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How to stake EGLD
To earn a yield on your EGLD, you can either lend them out to custodial providers or via a Defi lending protocol, run your own validator or delegate your tokens to validators of your choice.
We recommend using a Ledger Hardware Wallet to keep full control over your funds. To delegate your tokens, you should ensure you have your Elrond wallet and follow the steps below:
Step 1: Go to the Staking Dashboard and make sure your EGLD tokens are on your Elrond wallet.
Step 2: Click the ‘Stake’ button on the left-hand side menu of the page.
Step 3: Press ‘Stake now’ at the top right-hand side of the page.
Step 4: Select a validator from the list, if you’re not sure who to delegate to, consult our FAQ for guidance on selecting a validator.
Step 5: Enter the amount of EGLD you want to stake and sign the transaction.
How do I choose MultiversX (Elrond) 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 may not be 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.
Rating/Performance: Each individual validator has a rating score, which expresses its overall reliability, performance and responsiveness. Rating points influence the probability of a validator to be selected for consensus in each round. A performant validator will be preferred in consensus, as opposed to a validator which sometimes fails to contribute or which is not always online. You typically want to choose a validator with a rating of > 99. You can view the rating of a specific validator on the Elrond Validator Dashboard.
Number of Users: A high number of delegators could indicate positive sentiment towards a validator.
Validators Self-Staked balance: A provider that has 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.
Current Status: You can see whether the validator is currently active or not by checking the validator list shown on this page. Validators that are active have a green ‘Online’ label when you click their name.
Network Share: You typically don’t want to choose a validator with the highest voting power or a validator with 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 a larger share of the blocks. A validator with a low network share, might not be profitable and hence increases the risk of them discontinuing their services.
Value Add to the Ecosystem: Some providers offer extra services to their delegators, such as tax reporting tools, explorers, etc. This can be another great way to filter for validators that are thinking long-term. You can view the value-added services of staking providers by searching for their profile on our website and scroll down towards the bottom of the page.
How are the staking rewards generated?
The Staking Rewards on EGLD come from:
- Inflation on the MultiversX Network (Block Rewards): Elrond’s economics model is based on an inflation rate that decreases each year. The inflation rate should reach zero by the eleventh year post-mainnet launch. The hard cap on eGLD’s annual issuance means Elrond must organically grow its fee market over the next decade to pay validators for their continued contributions. See the approximated inflation rate here.
- Transaction Fees: A portion of the Staking Rewards are being generated from transactions on the network. The Staking APR will vary with network usage, as the network gets busier the APR will rise and vice versa. If the cumulative sum of fees during one year is higher than the minimum guaranteed rewards from inflation, the inflation rate will become zero, and the total rewards distributed will be higher than the minimum guaranteed rewards.
Also note that 10% of validator rewards and 10% of the fees are collected into a Protocol Treasury. The role of the treasury is to ensure the sustainable development of the Elrond ecosystem. Funds will eventually be spent based on the Elrond Governance model.
What are the risks to staking EGLD?
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: Delegators and validators cannot be slashed.
Unbonding risk: When staking EGLD tokens, there is a lockup period of 10 days. This means that investors will not be able to sell their tokens immediately, but instead need to wait 10 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 EGLD long-term.
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 MultiversX token.
This list is not exhaustive and other risks may apply.
What is EGLD?
EGLD is the native token of the MultiversX network that is used to carry out the key functions of the platform as detailed below:
- Staking: Users can temporarily lock up EGLD to contribute to the security of the network. In return for the service, both the validators and the stakers are rewarded with epoch rewards.
- Gas token: EGLD is used for network fees, each transaction processed by the network requires a small fee to be paid.
What consensus algorithm does MultiversX network use?
The Elrond network uses a consensus algorithm called “Secure Proof of Stake” (SPoS). This is a variation of the traditional Proof of Stake (PoS) consensus mechanism, which uses a combination of randomness and stake to select validators.
SPoS introduced an additional layer of security to the consensus algorithm by utilizing “Numbered Randomness”. It’s a unique mechanism that allows for the random selection of a subset of validators to propose and vote on new blocks. This process is called “shuffling” and it ensures that the validators are selected randomly, hence making it hard for malicious actors to manipulate the process. It also introduced “Meta-Transactions” that enables users to transact without having to pay transaction fees by using a relayer.
This combination of features allows the Elrond network to achieve high throughput and low latencies, by significantly reducing the number of validators needed to confirm a block and allowing a larger number of transactions to be processed in parallel.
What are the tokenomics of EGLD?
The maximum token supply of EGLD tokens is 31,415,926. Although it has a max supply of 31,415,926 tokens, annual issuance is offset by transaction fees, which means that EGLDs actual max supply may end up being less than theorized. EGLD has a decreasing inflation rate that should reach zero by the eleventh year post-mainnet launch. The hard cap on eGLD’s annual issuance means Elrond must organically grow its fee market over the next decade to pay validators for their continued contributions.
Initial token distribution:
- 19% was allocated to private investors, vesting over 18 months
- 25% was allocated to IEO investors, with 100% of the tokens released at the date of the IEO on Jul. 4, 2019
- 7% was allocated to Ecosystem rewards, vesting over 12 months
- 8.5% to a Marketing Growth Pool, vesting over 12 months
- 2% to a Community Fund, all vesting over 12 months
- 2.5% was allocated to advisors and locked for one year after the IEO
- 19% was allocated to the Founders and Core members, vesting over 42 months
- 17% was allocated to a Reserve Treasury, vesting over 30 months
- $15M was raised in a Series B on October 13, 2021
- $1.9M was raised in a Seed round on June 19, 2019
From the Staking Rewards Journal