Staking
SoftPaws Supported Networks / Protocols
| Network | Staking Link | Guide |
|---|---|---|
| Kassandra | https://app.kassandra.finance/farm?tab=stake | Staking On Kassandra |
What is Staking?
Staking is the act of locking tokens, usually for a set amount of time or with a withdrawal delay, in order to earn a reward. The reward is normally paid out in the same token, but can be paid out in other tokens. This is a rudimentary definition. Different protocols find all sorts of creative ways to use the term staking.
What is Delegating?
Delegating is generally associated with staking, but is in fact different. Delegating entails the giving (delegating) of voting rights to someone else to vote on your behalf. Often in crypto the terms staking and delegating are used interchangeably.
What is a Validator?
A validator validates blocks on a network. Delegators stake or delegate their tokens to a validator in order to earn rewards. Validators then vote on behalf of the delegators who have delegated to them. Usually, a delegator can vote for themselves if they wish. Validators play an essential role in securing a blockchain. They are usually take a commission fee for delegating to them.
How Are Rewards Paid?
Rewards are generally paid in inflation, real yield, or a combination of both. Inflation, in cryptocurrency, is the rate at which more tokens of the same token are minted (created). Often times staking rewards are payed out via inflation. Real yield is revenue earned by a protocol that can be paid out via staking rewards. It is very important to understand where rewards for the token you are staking are coming from.
Common Staking Practices
Common staking practices include withdrawal delays and locking times. Withdrawal delays are a specified amount of time that must elapse after a user requests to withdrawal their tokens. Usually, no rewards are given to the user once they request to withdraw. Often times the act of withdrawing is irreversible. So, the user must wait for the transaction to complete before staking again. A pool that uses locking times will have a specified amount of time a user must wait to withdraw their tokens. Once the specified amount of time has passed they are free to withdraw their tokens.
Staking on Cosmos Networks
Bonding
Staking on Cosmos Networks is often called bonding. When bonding on Cosmos networks funds are delegated to a validator of that chain. That validator will then vote for the delegator on governance proposals, unless the delegator votes on that proposal. The standard staking mechanism on Cosmos networks is a 21 day withdrawal delay. While tokens are unbonding no rewards will be earned.
Slashing
Generally on a Cosmos chain funds delegated to a validator can be slashed. Normally they will be slashed for downtime (given via the signed blocks window parameter) or for double signing a block (generally an intentionally malicious action). The latter is normally a much larger penalty. It is important to choose a reliable validator when staking on a Cosmos network. Cosmos Directory is a great resource to find a validator.
Redelagating
On Cosmos networks you can redelegate from one validator to another without the need to unbond your tokens. This can however get complicated. A great guide can be found here. Note this guide is written for Atom, but the same rules generally apply to other Cosmos chains unless they have updated parameters.