Vara Network Staking

To earn a yield on your VARA, you can either lend them out to custodial providers or via a Defi lending protocol, run your own Validator or delegate your tokens to validators 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 DOT on Talisman wallet or SubWallet and follow the steps below:

Step 1: Go to the VARA Staking Dashboard and connect your wallet.

Step 2: Click on the “Nominate” tab, then select “Start Nominating”.

Step 3: Select a payout option and click “Continue”.

Step 4: Select a validator from the table. If you are unsure which validator to delegate to, refer to our FAQ on choosing a validator for guidance.

Step 5: Finalize by clicking stake and confirming the transaction in your wallet.

View our step-by-step Vara staking tutorial.

• Staking rewards need to be manually claimed. Staking rewards distribution to nominators involves a manual process initiated by an authorized figure, usually the validators. Nonetheless, in a permissionless setting, any individual can activate the reward distribution for nominators backing a particular validator in the active set for that era. This setup necessitates deliberate action to allocate earnings.
• Staking rewards are available for a total of 84 eras (42 days). It's important to note that rewards will be forfeited and lost if the reward payout is not initiated within 84 eras. Moreover, should a validator withdraw all their stake, any pending rewards for eras not yet claimed will also be forfeited.
• View Verified Staking Providers (VSPs) on Subscan.
• VARA holders who stake VARA to a Validator can send a transaction to unstake and remove their tokens from being staked to a Validator. After this transaction, the VARA tokens enter a 30-day unbonding period. During the unbonding period, stakers can choose to re-delegate to a separate validator without having to wait for the unbonding period to elapse. However, a user’s slashing risk with the original Validator remains until the unbonding period concludes.

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.

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 with 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. 

Network Share: You typically don’t want to choose a validator with the highest or a low network share. Delegating to the most popular validators increases centralization risks within the network as those validators will have more say in governance and produce a larger share of the blocks. A validator with a low network share might not be profitable, increasing the risk of them discontinuing their services. If a validator drops out of the top 100, they also stop earning rewards. However, if you are willing to put more time in, then delegating to a smaller validator helps support the decentralization of the network. You would just have to make sure to check regularly if the provider is still active and operating. 

Value Add to the Ecosystem: Some providers offer extra services to their delegators, such as tax reporting tools or explorers. This can be another great way to filter for validators that are long-term invested in the Vara Network Ecosystem. By delegating to a validator that is strongly dedicated to the Vara Network Ecosystem, you are supporting their development which indirectly impacts the value of your VARA investment beyond the rewards from staking.

Staking rewards for VARA are composed of:

Inflation: Validators receive rewards in every era based on the inflation-based economic model. The maximum inflation rate for year 1 is 6.00%. VARA has been designed with a decreasing inflation rate in mind. However, the exact rates will be determined by governance voting. These rewards are allocated among all validators, and the amount each validator receives depends on their accumulated era points. The distribution of rewards is not affected by the number of tokens staked behind a validator.

The return on investment (ROI) for staking is influenced by the block rewards curve and the percentage of tokens staked, calculated as the block rewards curve divided by the percentage of stakeable tokens. The ROI decreases in a hyperbolic manner until reaching the Ideal Staking Rate, after which it continues to decrease hyperbolically if the percentage of tokens staked exceeds the Ideal Staking Rate.

A cap of 30% maximum ROI has been set; stakers earn a higher ROI if the staking rate is below the Ideal Staking Rate compared to at the Ideal Staking Rate itself. Any excess staking rewards beyond the 30% ROI limit are allocated to the Vara treasury.

You are welcome to play around with our VARA Staking Calculator to get a better feel of how these metrics can influence your rewards. 

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: VARA delegated to a validator can be partially slashed if the validator misbehaves. Slashing involves reducing or taking away the tokens that a validator has staked as a penalty for their misbehavior. If a validator on Vara faces slashing, they enter a period known as "unapplied slash" lasting 7 days. In this interval, stakeholders have the opportunity to present a governance proposal to reverse the slashing verdict. This process provides a window for reconsideration and possible alleviation of the slashing consequences.

Unbonding risk: When staking VARA tokens, there is a lockup period of 7 days. This means that investors will not be able to sell their tokens immediately, but instead need to wait 7 days after initiating unbonding before they can be traded again. This is something to keep in mind when deciding to stake, as crypto markets are highly volatile. Consider keeping funds liquid if you do not intend to hold VARA 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 VARA.

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

VARA is the native token of the Vara Network ecosystem that is used to carry out the key functions of the platform as detailed below:

Token Utilities

• Gas token: VARA is used for transaction fees. Each transaction processed by the network requires a small fee to be paid.
• Governance: Vara leverages the widely adopted OpenGov framework as its native governance model. This allows any VARA token holder to participate in Vara’s decentralized governance to help determine any future updates or modifications to the network.
• Staking: Users can temporarily lock VARA up to contribute to the security of the Vara Network ecosystem.

Vara Network employs a democratic and dependable Nominated Proof-of-Stake (NPoS) system for selecting validators in its consensus mechanism. Validators are picked through their stakes as well as the nominations from other token holders, enhancing the network's democratic and decentralized nature. NPoS promotes decentralization by avoiding scenarios where only the wealthiest participants can serve as validators.

Vara Network launched with a total supply of 10,000,000,000 VARA at genesis.

Initial token distribution:

• 35.5% is allocated to the community.
• 23% is allocated to the foundation.
• 21.5% is allocated to investors.
• 20% is allocated to the founders.