Avalanche is a blockchain platform that aims to facilitate high-performance, low-cost financial applications. It empowers users to establish custom token and digital asset ecosystems, allowing for secure and economical transactions. The goal of Avalanche is to create an open, powerful, and secure platform for finance applications. In contrast to other networks, fees on Avalanche are not directed to validators but rather are burned, This increases the scarcity of AVAX which is counterbalanced by minting process, to assure the longevity of the network.
Calculate how much you can earn by staking Avalanche. Results vary based on the staking amount, term, and type selected.
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- How to stake AVAX?
- Do I need to maintain my staking in any way?
- Once you initiate a transaction to add your stake to a delegator, the parameters cannot be altered. It is not possible to withdraw your stake prematurely or to modify the stake amount, node ID, or reward address.
- AVAX staking rewards accrue on a consistent schedule, typically every few minutes. These rewards can be collected at any time once the stake period has ended.
- At the moment, Avalanche does not offer an automatic compounding option for staking AVAX. To optimize your strategy, you can utilize our Staking Calculator to determine the best re-stake frequency for your specific amount of AVAX.
- As a participant in the Avalanche Ecosystem, all token holders are entitled and motivated to vote on governance proposals aimed at improving or upgrading the blockchain and ecosystem. However, only those who hold a minimum of 25 AVAX tokens are able to propose governance proposals.
- How do I choose Avalanche validators?
- How are the rewards generated?
- What are the risks of staking AVAX?
- What is AVAX?
- Staking: AVAX holders can choose to stake their tokens for a period ranging from 14 days to one year, in order to help secure the Avalanche network.
- Gas token: Every transaction on the network incurs a small fee that is paid to the validator in the form of AVAX.
- Governance: Owners of AVAX tokens have the right to vote on proposals related to the network’s consensus protocol, fees, and other aspects of the network’s operations. In order to be eligible to vote, AVAX holders must deposit tokens into the DAO contract. As an AVAX delegator, you can also create proposals as you hold a minimum of 25 AVAX tokens.
- What consensus algorithm does Avalanche use?
- What are the tokenomics of AVAX?
There are several ways to earn a return on your AVAX, including lending them out to custodial providers or through decentralized lending protocols, running your own validator, or delegating your tokens to validators of your choosing.
For the best security and control over your funds, we recommend using a Ledger Hardware Wallet. To delegate your tokens, you should ensure they are stored on your Ledger or other compatible wallets, and then follow these steps below:
Step 1: Go to the Avalanche wallet, access to your own wallet, and navigate to the “Earn” section.
Step 2: Select a validator node ID. Check our FAQ on how to choose a validator if you are unsure who to delegate to.
Step 3: Specify when you want to start/stop delegating stake, how many AVAX you would like to stake, and the address you send any rewards to, then start staking.
After delegating your AVAX tokens, there are a few things to keep in mind:
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.
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.
When choosing a validator to delegate to, there are numerous factors to take into account:
Commission Rates: When staking your tokens with a validator, the commission rate represents the percentage of your rewards that the validator will retain for themselves. The minimum delegation fee rate is 2% on the Avalanche Mainnet. A high commission rate can result in lower returns for you, while a low commission rate may lead to financial difficulties for the validator in the future. It’s important to note that validators may change their commission rates at any time.
Number of Users: A large number of delegators may signal a positive reputation for a validator.
Validators Self-Staked balance: Validators with significant amounts of self-staked tokens may have a greater motivation to maintain their operations, as they have more at risk than those with lower self-staked balances. However, it’s important to keep in mind that this metric has some limitations, as validators can choose to delegate their own tokens to another validator, which is done to enhance 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: When selecting a validator to delegate to, it’s generally advisable to avoid choosing one with the highest or lowest network share. Delegating to the most popular validators can increase the risk of centralization within the network as they will have more influence in governance and a greater share of blocks. On the other hand, choosing a validator with a low network share may be less profitable and increases the risk of them ceasing their operations. Finding the balance and choosing a validator with a moderate network share could be the best approach to keep the balance in decentralization and profitability.
Performance: Make sure you pick a validator with the highest possible uptime performance by viewing the validator information on the Validator Dashboard. A validator will receive a staking reward if they are online and response for more than 80% of their validation period, as measured by a majority of validators, weighted by stake. Our recommendation is to only pick those with a >=99% Response rate.
Stake Duration: The lock-up period for validators is between 14 and 465 days. You can choose one that you like based on the duration left for the validator on the Validator Dashboard.
Value Add to the Ecosystem: Another way to assess the long-term vision of validators is to check if they offer additional services to their delegators, such as tax reporting tools, explorers, etc. This can be a useful filter when comparing different providers.
Native staking rewards for AVAX are composed of:
Block Rewards: The amount of rewards earned from staking varies depending on the length of time staked and the maximum potential yield. The yield for each validator is calculated by multiplying the staking period variable by the maximum yield. The staking period variable is determined using the following equation: (0.002 x 365 + 0.896) x (0.002 x number of days staked + 0.896). The current maximum yield, which is approximately 9% APR, can be achieved by staking for a full year.
However, it’s important to note that the maximum yield can fluctuate based on the network’s inflation rate and the total number of tokens being staked, as the total annual rewards are distributed among all active stakers. As the number of tokens staked increases, the reward rate decreases. You can use our Staking Calculator to experiment with different staking scenarios and see how they would impact 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: There is no slashing risk when staking AVAX. Instead of punishing slow performance or incorrect validation with slashing, Avalanche simply does not pay a reward in these situations.
Unbonding risk: The unbonding period for AVAX is between two weeks and one year. Crypto markets are highly volatile, and investors need to be aware that they cannot sell their tokens immediately once they have staked them. Please take note of this lockup before you decide to stake. Consider keeping funds liquid if you do not intend to hold AVAX long-term. Although there is a maximum stake time of one year for validators, you may not actually have the option to stake to your chosen validator for a full year. Rather, the maximum staking duration is limited to the time that’s remaining on the validator’s staking commitment.
Dropping out of the active set: A validator will only be able to receive a staking reward if they are online and response for more than 80% of their validation period, as measured by a majority of validators, weighted by stake. A validator could also drop out of the active sets, meaning they no longer earn any rewards. You can monitor the health status of a node by checking its ID here. Ensure you check back frequently to ensure your validator is active, not jailed and has not raised their commission fees.
Protocol security risks: There is an inherent risk that the protocol could contain unknown bugs. This not only applies to staking but your AVAX investment in general.
This list is not exhaustive and other risks may apply.
AVAX is the governance token of the Avalanche network and it is used to perform various important functions within the platform.
The Avalanche network utilizes a consensus algorithm called Avalanche-X, which is a blend of proof-of-stake (PoS) and practical Byzantine Fault Tolerance (pBFT) mechanisms. The Avalanche-X algorithm is engineered to be secure, highly scalable, and energy-efficient. Additionally, it prevents double-spending and facilitates fast and safe transactions. The number of validators on the Avalanche network is not static and can fluctuate over time.
AVAX, the native token of Avalanche, was initially launched on September 21, 2020 with a genesis block containing 360 million AVAX tokens. The total supply of AVAX is capped at 720 million, with the remaining 360 million tokens set to be fully vested by July 2030. All fees on Avalanche are burned, benefiting everyone in the community.
Initial Distribution Breakdown
The protocol reserves 50% of the total token distribution for staking rewards.
50.00% is allocated to Staking Reward
10.00% is allocated to Team
1.00% is allocated to Public Sale Option A1
8.30% is allocated to Public Sale Option A2
0.67% is allocated to Public Sale Option B
9.26% is allocated to Foundation
7.00% is allocated to Community & Developer Endowment
5.00% is allocated to Strategic Partners
3.50% is allocated to Private Sale
2.50% is allocated to Seed sale
2.50% is allocated to Airdrop
0.27% is allocated to Testnet Incentive Program
Data provided by Avascan.