CXT Staking on Covalent Network: A Quick and Easy Tutorial

What is CXT Staking?

CXT staking enables token holders to delegate their tokens to block producers, who secure the Covalent Network by validating data requests, indexing blockchain data, and handling queries. Producers earn CXT for their work, while stakers receive rewards for contributing to network security. Network Operators must meet a minimum staking requirement to ensure proper behavior, with penalties for dishonesty, and stakers who don’t run nodes can delegate.

This article will serve as your staking guide, helping you familiarize yourself with the CXT staking process, providing a step-by-step tutorial, tips to choose a reliable CXT validator, and offering network-specific details such as fees and lockup periods.

How to Stake CXT?

Follow these steps to stake and restake CXT via a crypto wallet:

Step 1: Prepare a supported Covalent wallet

You can stake CXT tokens via MetaMask, Keplr, or other Web3 wallets. Install the browser extension as your Covalent wallet and deposit your CXT tokens into it before proceeding to the next step.

Step 2: Start staking CXT

Navigate to the CXT Staking Dashboard.

Enjoy the video tutorial or follow the step-by-step guide below.

Step 3: Connect your Covalent wallet

Connect your wallet. Allow the application access, if you’re visiting the website for the first time. Covalent staking operates on Ethereum.

Step 4: Choose the operator

Select the block producer to stake by clicking “Stake”. Verify if the delegation cap is not reached. Choose an operator supporting your decision with providers included in our Staking Rewards VSP Program.

Step 5: Enter the CXT tokens amount

Input the number of CXT tokens you want to stake and click “Approve”.

Step 6: Stake CXT

Finalize the staking process by clicking “Stake” and confirm the transaction in your wallet.

How do you choose Covalent producers?

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 is the percentage of your reward validators keep. A high commission rate reduces your rewards, while a low rate may impact the validator's profitability and long-term viability.

Validator Self-Staked Balance: Validators with a high amount of self-staked tokens have more at stake, providing a strong incentive to maintain their services. However, note that validators can delegate to themselves from another wallet to enhance security.

Network Share: Delegating to the most popular validators can increase centralization risks. Conversely, smaller validators may face profitability challenges, potentially leading to service discontinuation. Supporting smaller validators can help decentralize the network, but requires regular monitoring to ensure they remain active.

Delegation Cap: Each Covalent producer has a maximum delegation limit. It is based on the amount of self-staked tokens. Before delegating your tokens confirm the available staking limit.

How are CXT Staking Rewards Generated?

When a CXT token holder stakes their tokens with an Operator, they receive a share of the Operator's rewards based on their staked amount. The rewards system works as follows:

Proportional Rewards: Stakers receive rewards proportional to the amount they have staked with an Operator.

Network Tasks: Operators earn rewards by performing network tasks, such as producing Block Specimens and re-executing blocks. Rewards are determined by both the amount staked and the work performed.

Bootstrapping Phase: For the first 4 years, staking rewards are supplemented by a Staking Allocation, with reward emission rates adjusted to ensure profitability based on the total staked CXT.

Self-Sustainability: Over time, the network aims to be self-sustaining, with Query Operators paying fees for data access, which are distributed to Production Operators as rewards.

Epoch Emissions: Every 24 hours (epoch), CXT tokens are emitted from the reward pool to incentivize participation, with rewards initially fixed by Covalent until a free market develops for network tasks.

CXT Staking Details

• View the current Covalent staking APR here
• Use the CXT Staking Calculator to estimate your rewards
• Lockup: 14 days
• Average commission rate: 10%
• Minimum amount required for staking: no minimum

Track your staking portfolio

Monitor and manage your CXT delegations using the CXT Staking Dashboard. Track your earnings, claim rewards, and undelegate your stake.

Stay on top of your staking game by tracking the latest reward rates, validator count, and staking ratio on the Covalent Asset Page! Dive into the details of CXT staking APY, monitor your delegations, and explore real-time stats and analytics to make smarter staking decisions.

Curious about what your future rewards could look like? Use the CXT Staking Calculator to forecast your returns and optimize your strategy. For deeper insights into how these metrics affect your rewards, check out the FAQ section on the Covalent Asset Page – it’s your key to maximizing your staking potential!

How to Undelegate CXT?

To unstake your CXT tokens, follow the video tutorial or the steps below:

Step 1: Go to the CXT Staking Dashboard

Open the CXT Staking Dashboard to manage CXT delegations.

Step 2: Connect your Covalent wallet

Connect the wallet you staked with previously.

Step 3: Manage delegations

Scroll down to the “Staked” section to view your current staking positions and select “Unstake”.

Step 4: Unstake CXT

Enter the CXT amount you want to unstake.

Step 5: Confirm CXT unstaking

Finalize the unstaking process by clicking “Unstake” and confirm the transaction in your wallet.

Maximizing CXT Staking

Stake More

You can increase your stake by delegating more CXT to block producers. You can decide whether to stake with the same Covalent operators or diversify your delegation across several producers.

Conclusion

Staking is a fundamental aspect of Proof-of-Stake blockchains, providing valuable opportunities for investors and network participants. By staking your tokens, you not only earn rewards through token emissions and transaction fees but also contribute to securing and decentralizing the network.

Active participants may also gain access to exclusive airdrops, often reserved for those deeply involved in the ecosystem. Additionally, staking grants governance rights, empowering you to influence key network decisions based on the number of tokens you hold.

By participating in staking, you are not only optimizing your investment returns but also actively supporting the stability and resilience of PoS networks. Share this guide with others and encourage them to join you in building a more secure and decentralized future for Covalent.

Lastly, don’t forget to check out the Covalent Asset Page for more insights into staking CXT, and drop us a message if you find this tutorial useful. Happy staking!