Staking/Delegation
The process of placing TAO or ALPHA with a validator to earn a share of their dividends.
What is Staking?
Staking means placing your tokens with a validator on a specific subnet. By doing so, you increase that validator's effective stake, which gives them more influence when setting weights. In return, you receive a proportional share of the ALPHA dividends that validator earns.
On the root subnet, your TAO stays as TAO. On all other subnets, your TAO gets exchanged for the subnet's ALPHA token through the subnet's pool. Your position is then held in ALPHA, meaning its TAO value fluctuates with the ALPHA price. When you unstake, the ALPHA is exchanged back to TAO through the pool.
How Dividends Are Distributed
When a validator earns ALPHA dividends from a subnet, those dividends are split among all stakers (including the validator's own stake) proportionally. Before the split, the validator deducts their delegate take from the portion earned through delegated stake.
Example: Reward Distribution
Here is an example. A validator has 900 ALPHA of their own stake, and three nominators stake additional ALPHA:
Nominator 1: 120 ALPHA
Nominator 2: 50 ALPHA
Nominator 3: 30 ALPHA
Total effective stake: 1,100 ALPHA. The validator earns 100 ALPHA in dividends. The validator's own share (proportional to their stake):
100 x (900 / 1,100) = 81.82 ALPHA
The delegated share:
100 x (200 / 1,100) = 18.18 ALPHA
The validator takes 9% of the delegated share:
18.18 × 0.09 = 1.64 ALPHA
The remaining 16.54 ALPHA is split among nominators by contribution:
Nominator 1: 16.54 × 60% = 9.92 ALPHA
Nominator 2: 16.54 × 25% = 4.14 ALPHA
Nominator 3: 16.54 × 15% = 2.48 ALPHA
What to Know Before Staking
There is no lock-up period. You can stake and unstake freely. However, unstaking from a dynamic subnet involves exchanging ALPHA back to TAO through the pool, which incurs a swap fee. The amount of TAO you receive depends on the current ALPHA price and liquidity in the subnet pool at the time of unstaking.
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