Learn about EOS Staking
Can I stake EOS?
EOS uses Delegated Proof of Stake as the foundational consensus mechanism. While anyone has the capability to operate a node for complete validation of the EOS blockchain in a trustless manner, specific entities designated as Block Producers (BPs) are exclusively tasked with producing blocks and establishing the definitive blockchain.
Delegation: Unlike Proof of Stake, participants in the consensus process are not obligated to lock up tokens. Instead, individual token holders delegate their portion of tokens to their chosen BP candidates.
Custodial Staking: EOS token holders can earn rewards by depositing their assets into custodial service providers. 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.
How are rewards generated?
The top 21 candidates, determined by the cumulative delegated token stake, are elected as the active block producers. Token holders retain the flexibility to modify their delegations at will, and the selection of the 21 active BPs can swiftly change within minutes. Consequently, the authority of BPs remains contingent on the ongoing trust of token holders who delegate their stake to them for executing their duties.
EOS Reward Details:
- Annual inflation is fixed at 5%.
- 4% goes to a savings fund, which might distribute the funds to the community later on.
- 1% goes to Block producers and Standby Block Producers.
- Out of the 1% given to block producers, only 0.25% will go to the actual 21 producers of the blocks.
- The other 0.75% will be shared amongst all block producers and standby block producers – based on how many votes they receive and with a minimum of 100 EOS/day.
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.
Why should I vote for a Block Producer?
Block Producers are running and maintaining the EOS Mainnet, where many important transactions and dapps are deployed.
It is worthwhile to vote for honest, engaged, transparent Block Producer, to keep the Network healthy.
What are the risks of staking EOS?
Staking EOS, whether through delegated staking or custodial staking, comes with several risks:
Counterparty Risk: In custodial staking, you trust a third party with your EOS tokens. There's a risk that the custodian may experience security breaches, mismanagement, or insolvency, leading to loss of funds.
Platform Security: It's important to choose a reputable and secure platform for custodial staking to mitigate the risk of potential security breaches or hacks. Please take a look at the platform's track record and reputation within the cryptocurrency community to gauge its reliability.
Smart Contract Risks: Delegated staking involves interacting with smart contracts on the EOS blockchain. These contracts may contain bugs or vulnerabilities that attackers could exploit, resulting in financial losses for stakers.
Market Risks: The value of EOS tokens can fluctuate significantly due to market dynamics. Staking EOS locks up your tokens for a certain period, exposing you to the risk of missing out on potential price gains or suffering losses if the token's value decreases.
Liquidity Risks: Staking EOS tokens renders them illiquid for the duration of the staking period. If you need access to your funds urgently, you may face challenges in withdrawing or liquidating your staked tokens.
What is EOS token?
The EOS Network’s native token, EOS, is used to purchase or rent access to network bandwidth and storage capacity, to secure governance rights within the EOS Network, to transfer value on native applications, and to account for value by investors and speculators. EOS has a 3% rate of inflation with no limited max supply. EOS provides holders with several key benefits including a fast and secure medium of exchange, governance in the direction of the network, access to network resources, and more.
How was EOS launched?
90% of the initial EOS tokens have been sold through an 1-year-long ICO starting on 26th June 2017.
The total value of raised Ethereum was roughly at $4 billion USD at the end of the sale.