Staking

Here you will learn about what staking is, why it is important and how it works on the Curio Parachain.

Blockchain networks use consensus mechanisms to finalize blocks on the chain. Consensus is the process of agreeing on something, in this case, the progression of the blockchain or how blocks are added to the chain.

Why do we need Consensus?

Consensus is a method for agreeing to a shared state. For the state of the blockchain to continue to build and move forward, all nodes in the network must agree and come to a consensus. It is the way that the nodes in a decentralized network can stay synced with each other. Without consensus for the decentralized network of nodes in a blockchain, there is no way to ensure that the state one node believes is true will be shared by the other nodes. Consensus aims to provide an objective view of the state among participants who each have their subjective views of the network. It is the process by which these nodes communicate and come to agreement, and can build new blocks.

What are PoW and PoS?

Proof of Work (PoW) and Proof of Stake (PoS) have been inaccurately used as shorthand to refer to consensus mechanisms of blockchains, but that does not capture the full picture. PoW is the method for agreeing on a block author and part of the fuller Nakamoto consensus that also encompasses a chain selection algorithm (longest chain rule in Bitcoin). Similarly, PoS is a set of rules for selecting the validator (or collator) set and does not specify a chain selection rule or how a chain might reach finality. PoS algorithms have traditionally been paired with an algorithm for coming to a Byzantine agreement between nodes. For example, Tendermint (consensus of Cosmos) is a practical Byzantine fault-tolerant algorithm that uses PoS as its validator set selection method.

Why not Proof of Work?

Although simple and effective in coming to a decentralized consensus on the next block producer, proof of work with the Nakamoto consensus consumes an incredible amount of energy, has no economic or provable finality, and has no effective strategy for resisting cartels.

What is staking in PoS networks?

In PoS networks like Polkadot the security of the network depends on the amount of capital locked on the chain: the more the capital locked, the lower the chance of an attack on the network, as the attacker needs to incur a heavy loss to orchestrate a successful attack. The process of locking tokens on the chain is called staking.

Similar to the miners in PoW networks, PoS networks have validators (or collators), but they do not have to compete with each other to solve mathematical puzzles. They are instead pre-selected to produce the blocks based on the stake backing them. Token holders can lock funds on the chain and for doing so, they are getting staking rewards. There is thus an economic incentive for token holders to become active participants who contribute to the economic security and stability of the network. PoS networks in general are therefore more inclusive than PoW networks, as participants do not need to have either technical knowledge about blockchain technology or experience in running mining equipment.

Curio Parachain implements an improved PoS consensus mechanism compared to the Nominated Proof-of-Stake (NPoS) mechanism used in the Polkadot network. The consensus mechanism in Curio Parachain is called Limited Delegated Proof of Stake (LDPOS). The native token of the Curio Parachain network is the Curio Governance Token (CGT). CGT is used in the staking mechanism as a staking token and reward token. The Curio chain is connected to the Kusama network as a parachain, making the Curio chain even more secure.

Limited Delegated Proof of Stake (LDPoS)

Limited Delegated Proof of Stake (LDPoS) is a Delegated Proof of Stake (DPoS) consensus mechanism that limits the number of delegators and the number of collators to whom they can delegate their stake.

In LDPoS, the network has collators (similar to validators in the Polkadot ecosystem). The network also has delegators. Similar to nominators in the NPoS system (such as the Polkadot network), delegators use their CGT tokens to back collators that they trust in the system.

In this way, collators can be supported by token holders in the community while they build up their stake.

Collators

Collators are the most important members of the Curio Parachain as collator nodes hold the blockchain data, collecting transactions and building blocks. The blocks of data they verify are passed via the validators to the Relay Chain of the wider network (Kusama or Polkadot in the future) to be finalised and become the state of truth.

Running as a collator requires technical skill, hardware and commitment to the project. Collators are rewarded for every block they verify. The first group of official collators for Curio Parachain has been selected, and we have around 8 active collators at launch.

Delegators

Delegators are CGT token holders who choose to back collators with their tokens. In the LDPoS consensus, delegators play an important role in filtering the pool of candidates for honest, trusted and well-performing collators.

The requirements to become a delegator are much less than those for collators. You only need to stake a relatively low number of tokens and decide on a collator candidate. Once the collator you have backed with your stake authors a block and thus receives a reward, you and all the other delegators of this collator also receive a reward.

INFO

The amount of delegators per collator is limited. Currently, each delegator can only stake to one collator per account. This may change if the community decides to enable multiple delegations per account.

Staking parameters of the Curio Parachain

Staking currency

The native token - Curio Governance Token (CGT) - is used as a staking token and reward token.

Inflation config

Configuration of inflation includes:

• Collators' stake max rate: 30%

• Collators' annual reward rate: 20%

• Delegators' stake max rate: 30%

• Delegators' annual reward rate: 16%

The stake max rate is a percentage value that defines how much of the total supply can be staked without reducing reward. Therefore we reach configured inflation when we reach this max rate of total supply are staked. If we exceed this value then the staking reward is reduced in a way that makes inflation constant and equal to the configured value.

Collators APY dependence on total collators stake:

Delegators APY dependence on total delegators stake:

Staking configuration

Setting	Description	Value
MinBlocksPerRound	Minimum number of blocks in one round.	300
DefaultBlocksPerRound	Default number of blocks validation rounds last, as set in the genesis configuration.	600
StakeDuration	The number of blocks for which unstaked balance will still be locked before it can be unlocked by actively calling the extrinsic.	7 days
ExitQueueDelay	Number of rounds a collator has to stay active after submitting a request to leave the set of collator candidates. Must be at least 1.	2
MinCollators	Minimum number of collators selected from the set of candidates at every validation round.	8
MinRequiredCollators	Minimum number of collators which cannot leave the network if there are no others.	4
MaxDelegationsPerRound	The maximum number of delegations which can be made within the same round.	1
MaxDelegatorsPerCollator	The maximum number of delegators a single collator can have.	70
MinCollatorStake	Minimum stake required for any account to be elected as validator for a round.	10`000 CGT
MinCollatorCandidateStake	Minimum stake required for any account to be added to the set of candidates. Normally should be equal to MinCollatorStake	10`000 CGT
MaxTopCandidates	Maximum size of the top candidates set. Must be bigger than max number of collators with sufficient gap.	150
MinDelegatorStake	Minimum stake required for any account to become a delegator.	100 CGT
MaxUnstakeRequests	Maximum number of concurrent requests to unlock unstaked balance.	10
NetworkRewardRate	The rate in percent for the network rewards which are based on the maximum number of collators and the maximum amount a collator can stake.	10%
NetworkRewardStart	The starting block number for the network rewards. Once the current block number exceeds this start, the beneficiary will receive the configured reward in each block. Network reward is additional inflation that is being minted right to the NetworkRewardBeneficiary.	0
NetworkRewardBeneficiary	The beneficiary to receive the network rewards.	Treasury
MaxCandidateStake	Maximum collator stake (not including their delegators stake)	500`000 CGT