The main purpose of a collator is to produce blocks and support block liveness on the network. From there, collators offer up blocks to validators on the relay chain for finalization.

Collators gather transactions into blocks and submit these blocks to the relay chain (On Polkadot). Without a decentralized set of collators, no new blocks would be created, and the censorship resistance properties of the network would be in question. Validators of the Relay Chain ensure the validity of the submitted blocks and include them in relay chain blocks to ensure finality.

The Staking Rewards on GLMR come from:

• Inflation on the Moonbeam Network (Block Rewards): GLMR is an inflationary token that targets an annual inflation rate of 5%. The purpose of inflation in Moonbeam is to pay for ongoing security needs of the network. The primary security budget items are to pay for a parachain slot on an ongoing basis, and to incentivize collators to provide collation (block production) services to support the Moonbeam network. The system targets 5% annual inflation, with approximately 1% (20% of annual issuance) going towards incentivizing collators and approximately 1.5% going towards the parachain bond reserve to accumulate on chain funds to pay for a parachain slot in perpetuity. The remaining roughly 2.5% (50% of annual issuance) is for users that stake their GLMR tokens and helps power the collator selection process. Inflationary token emissions can vary over time based on changes to parachain block times, network conditions, variances in relay chain performance, runtime bugs, and other factors. This implies that GLMR holders who choose not to stake will get diluted over time. 

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 Moonbeam Staking Calculator to get a better feel of how these metrics can influence your rewards

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: Please note that there is no risk of slashing on the Moonbeam network. Moonbeam has no slashing, so you’ll never lose your original delegation amount. However, if your chosen collator stops producing blocks, you won’t earn rewards for the period they’re offline.

Unbonding risk: The unbonding period for GLMR is 7 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 7 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 GLMR long-term. 

Protocol security risks: There is an inherent risk that the protocol could contain unknown bugs. This not only applies to staking but your GLMR investment in general.

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

GLMR has an uncapped token supply that was launched with an initial supply of 1 billion GLMR. The network has a yearly token issuance rate of 5% and utilizes a burn mechanism where 80% of transaction fees are destroyed, while 20% are added to the on-chain treasury.

Initial Distribution Breakdown 

The Initial token distribution of GLMR  is as follows:

• 14% is allocated to Seed investors 
• 12% is allocated to Strategic funding
• 9.8% is allocated to the Take Flight community event
• 15% is allocated to Crowdloan participants
• 3% is allocated to Parachain bond funding
• 0.5% is allocated to the Parachain bond reserve
• 0.5% is allocated to the Treasury
• 16.7% is allocated to Long-Term Protocol and Ecosystem Development
• 5% is allocated to Liquidity Programs
• 3.6% is allocated to the Developer Adoption Program
• 3.9% is allocated to Key Partners and Advisors
• 1.4% is allocated to PureStaker Early Backers
• 10% is allocated to Founders and Early Employees 
• 4.6% is allocated to Future Employee Incentives

Funding Rounds:

• $1.3M was raised in a seed round on 30/09/2020
• $6M was raised in a strategic round on 30/03/2021
• $24.5M was raised in a community round on 24/09/2021 at an average price of $0.25

To earn a yield on your GLMR, you can either lend them out to custodial providers or via a Defi lending protocol, run your own collator or delegate your tokens to collators of your choice.

We recommend using a Ledger Hardware Wallet to keep full control over your funds. To nominate your tokens, you should ensure you have your GLMR on Talisman wallet and follow the steps below:

Step 1: Go to the Moonbeam Staking Dashboard and ensure you have your GLMR on your Talisman wallet.

Step 2: Scroll down to the Staking section and click on ‘Manage delegations’.

Step 3: Click on ‘Select a collator’ and choose a collator from the active pool. Check our FAQ on how to choose a collator if you are unsure who to delegate to. 

Step 4: Enter the amount of GLMR you want to stake, click ‘Delegate’, and sign the transaction.

View our Step-by-Step Staking tutorial here.

Once you have delegated your GLMR, there are things you need to consider going forward:

• Firstly, you might consider delegating to a different collator if your current one does not perform well or falls out of the active set. It is good practice to check in every now and then to make sure the collator is still performing well.
• Secondly, rewards can be auto-compounded. The staking dApp has an option to toggle auto-compounding your delegation. If you want to get the most out of your staking journey, you should consider this option. By using our Moonbeam staking calculator, you can simulate your staking returns for GLMR.
• The minimum bond for each collator tends to increase over time, so if your delegation is close to the minimum, there is a higher chance you might fall below the minimum and not receive rewards

GLMR is the native token of the Moonbeam network that is used to carry out the key functions of the platform as detailed below:

Token Utilities

Staking: Users can temporarily lock GLMR up to contribute to the security of the Moonbeam Network.

Gas token: GLMR is used for transaction fees.  Each transaction processed by the network requires a small fee to be paid. Fees on Moonbeam related to transactions and smart contract execution are handled in two ways. 80% of the spent fees are burned, which acts as a deflationary force and accrues value to existing GLMR holders based on increased utilization of the network. 20% of the spent fees go to the on chain treasury which can be allocated via onchain governance to projects and initiatives which further adoption and engagement with the network.

Governance: GLMR 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 and is used for proposing referenda, electing council members, voting, etc.

Moonbeam uses a hybrid consensus protocol based on Delegated Proof-of-Stake (DPoS), which provides deterministic finality. DPoS is an evolution of Polkadot’s Nominated Proof of Stake (NPoS) concept, that puts more power into the hands of token holders by allowing delegators to choose which collator candidate they want to support and in what magnitude.

In Polkadot, there are collators and validators. Collators maintain parachains (in this case, Moonbeam) by collecting transactions from users and producing state transition proofs for the relay chain validators. The collator set (nodes that produce blocks) are selected based on the stake they have in the network.

For finality, Polkadot/Kusama rely on GRANDPA. GRANDPA provides deterministic finality for any given transaction (block). In other words, when a block/transaction is marked as final, it can’t be reverted except via on-chain governance or forking. Moonbeam follows this deterministic finality.