In this chapter, you’ll learn what staking is, and what the different ways are to stake on the Metal Blockchain, namely as a validator or a delegator, and other staking specifics.
Staking is the process of depositing and locking up cryptocurrency tokens to participate in a blockchain’s Proof-of-Stake (PoS) consensus mechanism. Staked coins are used to validate transactions and secure the network. Staking rewards are offered to incentivize users to lock up their coins.
Anyone that wishes to support the Metal Blockchain’s Proof-of-Stake mechanism can do so by locking a specified amount of the blockchain’s native cryptocurrency METAL. The staked cryptocurrencies cannot be moved or used during the locking period.
The deposit of staked METAL coins ensures that validation nodes are committed to the development and stability of the network.
There are two ways users can stake METAL: become a validator or become a delegator.
Validators can be thought of as active nodes in the network that validate transactions and secure the blockchain.
Delegators are those who wish to stake but want to remain relatively passive. Delegators trust an existing validator node through the delegation of their staked tokens. Delegators are subsequently rewarded for their support.
To become a validator on the Metal Blockchain, you must stake a minimum of 2,000 METAL. The minimum duration is 14 days. The maximum duration is 1 year (365 days).
To ensure the decentralization of the network, each validator holds a maximum weighting. The maximum weighting is composed of the validator’s stake plus the stake delegated to them. The maximum weight is the minimum out of 3 million METAL tokens or 5 times the amount staked by the validator.
For example, if a user staked 2,000 METAL to become a validator, they can only be delegated 8,000 METAL. This safety mechanism is implemented to prevent validators from creating multiple rogue nodes that act like delegators. This would defraud the system through a Sybil attack.
A validator needs at least 80% uptime during the staking period in order to receive staking rewards. Alongside collecting rewards, validators can set their own delegation fee that they charge to delegators for their services. The minimum fee is 2%.
To become a delegator in the Metal Blockchain, a user must stake at least 25 METAL. Like validators, these tokens must be staked for a minimum of 2 weeks and a maximum of 1 year.
When delegating staked tokens, a user must choose to allow a validator node to process transactions on their behalf. Choosing to delegate METAL does not put your METAL at risk. A validator cannot spend staked METAL tokens and a user will always receive the original staked amount plus staking rewards at the end of the locking period. Rewards collected by the validators are distributed back to delegators proportional to the number of staked tokens.
Note: Delegators are charged a delegation fee by validators due to the increased effort validators must employ. This delegation fee can be set by validators, the minim fee is 2%.
Now that we explained the staking concept, and you’re ready to start staking, you’ll need to create your Metal Blockchain account