Staking

Archway is a Delegated Proof of Stake (DPoS) blockchain built with the Cosmos SDK , and it relies on validator nodes in order to secure the network. Validators' voting power is determined by the amount of staked tokens (ARCH) bonded as collateral either directly by validators, or via delegation. Delegating enables ARCH holders that don't have the skills or desire to run a validator to participate in securing the network and be rewarded with a share of tokens.

You can stake by either:

Validators

Validators participate in the consensus protocol by proposing new blocks and receiving rewards in exchange. Those rewards (minus the validators commission fee) are then split between all the delegators. The commission fees are configurable by the validator themselves and each validator tends to have their own policy across multiple chains.

Validators need to be in the active set to allow their delegators to earn rewards. The active set is the list of validators that have enough weight (i.e. voting power) to be included in the active set. Weight is directly proportional to the amount of delegated tokens. Just as a reference, the active set for chains built with the Cosmos SDK usually varies between 50 and 150.

Delegating

ARCH holders who do not run a validator themselves, are called Delegators. Delegators staking their coins with a validator entrust that validator to participate in the block issuance process on their behalf. This allows delegators to earn rewards in the process, while also being subjected to slashing penalties. Delegating ARCH tokens via staking helps improve the economic security of the Archway network.

Delegators keep full custody of their funds while receiving staking rewards as their tokens stay in their wallets in this bonded state. During the staking period, the tokens are bonded to the validator and are illiquid. When the tokens are unstaked/withdrawn from the delegation, they suffer a 21 day unbonding period (a cooldown period during which the tokens are frozen before being unstaked and usable again). During the unbonding period, delegators don’t earn rewards.

Delegators staking rewards are awarded per block, minus the commission fee paid to the validator.

Delegators can also participate in network governance by voting with their bonded tokens on the different active Governance Proposals

When delegating tokens to a validator, you are also delegating voting power. Delegating to a validator who is active in the governance processes and openly communicates with the community is an important element

You can delegate ARCH via:

Slashing

Slashing is the mechanism that penalizes validators (and consequently their delegators) for acting against the networks best interests, such as:

Downtime (soft slashing) When a validator is offline and does not participate in block signing for a certain amount of time, it gets slashed. Slashing leads to a small loss of staked tokens, on top of not earning new rewards for the duration of the downtime.

Double signing (hard slashing) Double signing occurs when a validator uses its private keys to sign multiple blocks at the same time. The penalty is considerably higher, as it involves a higher loss of staked tokens, jail time for the validator, and an unbonding time for the delegator tokens (during which delegators stop gaining rewards)

Validators need to be careful in adopting the necessary measures to prevent being slashed, as both the validator and its delegators are subjected to slashing penalties. For this reason, it is crucial for delegators to carefully choose the validator(s) to which delegate to.

How to select a validator

There are many variables that can be used to compare validators and choose the right one for you. The most important indicators you need to look for are the following:

Uptime

Uptime is the metric that helps to determine how reliable a validator is based on their consensus history. Uptime is shown in via a block explorer (in the validator tab) and typically varies between 90% and 100%.

Self-delegation

Self-delegation is the number of tokens a validator is delegating to itself. A high amount of self-delegation demonstrates that the validator has skin in the game, as it will need to be careful not to get slashed in order not to incur losses. A high self-delegation amount usually signals that the validator takes validating operations seriously.

Commissions

Commissions are the amounts a validator is charging for its validation services, and it is a percentage taken off the delegators' rewards. Commission rates may vary between 5 to 10%, as these amounts may provide enough profits for validators to run. Voting power is the weight that a validator has in the consensus mechanism, and it is expressed as the percentage of the delegations to a validator compared to the full amount of delegations. In order to minimize single points of failure and nurture decentralization, it is helpful to delegate to validators with moderate voting power. This will help to balance the power between the validator set, possibly preventing a few highly weighted validators from colluding.

Contributions

Some validators may run additional services such as relayers, blockexplorers, or other tools. Supporting these contributors is key to the success of a healthy ecosystem.