![]() To learn more about these topics, check out our comprehensive liquid staking report. ![]() There are new designs emerging to mitigate the downsides of liquidity restrictions associated with staking through tokenization of staked positions, which is often referred to as liquid staking or staking derivatives. In addition, lockup periods help with a variety of other goals like ensuring the safety of light clients, limiting validator turnover, and enforcing correlated penalties. If these limitations would not exist, a node could misbehave and instantly withdraw his stake, thereby avoiding penalties. Osmosis is an automated market maker (AMM) protocol built for liquidity providers. One reason for these liquidity limitations is that protocols with staking need to ensure that slashings or other penalties can be enforced after the offense took place. This withdrawal delay is often referred to as the unbonding or lockup period. In many networks there is an additional enforced delay that needs to pass before staked tokens can be withdrawn. Minumum delegation: There is no minimum delegation.Ī critical component in the staking process is the need to lock tokens in escrow.Re-Staking: You need to withdraw rewards and re-stake them with some frequency if you want to make use of compounding returns.Offenses include double-signing (5% slashing penalty for delegators) and downtime (no slashing penalty, validator is ‘jailed’ and delegators miss out on staking rewards for a minimum of 2 hours). Make sure to do due diligence to minimize this risk. Slashing: You can get slashed (loss funds) in case the validator you are delegated to commits an offense.Withdrawal Delay: After withdrawing, your staked funds will only become accessible after the unbonding period (28 days) has passed.Learn more about the details of staking reward rates for chains built using Cosmos SDK here. Another unique aspect of Osmosis is that only 25% of inflation rewards go to stakers (as of genesis). Staking Reward Rate: Rewards from staking OSMO will vary depending on the inflation and total amount of tokens that are staked at a given time.Validating Rights: The weight of validators such as Chorus One is determined by the amount of staking tokens (OSMO) bonded as collateral.Staking rewards are distributed at the end of each epoch. Epochs: Osmosis uses epochs to account for reward distribution.Users can delegate their OSMO tokens to Chorus One to receive a share of rewards generated by the network. It has a circulating supply of 286,370,297 ATOM coins and the max. Osmosis uses the standard DPoS staking mechanism found in the Cosmos SDK.
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