Staking/Delegation

A process that allows users to support validators and earn rewards by locking up their TAO tokens.

What are Staking and Delegation?

Staking means locking up TAO tokens to support the network. Users who stake contribute to network security and earn rewards based on their staked amount. The minimum stake is 0.1 TAO.

Delegation lets users support validators without running nodes themselves. By delegating TAO, users lend their staking power to validators who become delegatees . Users keep control of their tokens and can unstake them at any time, though there are limits on frequency.

USEFUL INFO ON STAKING

There is no lock-up period for staking or unstaking your TAO ; you can adjust your stakes as needed. Your TAO remains under your control at all times, and validators cannot access your funds directly.

You can track your staking rewards through tools like taostats.io.

How It Works

When users delegate TAO to a validator, it increases that validator's effective stake. This larger stake increases the validator's impact on setting weights . The validator pools all delegated stake with their own to perform validation tasks.

Rewards from validation tasks are shared among all stakeholders. Validators typically keep 0-18% of the rewards and distribute the rest to nominators /delegators based on their stake proportion. The network distributes these rewards daily.

Reward Distribution

The network calculates rewards based on total stake and performance. A validator's own stake earns full rewards, while delegated stake rewards are split between the delegatee and nominators. The delegatee's take can vary from 0% to 18%, which they set themselves.

Let's look at an example of how rewards are distributed.

A validator holds 900 TAO , and three nominators have delegated additional TAO to them:

Nominator 1 delegates 120 TAO
Nominator 2 delegates 50 TAO
Nominator 3 delegates 30 TAO

This creates a total effective stake of 1,100 TAO (900 + 120 + 50 + 30).

From the delegated amount of 200 TAO, each nominator's contribution is:

Nominator 1: 120/200 = 0,6 (60%)
Nominator 2: 50/200 = 0,25 (25%)
Nominator 3: 30/200 = 0,15 (15%)

Now, let's say the validator earns 100 TAO in rewards. The validator first keeps their portion based on their stake:

Validator's share = 100 * (900/1100) = 81.82 TAO

The validator also takes 9% from the delegated rewards. The delegated portion is:

Delegated rewards = 100 * (200/1100) = 18.18 TAO

So the validator keeps an additional 18.18 * 0.09 = 1,64 TAO as their take.

In total, the validator receives 83.46 TAO (81.82 + 1.64).

The remaining 16.54 TAO (100 - 83.46) is distributed among the nominators based on their contributions:

Nominator 1 receives 9.92 TAO (16.54 * 60%)
Nominator 2 receives 4.14 TAO (16.54 * 25%)
Nominator 3 receives 2.48 TAO (16.54 * 15%)