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Learn about Flow Staking
How to Stake FLOW?
There are several ways to earn a return on your FLOW, 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 using a Ledger Hardware Wallet. To delegate your tokens, you should ensure they are stored on your Ledger or the Blocto wallet, and then follow these steps:
Step 1: Go to the Flow Port and connect to your Ledger or Blocto wallet.
Step 2: Select “Delegate” to delegate your stake to a Node Operator from this list. You’ll need to know the node operator ID of the operator who is running the nodes you wish to stake. Check our FAQ on how to choose a validator if you are unsure who to delegate to.
Step 3: Enter a Node Operator ID, enter your stake amount, and click “Next” to reach the confirmation screen. Confirm the details of your delegation request and click “Submit”.
Do I need to maintain my staking in any way?
After delegating your FLOW tokens, there are a few things to keep in mind:
- Rewards for staked tokens are distributed every Wednesday at 7:00pm UTC.
- To withdraw your staked tokens to your wallet, navigate to the “Stake & Delegate” section in the Flow Port, press “Manage Delegations”, and then hit the “x” sign to unstake. Note that staking operations are disabled on the last day of an epoch, typically around 7:00pm UTC on Tuesday, until the next day.
- Rewards received from staking will not be automatically re-staked through the Flow Port. If you wish to re-stake your rewards, it must be claimed and staked again manually. Use the FLOW Staking Calculator to estimate the best re-staking frequency for your amount of tokens staked.
- At any given time, a single account address can have a maximum of 1 active node and 1 active delegation. To delegate to multiple nodes, additional account addresses must be created.
- As a member of the Flow Ecosystem, you can participate in community polls and governance activities by using your Flow account. Your participation and vote are important, but it does not affect the sum of your rewards.
How do I choose Flow 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.
When choosing a validator to delegate to, there are numerous factors to take into account:
Commission Rates: When staking your tokens with a validator, the commission rate represents the percentage of your rewards that the validator will retain for themselves. A high commission rate can result in lower returns for you, while a low commission rate may lead to financial difficulties for the validator in the future. It’s important to note that validators may change their commission rates at any time.
Number of Users: A large number of delegators may signal a positive reputation for a validator.
Validators Self-Staked balance: Validators with significant amounts of self-staked tokens may have a greater motivation to maintain their operations, as they have more at risk than those with lower self-staked balances. However, it’s important to keep in mind that this metric has some limitations, as validators can choose to delegate their own tokens to another validator, which is done to enhance the security of their funds.
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 dot under them.
Network Share: When selecting a validator to delegate to, it’s generally advisable to avoid choosing one with the highest or lowest network share. Delegating to the most popular validators can increase the risk of centralization within the network as they will have more influence in governance and a greater share of blocks. On the other hand, choosing a validator with a low network share may be less profitable and increases the risk of them ceasing their operations. Finding the balance and choosing a validator with a moderate network share could be the best approach to keep the balance in decentralization and profitability.
Performance: Make sure you pick a validator with the highest possible uptime performance by viewing the validator information on the Flow Port. Our recommendation is to only pick those with a >=99% performance and a long history of not getting slashed.
Value Add to the Ecosystem: Another way to assess the long-term vision of validators is to check if they offer additional services to their delegators, such as tax reporting tools, explorers, etc. This can be a useful filter when comparing different providers.
How are the rewards generated?
Currently, rewards for stakers are distributed at the end of each epoch (approximately 7 days), and are paid out every Wednesday at 12:00 pm PT (7:00 pm UTC). Additionally, at the end of each epoch new node operators can join the network and existing operators who have unstaked can exit the network.
The staking rewards for FLOW are generated by:
Block Rewards: Flow rewards are currently set at a fixed weekly amount of approximately 1.3 million FLOWs. Rewards are paid by first drawing from the central pool of transaction fees accumulated since the last rewards payment.
Once the pool is exhausted, new FLOW tokens are minted to be used as rewards.
If the transaction fees are low, the majority of rewards will come from token inflation. However, Flow is designed to limit inflation as much as possible in the long term.
It’s worth noting that on Flow, all inflation is distributed to stakers, meaning holders of FLOW will not experience dilution as long as they are actively participating by staking or delegating.
Transaction Fees: The Flow network has two types of transaction fees: 1) Processing fees: These are the fees required for submitting and including a transaction in a block. 2) Computation fees: These are additional fees applied for operations that require additional computation beyond balance updates.
Transaction fees are currently low on the Flow network and start at 0.001 FLOW per transaction. As the network evolves and the volume of transactions increases, so will the transaction fees. Any excess transaction fees collected beyond the required rewards will be held in an escrow account and used to offset future inflation indefinitely.
It’s important to keep in mind that the total annual rewards are divided among all active stakers. As the number of staked tokens increases, the reward rate decreases.
Furthermore, there are governance proposals that could adjust some of the on-chain parameters, which could also change the APR if they are approved.
You’re welcome to use our Staking Calculator to get a better understanding of how these factors can impact your rewards.
What are the risks of staking FLOW?
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: When a validator misbehaves, the FLOW delegated to them can be slashed. However, such incidents are rare on Flow as nodes are only slashed for actions that directly threaten the security and integrity of the network. The slashing process is also highly secured, it must be done by a supermajority of more than 2/3 of the staked consensus nodes and the protocol violation must be adjudicated on a case-by-case basis. If a node is found guilty, the fine is directly deducted from the node’s stake.
Unbonding risk: The unbonding period on Flow is an epoch, approximately 7 days. This means that once you have staked your tokens, you will have to wait 7 days for them to unbond and become liquid. Please keep this in mind before deciding to stake, especially if you plan on selling your tokens in the short-term. It’s recommend considering keeping funds liquid if you do not intend to hold FLOW 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 FLOW.
This list is not exhaustive and other risks may apply.
What is FLOW?
FLOW is the native token of the Flow network and it is used to perform various important functions within the platform.
- Staking: FLOW holders can choose to lock up their tokens in the protocol contract in order to help secure the Flow Network and earn staking rewards paid out in token emissions and transaction fees.
- Gas token: Small amounts of FLOW token are required for every activity on the network – from new user accounts to storage for assets and smart contracts.
- Governance: Token holders can use their Flow accounts to submit votes for a representative council that can make day-to-day decisions, or to community polls and other governance related activities.
What consensus algorithm does Flow network use?
The Flow network utilizes a modified version of the Proof-of-Stake mechanism to achieve consensus, meaning that cryptocurrency transactions are validated instead of mined. The Flow network consists of nodes that perform specialized tasks, dividing tasks that are typically done by a single validator among several network participants, with no limit to the number of Flow validators.
To process cryptocurrency transactions and add new blocks to the blockchain, Flow relies on four types of nodes: consensus, execution, verification, and collection. Consensus nodes determine the presence and order of transactions on the Flow blockchain; execution nodes run the computations required to complete and verify Flow transactions; verification nodes monitor and verify the activities of the execution nodes; and collection nodes aim to enhance network connectivity and data availability across the Flow blockchain.
What are the tokenomics of FLOW?
FLOW is a cryptocurrency with an initial supply of 1.25 billion tokens and a weekly reward of 1.3 million. The proportion of token emissions is determined by the amount of transaction fees collected over the course of the week.
Initial Distribution Breakdown
Any tokens that have been minted are free to be used and staked. The initial distribution of FLOW tokens is as follows:
32% for Ecosystem Development
20% for Dapp Labs
18% for the Development Team
10% for Community Sales
8.90% for Small Backers
11.10% for Large Backers
Who are the Team Members behind Flow?
Flow is the product of Dapper Labs, the company behind the CryptoKitties blockchain game.
Led by founders Roham Gharegozlou, Dieter Shirley and Mikhael Naayem, the team developed Flow as a platform for blockchain-based games and digital collectibles.
Previously called Axiom Zen, Dapper Labs unveiled Flow in 2019 after announcing it had raised $11 million in funding led by investor giant A16z.
Dapper Labs underwent a second funding round led by NBA stars Andre Iguodala and Spencer Dinwiddie, intended to be used towards the development of blockchain-based games on Flow.
From the Staking Rewards Journal