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Learn about Toncoin Staking
How to liquid stake TON
To earn a yield on your TON, you can either lend them out to custodial providers or via a Defi lending protocol, run your own Validator or lend your tokens to validators of your choice.
Step 1: Go to app.tonstakers.com and connect your wallet.
Step 2: Enter the amount of TON you want to stake
Step 3: Click ‘Stake’ and sign the transaction
View our detailed step-by-step TON staking tutorial.
Do I need to maintain my staking in any way?
How are the staking rewards on TON generated?
Staking rewards for TON are composed of:
Gas fees: Users include an additional amount of Toncoin in their transactions as a reward for validators' efforts. This extra sum is then allocated proportionally among the validators elected for that particular validation cycle, based on their stake.
Inflation: During the validation process, new coins are created and distributed to validators. This contributes to an overall annual inflation rate of the coin ranging from 0.3% to 0.6%.
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 TON Staking Calculator to get a better feel of how these metrics can influence your rewards.
What are the risks to liquid staking TON?
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: TON delegated to a validator can be partially slashed if the validator misbehaves. If a validator does not participate in block creation and transaction signing for a significant amount of time during a validation round, it is potentially fined 101 TON.
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 TON.
Please note that this is not an exhaustive list of all the risks related to staking.
What is TON?
TON is the native token of the Ton network that is used to carry out the key functions of the platform as detailed below:
- Governance: TON is used to vote on governance proposals on the network. The amount of voting power is measured in terms of stake.
- Staking: Users can lend TON to validators, every time a validator earns a reward by validating blocks, it is distributed between the involved participants.
- Gas token: Each transaction processed by the network requires a small fee in TON to be paid to the validator.
What is TON liquid staking?
TON Liquid Staking (LSt) is a mechanism that enables TON holders, regardless of their stake size, to contribute to the TON Blockchain's validation process through a pooling strategy.
In this system, stakers or Nominators, who are essentially TON holders with funds to invest, pool their resources to support the validation process. These users essentially delegate a pool to utilize their rights for blockchain validation.
The rewards in the TON LSt protocol primarily originate from the validation process. However, at the pool level, these rewards are technically derived from the interest paid by validators who borrow funds for staking.
When participants stake their Toncoin via the TON LSt protocol, they receive a liquid staking receipt token known as Jetton Pool. This token represents the total amount of funds staked by all users in a particular pool. Over time, as the pool earns rewards for each validation cycle (essentially for maintaining the TON Blockchain), the value ratio of Jetton Pool to TON increases. Consequently, stakers can redeem their accumulated rewards by exchanging their Jetton Pool tokens for TON, serving as an incentive for engaging with the platform.
How does TON LSt protocol work?
Liquid staking allows participants to make use of staking pools that allow them to stake their Toncoin on the platform.
Stakers, also known as Nominators, are TON holders who stake their funds in a pool to be used for validation. In other words, these are users who nominate a pool to exercise their validation rights.
TON LSt also helps define proper governance of the protocol through a group of participants that manage arbitrary liquid staking pools on the network. Liquidity is provided by lending user funds from pools to validators at a predetermined interest rate.
Tonstakers improves on existing nomination pool designs by:
- Pool Jettons: Pool jettons are liquid staking receipt tokens representing native TON token shares in liquidity pools on the TON LSt protocol. The idea behind Pool Jettons allows users to deposit their TON tokens and receive Pool Jettons tokens in exchange, enabling them to maintain liquidity and stake on the protocol while also allowing users to convert their Pool Jettons back into TON at any time should they choose to withdraw their funds.
- Liquidity Provision:Lliquidity provisioning allows Stakers to lend TON to Validators (to liquidity pool) to increase their overall liquidity. This allows Validators to borrow TON from a liquidity pool and return their funds after incurring interest on their assets, ensuring they have the necessary resources to actively participate in network validation and consensus.
- Deposits and Withdrawals: The ability to withdraw and deposit assets into the TON Liquid Staking protocol allows users to deposit and withdraw their assets with no predetermined minimum or maximum deposit threshold. The protocol manages deposits and withdrawals through specialized smart contracts, ensuring accurate accounting and proper handling of user funds and transactions.
What consensus algorithm does Ton use?
Initially, the TON blockchain utilized a proof-of-work (PoW) consensus mechanism. However, due to limitations in resources, TON transitioned to a proof-of-stake (PoS) based system. Presently, TON operates on a modified version of PoS known as Block-Proof-of-Stake (BPoS). This variant is essentially a Byzantine Fault-Tolerant (BFT) adaptation of the traditional PoS algorithm.
What are the tokenomics of TON?
TON has a maximum supply of around 5 billion TON and, at the end of 2023, an annual inflation rate of ~ 0.6%.
From the Staking Rewards Journal