staking: Elastos is a hybrid proof-of-work (PoW) and delegated proof-of-stake (DPoS) network, which means that resistance from various attacks partially comes from staking ELA. Staked ELA represents the decentralized infrastructure of servers that maintain the network and process transactions for applications and users on ELA. Rewards for providing this service are received in ELA.
Gas Token: ELA is used to price computation and storage on the Elastos infrastructure. The network charges transaction fees in ELA to process changes and transactions. This also extends to the Elastos sidechains (such as the Elastos Smart Chain and Elastos Identity Chain), which also use ELA as their native currency.
Node Registration and Governance: To become a validator on the Elastos blockchain(s) or a member of the Cyber Republic Council (CRC), a minimum amount of ELA is required.
Medium of Exchange: ELA is readily available on the protocol level, so it can be used to transfer value between various Elastos blockchains, bridges, applications and accounts. This means that applications can use ELA to charge for various functions, like access to data or other complex transactions. Entities can also easily exchange ELA between each other, without the need for trusted third parties to clear and settle transactions.
What consensus algorithm does Elastos use?
The Elastos mainchain leverages a combination of three consensus mechanisms to ensure robust transaction execution:
Auxiliary Proof of Work (AuXPoW) is a mechanisn wherein Bitcoin miners compete to produce blocks for the Elastos mainchain in return for ELA. The security benefits of Bitcoin are integrated into solutions through merged-mining. The mainchain uses a PoW consensus mechanism based on SHA256, with blocks produced approximately every 2 minutes and 8 MB in size, compared to Bitcoin’s 10-minute blocks and 1 MB size limit.
Note: The mainchain’s role is limited to serving as a root of trust, so transaction throughput is not a primary concern. Scalability is achieved through the use of sidechains.
Bonded Proof of Stake (BPoS) is a hybrid consensus mechanism that blends elements of delegated proof of stake and proof of stake. It offers the following benefits:
- Variable bonding time
- Improved profit share model
- Increased mobility between inactive and active sets
- Secure block finality
On the mainchain, BPoS provides finality for PoW-solved blocks, while on sidechains it is responsible for both block production and validation.
Proof of Integrity is a moniker given to the consensus layer backed by the Cyber Republic, Elastos’ decentralized autonomous organization (DAO). Councilors elected on an annual basis are automatically granted a slot in the block production rotation and participate in securing not only the mainchain, but also validate the sidechains and act as arbiters for cross-chain transfers.
By combining these three consensus mechanisms, the mainchain provides a secure and efficient foundation for decentralized applications.
What are the tokenomics of ELA?
Elastos refactored the supply the ELA in 2020 to adopt the following characteristics:
Max Supply: 28,220,000
Inflation Rate: 2% annually, halving every 4 years (see schedule here).
- 35% to BPoS staking
- 35% to the Cyber Republic DAO Treasury
- 30% to Bitcoin merge-miners
All ELA besides future block rewards are currently circulating. There are no outstanding lockups or vesting periods.
From the Staking Rewards Journal