SKALE Staking

To earn a yield on your SKL, 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 delegate your tokens, you should ensure you have your SKL on your EVM-compatible wallet and follow the steps below to stake via the SKALE Portal:

Step 1: Visit the SKALE Portal and access the Staking interface from the Home tab or the tab on the left menu.

Step 2: The portal will prompt you to connect your wallet, or you can also connect by clicking on “Connect Wallet” at the top right of the page. Make sure to use a Metamask wallet.

Step 3: Once your wallet is connected, you can browse through the list of available validators. Each validator has a profile that provides details about their service, including their fee.

Step 4: After choosing your preferred validator, input the amount of SKL you wish to stake, approve the token spending, and then confirm your delegation.

View SKALE’s step-by-step staking tutorial here.

• Once a staking period has come to an end, you will be able to claim your rewards for staking your SKL. When you have rewards available to claim for staking they will be displayed on the SKALE screen. Tap claim to begin claiming your rewards.
• SKL staking automatically renews each staking period unless you turn off the automatic renewal.
• Rewards are distributed every month and will be available for delegators to claim every 1st day of each month.

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 security of their funds. 

Current Status: To check if a validator is currently active, go to the Validator Dashboard on Mintscan. The default view on this page is for “Active” validators, but you can also filter to view inactive validators in the top right corner of the page. Keep in mind that only the top 100 validators on SKALE, ranked by balance, receive rewards.

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 centralisation 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 SKALE Ecosystem. By delegating to a validator that is strongly dedicated to the SKALE Ecosystem, you are supporting their development that indirectly impacts the value of your SKL investment beyond the rewards from staking.

Staking rewards for SKL are composed of:

Fees and Inflation: Validators stake SKL into the network and then gain the right to run nodes and earn both fees and tokens via inflation.

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

Currently, there is no risk as the main penalty for validators is bounty reduction if a validator fails to stay in compliance with minimum requirements. In future network phases, the stake will be slashed if a validator exhibits malicious behavior.

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: Currently, there is no slashing risk to the stake, as the main penalty for validators at this phase is bounty reduction if a validator fails to stay in compliance with minimum requirements. In future network phases, the stake will be slashed if a validator exhibits malicious behavior.

Unbonding risk: There is no unbonding period, but only a delegation period and whenever you request undelegation you need to wait until your delegation period ends, at the end of every month.

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 SKL.

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

SKL is the native token of the SKALE ecosystem that is used to carry out the key functions of the platform as detailed below:

Token Utilities

• Governance: If you hold and stake SKL tokens, you can vote on governance proposals that affect the operation and evolution of the SKALE Network. This includes proposals for SKALE Chain pricing, Network inflation and more.
• Staking: Users can temporarily lock SKL up to gain the ability to vote on proposals that affect the operation and evolution of the SKALE Network.

The SKALE chain operates as a Proof-of-Stake blockchain that is completely compatible with the Ethereum mainnet, supporting the use of Ethereum wallets, tools, and decentralized applications (dApps). Like other chains compatible with Ethereum, it features a blockchain structure where transactions are sequentially arranged into blocks that are then confirmed. Additionally, it incorporates a computing entity known as the Ethereum Virtual Machine (EVM), which holds a collection of variables referred to as the EVM state.

In its operation, the EVM sequentially processes each transaction within committed blocks. It executes the set of instructions (or bytecode) provided by each transaction, which in turn modifies the state of the EVM. This systematic approach ensures that the SKALE chain can efficiently support the execution and management of transactions and smart contracts in a manner fully interoperable with Ethereum's ecosystem.

SKL was created with an initial supply of 7 billion. SKL minting events are performed by the Network via a governance proposal.

Initial token distribution:

• 1.3% is allocated to the ecosystem fund
• 33% is allocated to validator rewards
• 4% is allocated to the core team
• 10% is allocated to the Skale foundation
• 16% is allocated to the broader founding team
• 28.1% is allocated to the early supporters and public allocation