The Shiba Inu ecosystem has expanded significantly with the introduction of its layer-2 solution, Shibarium. A core function of this network is staking, which allows participants to help secure the blockchain and earn rewards. This guide provides a detailed overview of how staking and delegation work, the roles involved, and the processes for earning and managing rewards.
Understanding Staking on Shibarium
Staking is the process of actively participating in transaction validation on a proof-of-stake (PoS) blockchain. By locking up your crypto assets, you contribute to the network's security and operational integrity.
What Is a Validator Stake?
Stakers are rewarded for helping to validate the ledger. They achieve this by delegating their stake to validator nodes. These validators perform the essential work of replaying the ledger and sending votes to a per-node vote account. Stakers can then delegate their stakes to these accounts, participating in the consensus mechanism without running their own node.
The Profitability of Staking
The primary benefit of staking is the opportunity to earn more crypto. Annual interest rates can be very generous, sometimes exceeding 10% or 20%. It's a potentially profitable way to invest your money, and the only requirement is owning cryptocurrency that uses the PoS model. To become a validator, you need to stake BONE tokens with stake manager contracts on the Ethereum mainnet (L1). Rewards are distributed to all stakers proportional to their stake at every checkpoint, with the block proposer often receiving an additional bonus.
Validators are crucial for maintaining the Shibarium network. They run a full node, stake BONE, and participate in the PoS consensus to produce and validate blocks. Their performance is vital for the network's stability and security. In the early stages, validator selection is a manual process involving an application and interview to ensure the network remains secure.
Minimum Stake Requirement
The minimum amount required to begin staking is 1 BONE token.
The Purpose of Validator Staking
Validators are required to put up collateral, or "stake," to participate in securing the network and to be rewarded for their efforts. This stake can be forfeited (a process known as "slashing") if a validator's actions break the programmatic rules of the blockchain protocol they are helping to secure.
Transaction Times and Gas Fees
All staking transactions for Shibarium occur on the Ethereum blockchain for enhanced security. The time a transaction takes depends on the gas fees you set and the level of congestion on the Ethereum network at that moment. Using the "Speed Up" option in your wallet allows you to increase the gas fee to expedite a pending transaction. 👉 Explore more strategies for managing gas fees
The Role of a Delegator
Delegators are individuals or entities who participate in the consensus mechanism by delegating their voting rights to a validator. They choose a validator to support and delegate their voting power to them. The validator then uses this combined power to help secure the network and validate transactions, creating a more efficient and scalable system than proof-of-work (PoW).
Delegators are BONE token holders who support the network by staking their tokens into validator nodes instead of operating one themselves. They play a critical role by selecting which validators are responsible for validating transactions. In return for lending their tokens, delegators earn a portion of the rewards those validators receive. However, this also means they share the same risks; if a validator violates protocol rules, the delegators could lose a portion of the tokens they delegated.
Managing Your Delegation
After completing a delegation, you can check all the details, including your stake and rewards, by visiting the "My Account" section on the official Shibarium portal.
Supported Wallets and Hardware
Currently, the only supported wallet for these operations is MetaMask. Hardware wallets are not supported at this time. Furthermore, all gas fees for transactions on the Ethereum network must be paid in ETH, its native cryptocurrency.
It is important to note that you do not need to deposit BONE tokens onto the Shibarium network itself for staking. All funds must remain on the Ethereum Mainnet.
Common Transaction Issues
If the confirmation button for a transaction is disabled, it is likely because you have an insufficient amount of ETH in your wallet to cover the required gas fees for the transaction.
Earning and Claiming Rewards
Rewards are distributed after every checkpoint is successfully submitted to the network.
Fluctuations in Reward Amounts
The rewards you earn depend on the total amount of locked supply in the network at each checkpoint. This amount is expected to vary significantly as more BONE tokens are locked in staking contracts. Initially, rewards may be higher but will generally decrease as the percentage of locked supply rises. The checkpoint mechanism captures these changes in locked supply, which is used to calculate the rewards for that period.
The Claiming Process
To claim your rewards, you must first complete the unbonding period. Once this is done, the "Claim Stake" button will become enabled, allowing you to claim your staked tokens, which will then be transferred back to your account.
Understanding the Unbonding Period
The unbonding period on Shibarium is set to a duration of 1 checkpoint, which takes approximately 45 minutes to 1 hour to be submitted. This period applies to the originally delegated amount and any re-delegated amounts. It does not apply to rewards that have not been re-delegated. It is crucial to know that you will stop receiving rewards once you initiate the unbonding process.
The Delegation Process
Delegating your tokens requires two sequential transactions on the Ethereum network: one to approve the action and another to deposit the stake.
Re-delegating Rewards
Re-delegating your rewards means you choose to increase your total stake by automatically restaking the rewards you have accumulated, compounding your potential earnings.
Frequently Asked Questions
Q: Can I stake to any validator?
A: Yes, you can choose to delegate your stake to any available validator on the network.
Q: Which browsers are compatible with the Staking Dashboard?
A: The dashboard is compatible with any web browser that supports the MetaMask extension.
Q: What should I do if my MetaMask transaction is stuck on 'confirming'?
A: Try restarting your browser or the MetaMask mobile app. You can also try locking and unlocking your MetaMask wallet, restarting your device, or checking a block explorer like Etherscan to see the status of the transaction.
Q: How do I transfer funds from an exchange like Binance to my Shibarium wallet?
A: You must first withdraw your funds from the exchange directly to your Ethereum address within your MetaMask wallet.
Q: Do I need to keep my computer on after delegating?
A: No. Once your delegation transactions are confirmed and your stake is visible in the dashboard, your participation is active. There is no need to keep your device running.
Q: What happens if I add more funds to a validator node where I have existing rewards?
A: If you have not re-delegated your existing rewards before adding more funds, those accrued rewards will be automatically withdrawn and sent to your account. To avoid this, re-delegate your rewards first.
Q: How do I switch my delegation from a Foundation Node to an External Node?
A: You can use the "Move Stake" option on the Staking user interface to switch your delegation from a Foundation node to any External node of your choice.
Q: Is there an unbonding period when switching between node types?
A: There is no unbonding period when switching delegation directly from a Foundation node to an External node. The switch is immediate. However, unbonding from any node (Foundation or External) will incur the standard unbonding period.
Q: What happens to my rewards if I switch my delegation?
A: If you haven't claimed your rewards before switching, any rewards accumulated up to that point will be automatically transferred to your account upon a successful switch.
Q: Can I partially move my stake to an External Node?
A: Yes, the "Move Stake" function allows for partial transfers. You can move a portion of your stake to an External node while leaving the remainder on a Foundation node.
Q: Can I switch directly from one External Node to another?
A: No, the "Move Stake" option is only available from Foundation nodes. To switch between External nodes, you must first unbond from your current External node and then delegate to a new one, which will involve the standard unbonding period.
Q: How many transactions are needed for a Move Stake operation?
A: A Move Stake is a single transaction on the Ethereum blockchain, for which you will need to pay a gas fee in ETH.
The Validator's Role Explained
A validator on a blockchain acts like a verifier, ensuring every incoming transaction is legitimate and accurate. A transaction is only completed once it has been verified by a validator.
Validator Commissions
In exchange for their service, validators receive rewards proportional to their stake. These rewards are divided among all staking participants based on the amount of tokens they have staked. A user's reward balance is recorded in a smart contract, which determines the rewards available to be claimed. To become a delegator, a user must stake a minimum amount and approve the request, after which they are added to the delegator list for that validator.