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Delegator FAQ

Is staking of APV-Tokens custodial?​

APV tokens are held in the staking contract, but the sole owner of the tokens is the individual who staked them. Only the owner of the staked APV tokens can interact with them.

Why there is a commision fee on staking rewards?​

Staking rewards come with a commission fee, which is essentially a percentage of the rewards that is taken by the validator or staking pool operator. Here are the main reasons for this commission fee:

  1. Operational Costs Running a validator node involves significant operational costs. These include:
  • Hardware and Infrastructure: Purchasing and maintaining servers and other hardware.
  • Hosting and Bandwidth: Costs related to internet connectivity and data hosting.
  • Security: Implementing and maintaining security measures to protect the network and staked assets.
  • Software Development and Maintenance: Developing and updating the software required to run the validator node or staking pool. The commission fee helps cover these expenses, ensuring the validator can operate efficiently and securely.
  1. Compensation for Services Validators and staking pool operators provide a service by maintaining the network, validating transactions, and ensuring the blockchain's integrity. The commission fee acts as compensation for their time, expertise, and effort in providing these services.
  2. Incentive for Performance The commission fee also serves as an incentive for validators to perform well. Higher performance validators are more likely to attract more stakers, and the commission fee can motivate them to maintain high standards of operation and reliability.
  3. Economic Sustainability For the staking ecosystem to be sustainable, validators need to be financially viable. The commission fee ensures that validators have a steady income stream, which helps maintain the network's overall health and stability.
  4. Market Differentiation Different validators and staking pools may charge varying commission rates based on their reputation, performance, and the services they offer. This differentiation allows stakers to choose validators that best meet their needs, whether they prioritize lower fees, higher security, or better performance

How do delegator rewards work?​

Delegator rewards in staking are a way for individuals to earn returns on their crypto holdings by participating in the network's security and transaction validation process without running a validator node themselves. Here's a detailed explanation of how delegator rewards work:

  1. Delegation Process Delegators participate in the staking process by locking up their cryptocurrency and delegating it to a validator or staking pool. This allows them to contribute to the network's security and consensus mechanism without needing to manage the technical aspects of running a validator node.
  2. Role of Validators Validators are responsible for validating transactions and creating new blocks in the blockchain. They stake their own cryptocurrency as collateral to ensure honest behavior, as they risk losing their stake through slashing if they act maliciously. Validators earn rewards for their work, which are then shared with their delegators.
  3. Earning Rewards When a validator successfully validates a block, they earn staking rewards, which are typically distributed as follows: Validator's Share: The validator takes a commission fee (also known as an operator fee) from the rewards for their services. Delegator's Share: The remaining rewards are distributed among the delegators in proportion to their stake. For example, if a validator earns 1000 tokens in rewards and has a 10% commission fee, the validator would keep 100 tokens, and the remaining 900 tokens would be distributed among the delegators based on their respective stakes.
  4. Proportional Distribution The rewards distributed to each delegator are proportional to the amount they have staked with the validator. For instance, if a delegator has staked 10% of the total amount delegated to a validator, they would receive 10% of the rewards after the validator's commission is deducted.
  5. Locking and Unbonding Periods Delegated tokens are typically locked in a smart contract and cannot be accessed by the validator. To withdraw their staked tokens, delegators must go through an unbonding period, during which their tokens remain locked but no longer earn rewards. This period varies by blockchain but is designed to ensure network stability.

Is there any cool down perios fort a delegator?​

Yes, there is a cool-down period of 10 days. This only applies to the staked tokens not to the rewards itself. Rewards can be redeemed at any time.

Are there any risks connected with staking?​

Yes, staking is not completely risk-free. One of the major risk - slashing is not live yet and will not be introduced up until 2026 or later, so this is not a case. The primary risk is that the (audited) staking contract is compromised. To mitigate this risk, the staking contract will be audited by top auditors company.