Metis staking rewards are generated through Sequencer Mining, a process that rewards participants (lockers) who lock governance tokens to support block production on the network. Here’s how it works:

Decentralized Sequencer Nodes: With the launch of the first decentralized sequencer for a Layer 2 rollup, rewards are distributed via smart contracts to lockers, incentivizing participation in securing the network.

Mining Rewards Rate (MRR): For the first 12 months, all sequencer nodes will benefit from a 20% MRR, encouraging LSD platforms to apply for node allocations and innovate their reward structures for participants.

Ecosystem Development Fund: Out of the 4.6M METIS fund:

• 3M METIS are allocated to Sequencer Mining, directly fueling staking rewards.
• 1.6M METIS are for Ecosystem Grants, supporting LSD-related dApps and infrastructure.

Revenue Sharing: As Metis introduces its decentralized sequencer, it becomes the first rollup to share sequencer revenue with the community, creating a sustainable model for staking rewards.

• You can monitor your delegations and token holdings using the Staking Terminal. In addition, you can determine the state of your tokens and rewards.
• Delegating to a reliable, long-term-focused provider can significantly minimize your maintenance efforts.

We strive to make staking as safe and transparent as possible, however, it's important to consider factors that may influence whether a particular staking option is appropriate for you.

Blockchain and Technology Risks: Metis and its underlying technology, smart contracts, are still developing, potentially containing bugs or vulnerabilities. As Metis is an emerging protocol, unforeseen risks may arise, and the technology’s success is uncertain.

Third-Party Dependency: Metis relies on external parties for staking, development, operation, and adoption. There is no guarantee these parties will continue supporting the network. Metis token holders cannot delegate assets directly to sequencers and have to rely on liquid staking providers.

Governance Token Locking: Rewards depend on lockers locking METIS tokens, which could lead to the concentration of governance power in the hands of a few large holders.

Incentives Over-reliance: If the program depends heavily on high MRR to attract participation, it may struggle to maintain engagement once rewards decrease.

Please note that this is not an exhaustive list of all the risks related to staking.

Sequencers are responsible for ordering transactions and are employed by rollups to enhance the user experience with lower fees and quicker transaction confirmations.

In Layer 2 networks, sequencers handle transactions between the L2 and L1 systems by:

• Retrieving transactions from the L2 mempool, deciding which to execute or discard, and broadcasting results to other nodes.
• Grouping transactions into batches, compressing them and periodically submitting these batches to the Layer 1 blockchain (e.g., Ethereum) for final verification.
• Maintaining transaction order, either on a first-come, first-served basis or prioritizing transactions with higher gas fees.
• Acting as traffic controllers, efficiently managing transaction flow to ensure smooth and secure interaction with the underlying L1 chain.

This batching process reduces transaction costs and improves network efficiency, while sequencers earn a portion of the transaction fees as their compensation.

The METIS token serves multiple functions within the Metis ecosystem:

Transaction Fees: It is used to pay transaction fees, with 30% of the gas fees returned to protocols built on the network.

Decentralization and Security: METIS tokens are staked by third-party sequencers to ensure decentralization and financial honesty, preventing reliance on a single sequencer.

Sequencer Incentives: Sequencers earn METIS tokens as rewards for bundling transactions and submitting them to Ethereum, similar to Ethereum's Proof-of-Stake model.

Proof-of-Stake Mechanism: Sequencers are randomly selected from a pool to process transactions, enhancing network security and preventing single points of failure.

METIS has a total supply of 10,000,000 tokens. The distribution of METIS tokens is as follows:

• Transaction Mining: 47.7%
• Community Ecosystem: 9.0%
• Private Round: 7.0%
• Founding Team: 7.0%
• Seed Investors: 6.0%
• Liquidity Reserve: 6.0%
• Airdrop: 6.0%
• MetisLab Foundation: 4.0%
• Community Incentives: 3.0%
• Strategic Round: 1.5%
• Advisors: 1.5%
• Angel Investors: 1.0%
• Liquidity IDO: 0.3%