Avalanche is a smart contracts platform that helps you deploy and build dApps at a low cost. It focuses on scalability, decentralization, security, and flexibility. Avalanche is one of the first open-source platforms for global finance’s scalability and fast transaction speed through its proof of Stake (POS) consensus protocol. It uses AVAX as its native cryptocurrency.
There exist two ways users can stake AVAX, by becoming a delegator or by becoming a validator. But before we go in-depth into what delegation and validation mean, let’s briefly consider what staking is.
What you'll learn 👉
AN INTRODUCTION TO STAKING
Simply put, staking is storing or locking crypto assets in an account for some time in return for a reward. This process supports the functionality and aids the security of a blockchain. It allows users to join the blockchain community and take part in the administration and unison of the blockchain.
Under the POS system, when users stake their coins, they give them to the crypto protocol to add new blocks to the blockchain, which validators will confirm. The staker earns additional coins plus the initial amount of staked coins.
Instead of leaving your cryptos sleeping in your wallet, why not give thought to utilizing them in this way to earn passive income.
VALIDATOR
A validator is a node operator that plays the role of verifying transactions on the blockchain. On Avalanche, validators must meet the requirements to stake a certain amount of AVAX token and properly participate in the network to secure their rights as validators and receive rewards.
Your chance of being awarded as a validator rests on the number of coins you stake. The more your stake remains locked, the higher the reward you earn. If you, as a validator, stakes for up to a year, you receive the maximum rate of rewards and the lowest rate of rewards for staking up to 14days.
Before transactions are taken to the blockchain ledger, a validator checks their legitimacy and accuracy whether or not it conforms to the blockchain’s rule. Validators may have to consider the transaction fee sent by the initiator of each transaction before deciding which to create as a block.
DELEGATOR
A delegator is a token holder who earns rewards but does not directly participate in the consensus process. A delegator chooses a current validating node to delegate his AVAX to.
As a delegator, you must indicate:
- The node ID you want to delegate
- The number of AVAX you choose to stake
- The Start time and End time must not exceed the validator’s own time
- The wallet address your rewards will be sent to
It is paramount to know that you cannot affect the parameters once you have added your stake to a delegator. Your reward comes after your delegation, provided your validator remains correct and online. Do not forget that validators have rights to a slice of the reward you receive.
STAKING PARAMETERS
- The least amount a delegator should stake is 25 AVAX, while that of a validator is 2000 AVAX
- The least period coins can be staked for validation is 2 weeks, while the maximum duration is 1 year
- The lowest delegation fee is 2%
- Since validators’ rewards are centered on Proof of Uptime and Correctness, the least percentage of time a validator should be correct and online is 80%
- The maximum weighting of a validator(owned stake+delegated stake)is the minimum of 3 million AVAX or 5× the total amount the validator staked
STAKING WITH THE AVALANCHE WALLET
Step 1. Open the Avalanche wallet
You can click on ‘create a new wallet’ if you don’t have one.
Step 2. Navigate to the ‘Earn’ section
Be sure to have crypto on the Platform Chain (P- Chain), or you can transfer some from the Exchange chain (X-Chain) using the cross-chain transfer.
After entering the amount of AVAX from your X-Chain, tab the ‘Transfer’ button. Please keep in mind that the transaction cost is 0.001 AVAX which should be added to the amount you want to transfer.
OK. Before the next step, do you now have your crypto ready on your P-Chain? If yes, let’s proceed.
Step 3. Become a validator
You need at least 2000 AVAX tokens to become a validator. To validate:
- Connect your wallet to a node and specify its ID
- Indicate necessary parameters, like how much you’re staking, how long you’ll be staking for, your reward address, and your delegation fee rate.
- Click ‘validate’. You’re ready!
Take note that you need to be online for at least 80% of your stated time before you can get staking rewards. Also, you can’t change the parameters after validating, so you’d better crosscheck well before clicking the button
Step 4. Add a delegator
A list of active nodes is available for you to choose which to delegate your AVAX with.
Ensure you check the selected validator’s set date; that way, you won’t go beyond the end date and time set by the validator.
State your staking period and amount.
Click on ‘confirm’ and then ‘submit’ to complete the delegation process.
HOW TO STAKE AVAX THROUGH AN EXCHANGE
Staking through an exchange, like Binance, is an alternative to validating and delegating. Let’s try the steps below to stake AVAX through the Binance exchange. Assuming you have a Binance account,
- Buy AVAX from Binance in case you do not have any or enough. If you do have, send the amount you want to stake to your Binance account
- Next, click ‘Finance’ found at the upper part of the page, and then click on ‘Binance Earn’
- Use the search box to find ‘AVAX’ and check for staking earnings associated with the AVAX token
- After selecting your choice staking earning, click on ‘Stake’. Then input the amount of AVAX you want to stake and the period it will be locked up
- Agree with the terms and conditions, and finalize the process by confirming the transaction.
- There you are!
WHY VALIDATE AVALANCHE
In addition to the fact that Avalanche emphasizes high transaction speed and scalability, there are more impressive plus points that can spur you to consider validating Avalanche.
Staking rewards
As a validator on Avalanche, you have the right to set up your fee for every delegator you allow into your node. Also, you stand a chance to receive up to 11% APY for staking AVAX.
Secure a growing network
The platform’s decentralization allows users to build and launch more applications and digital assets day in day out. Join the growing number of validators and play your part to enhance the security of the network by participating in every consensus.
No slashing
Some POS consensus techniques enforce slashing when a transaction, perhaps due to network malfunction, is altered or counts as illegitimate. In contrast, Avalanche does not carry out slashing to nullify its user’s assets. Avalanche returns all stakes after the staking period.
Low hardware requirements
Avalanche accepts low hardware requirements to run a validator node, giving room for common, low-price tools such as desktops and laptops to be used for validating. Thus, contributing to the decentralization and performance of the blockchain.
FREQUENTLY ASKED QUESTIONS
