Learn about Chiliz Staking
Can I stake Chiliz (CHZ)?
Chiliz runs its own proof-of-stake Chiliz Chain and has staking as an integral part of a consensus mechanism. Additionally, CHZ is available on custodial staking platforms.
Staking: By holding CHZ in a wallet, participants support the network's operations, secure transactions, and maintain blockchain integrity. Stakers earn rewards in the form of additional CHZ, incentivizing their contribution to the network's stability. Depending on their stake percentage in the total pool, they also gain opportunities to validate transactions, create new blocks, and become validators.
Custodial Staking: Custodial services provide staking pools for CHZ where users can contribute their token holdings. While this isn't traditional staking, it enables CHZ holders to earn rewards. This method allows CHZ holders to gain rewards without using a standard staking mechanism.
How are the CHZ staking rewards generated?
Staking: When you stake CHZ on the Chiliz Chain, you earn rewards from the network's transaction fees. Validators receive these fees when they create a block, with more transactions leading to higher rewards. Delegators receive a portion of these rewards minus validator commission.
Here's the breakdown of reward distribution:
- Validators receive 80% of the rewards. They can keep up to 30% as their fee and share the remainder with those who staked CHZ on their node, based on their individual stakes.
- The remaining 20% of the rewards go towards maintaining and growing the Chiliz Chain network.
Custodial Staking: Centralized third-party providers mostly utilize strategies where assets from each plan and type are consolidated and allocated for yield in various on-chain opportunities. Some of the avenues for yield generation are mining, staking, liquid staking, proprietary market-neutral algorithmic trading, and collateralized on-platform lending.
What are the risks of staking CHZ?
Platform Security: Ensure the platform you choose is reputable and secure. There is a counterparty risk associated with lending to a custodial provider.
Smart Contract Risk: Supplying CHZ tokens or participating in DeFi protocols involves interacting with smart contracts deployed on the blockchain. These smart contracts may contain bugs, vulnerabilities, or security risks that could result in financial losses if exploited by malicious actors or if the contracts behave unexpectedly.
Regulatory Risk: Be aware of the legal and regulatory environment surrounding cryptocurrency lending and staking in your jurisdiction.
Before staking CHZ, consider factors such as the reputation and security of the staking platform, the potential rewards and risks involved, any lock-up periods or withdrawal restrictions, and your own investment goals and risk tolerance.
What are Fan Tokens?
Fan Tokens are limited digital assets created on the Chiliz Chain and form the core of the Socios.com app and ecosystem. These tokens are CAP-20 tokens, unique to the Chiliz Chain.
For a complete and updated list of available Fan Tokens on the Chiliz Chain, refer to this link.
What is Chiliz Chain tokenomics?
In early 2024, Chiliz unveiled an enhanced tokenomics model, incorporating a steadily declining annual inflation rate alongside a perpetual token burn mechanism.
Chiliz Chain tokenomics 2.0 details:
- Initial (year 1) annual base inflation - 8.80%
- Decreasing year-over-year inflationary decay
- Annual inflation stagnation (inflation floor) in 14 years - 1.88%
- Transaction Fee Burning Mechanism - Chiliz Chain will implement EIP-1559 wherein the vast majority of accrued gas fees will be burned at a protocol level
Inflation Supply Allocation:
- Validators/Delegators - 65%
- Community Vault, $CHZ LP (liquidity provider), and possible Shared Security Restaking Rewards - 10%
- Ecosystem and Operational (E&O) Distribution - 25%
The introduction of new tokenomics for Chiliz Chain signifies an evolution, securing CHZ tokens' significance within the ecosystem. This upgrade strategically aligns with sustainable growth, community engagement, and enhanced token utility.