Starknet Staking

Delegated staking offers numerous validators, and selecting the right one can be challenging. Once the provider enters our Staking Rewards Verified Staking Provider (VSP) Program, you will be able to support your decision-making process. Through this program, we thoroughly scrutinize potential workers, evaluating factors such as security measures, their on-chain reliability, their provider setup, and value-added services for the whole ecosystem.

In addition, you can consider other metrics when selecting a validator to delegate to:

Commission: The commission rate represents the portion of your rewards that validators retain. A higher commission rate decreases your earnings, while a lower rate may affect the validator's profitability and sustainability.

Validator Self-Staked Balance: Validators with a significant amount of self-staked tokens have a greater stake in the network, giving them a strong incentive to uphold their services. However, they may delegate tokens from another wallet to further enhance security.

Network Share: Delegating to popular validators can raise centralization risks, while smaller validators may struggle with profitability. Supporting smaller validators helps decentralize the network but requires monitoring to ensure they stay active.

Number of Users: The number of delegators is a key factor in choosing a validator, as it affects rewards, network security, and reputation. Validators with more delegators contribute to stronger network security and are often seen as more trustworthy.

Starknet staking rewards are generated through a dynamic minting mechanism that adjusts based on the level of participation in staking. As more people stake their STRK tokens, the system mints new tokens as rewards for participants, incentivizing them to continue securing the network. The amount of new tokens issued is linked to the total percentage of tokens being staked, ensuring that rewards scale with network activity. Sources of Starknet staking rewards:

New Token Minting: Staking rewards are primarily generated through the minting of new STRK tokens. The number of new tokens issued depends on the overall staking rate and maximum theoretical inflation rate.

Transaction Fees: Validators and delegators earn a portion of transaction fees paid on the network, either in STRK or ETH.

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.

Security Risks: Starknet could face attacks such as consensus attacks, double-spending, and network vulnerabilities.

Blockchain and Technology Risks: Starknet and its underlying technology, smart contracts, are still developing, potentially containing bugs or vulnerabilities. As Starknet is an emerging protocol, unforeseen risks may arise, and the technology’s success is uncertain.

Third-Party Dependency: Starknet relies on external parties for development, operation, and adoption. There is no guarantee these parties will continue supporting the network.

Unbonding Risk: When staking STRK tokens, there is a 21-day lockup period. Investors cannot immediately sell their tokens; they must wait 21 days after initiating the unbonding process before trading is possible. Given the volatility of crypto markets, this is an important factor to consider when deciding to stake.

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

The STRK token is central to Starknet's operations, serving three main purposes:

Transaction Fees: STRK is used to pay network fees alongside ETH. A portion of the STRK fees are converted to ETH to cover Ethereum L1 gas costs.

Staking: STRK tokens can be staked to provide services critical to Starknet’s security and performance, such as sequencing and data availability, with future services planned for 2024-2025.

Governance: STRK holders can vote on governance proposals and protocol updates, influencing decisions related to Starknet’s liveness, security, and future direction.

STRK has a total supply of 10,000,000,000 tokens. The distribution of STRK tokens is as follows:

• 20.04%: Early Contributors
• 18.17%: Investors
• 10.76%: StarkWare
• 12.93%: Grants including Development Partners (DPs)
• 9.00%: Community Provisions
• 9.00%: Community Rebates
• 10.00%: Foundation Strategic Reserves
• 8.10%: Foundation Treasury
• 2.00%: Donations