TL;DR - Proof of Stake allows for individuals, groups and/or businesses to participate in the operation of a blockchain network as well as the governance surrounding how decisions are made. We will go over how you can get started with this as fast and securely as possible. For more background on the basics of staking please read our guide which can be found here: https://lunie.io/guides/what-is-staking/
While Proof of Stake networks share a lot of similarities in philosophy, operationally they are all quite different. This guide will focus exclusively on the e-Money network.
Let’s start with the assumption that you have some of e-Money’s native crypto asset NGM(Next Generation Money) and are ready to begin getting rewards through staking. With Lunie, once you have picked a validator to delegate your tokens to, you can manage how you interact with that validator and your assets entirely from the Lunie interface.
Voting power of an e-Money validator is a critical metric to consider when choosing where to delegate your NGM. The voting power metric is representative of how much a stake a validator has been allocated by delegators and thus determines how likely they are to be selected by the network to vote on and propose a new block. This is when validators receive rewards for themselves and on behalf of those who delegated their stake to them.
Lunie offers an easy to understand rewards estimate for each eligible validator on the network based off of a calculation of:
- The total annual validator rewards which is voting power * annual provision (a variable defined in the protocol)
- Subtracting the validator’s commission from the annual calculation
- Assuming a 1 NGM token delegation which will receive a percentage of the available rewards
- Based on how many tokens are already delegated to that validator
These rewards figures do not represent the compounding effect of rolling rewards into the existing staked balance periodically. The rewards given to token holders will also vary in terms of volume related to which baskets of specific asset-backed tokens are being rewarded to stakers.
This rewards estimate is only a rough idea of what a delegator can expect over the course of a year and is subject to change either through the validator adjusting their commission rates, experiencing downtime or some negative slashing effects, etc. Hence, you should evaluate each validator qualitatively as well as quantitatively and continue to re-evaluate where you delegate to over time.
Managing Staking Rewards
The staking rewards are in a separate balance from the primary balance of available NGM or the illiquid NGM bonded to validators. The rewards from staking in the e-Money network will consist of NGM and a variety asset-backed tokens displayed in their respective fiat denominations. In order to access your rewards and make them available for transfer or do anything else with them, you’ll need to claim them.
Assuming you have NGM delegated to a validator and you want to un-delegate them, the NGM will be subject to a mandatory 21-day lockup period enforced by the network. This 21-day lockup period is built into the network to prevent long-range attacks. During this period, your account will not earn any rewards associated with staking those funds and they will not be transferable until the period is complete.
For example, if you have 100 NGM staked and you un-delegate 25 NGM, the 75 NGM still staked will continue to earn their rewards, while the 25 NGM will earn no rewards unless they are re-staked after the lock-up period.
However, token-holders can immediately change who they delegate a portion or all of their stake to by re-delegating directly to another validator, rather than un-delegating, waiting for 21 days and then re-delegating elsewhere. This allows your rewards to continue to be earned un-interrupted.
Within the e-Money network, NGM token holders will not have inherent governance rights. This means that beyond rewards earned by staking NGM to validators within the e-Money network, there will be no actual voting or governance participation on behalf of network participants.
Additional Considerations When Picking A Validator
Note - Lunie is not a validator any Proof of Stake blockchains - therefor we have no objective benefit to recommend one validator service over another - we simply offer the clearest indicators possible of what a validator’s performance and current status is and the rest of the judgement will fall on the user. As always, we are happy to field any questions you might have about this process and are open to feedback.
Slashing Risks - Staking on the e-Money network comes with some risks of loss of funds. If a validator messes up by double signing they and those who delegate to them will be slashed 5%. If a validator experiences downtime, the slash will be less severe at .01%.