Sei network 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 35 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.

The maximum issuance of Sei tokens (SEI) is 10 billion tokens.

Initial Distribution Breakdown:

The initial distribution of Sei (SEI) tokens is as follows:

• 48% is allocated to the community
• 9% is allocated to core contributors
• 20% is allocated to the foundation
• 3% is allocated to investors
• 20% is allocated to private sales investors

The Staking Rewards on Sei Network are generated by:

Mints (Block Rewards) – The chain will periodically mint new tokens.

Fees – Fees are added to each transaction to avoid spamming and pay for computing power. Validators set minimum gas prices and reject transactions that have implied gas prices below this threshold. At the end of every block, compute fees are disbursed to the participating validators proportional to their stake

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.

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: If validators double sign, are frequently offline, or do not participate in governance, their staked Sei (including the Sei of users that delegated to them) can be slashed. Penalties can vary depending on the severity of the violation.

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 the active set, meaning they no longer earn any rewards. Ensure you check back frequently to ensure your validator is active, not jailed and has not raised their commission fees unreasonably.

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

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. 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.

Our VSP documentation contains further details about the program, Staking Providers that are part of the VSP will have a blue checkmark displayed next to their names here.

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 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. This metric has some limitations as validators can choose to delegate to their own validator from another wallet, which is done to increase 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: You typically don’t want to choose a validator with the highest network share 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. Max voting power per validator is capped at 15% on the Sei network.

Performance: Make sure you pick a validator with the highest possible uptime performance by viewing the validator information on the explorer. Our recommendation is to only pick those with a >=99% Slot Success Rate 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, explorers, etc. This can be another great way to filter for validators that are thinking long-term.

To earn a yield on your SEI, you can either lend them out to custodial providers, run your own validator or delegate your tokens to staking pools 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 SEI on your Ledger or Keplr and then follow the steps below:

Step 1: Go to the Sei Staking App and connect your wallet. 

Step 2: Request Faucet Sei token

Step 3: Click on ‘All Validators‘ and select a validator from the list. If you are unsure which validator to delegate to, refer to our FAQ on choosing a validator for guidance.

Step 4: Enter the amount of SEI you would like to stake and sign the transaction.

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

As a participant in the Sei Ecosystem, you can vote on Governance Proposals. Anybody can create a governance proposal which will start in the deposit period, and will be promoted to voting period once the minimum deposit amount is met. Anyone can deposit to a proposal in the deposit period.