Nominator FAQ
What are validator elections?
Validator elections are the process by which token holders (nominators) vote (nominate) validator nodes they think are trustworthy to secure the network. Validator elections are held every 24 hours, and successfully elected validators will serve for a 24 hour period (era) before a new election occurs.
There are a fixed number of active validator slots available in every election; CENNZnet currently has 15 places. However, there is no limit to how many validator nodes can apply to be considered in an election cycle. We also intend to increase the cap over time as more validators join the network and as we continue the path to full community governance.
What do elected/active validators do?
Elected validators, also known as active validators, act as node operators who each store a copy of the blockchain and must perform certain functions to keep the system secure. On CENNZnet, validator nodes are responsible for authoring new blocks and voting in the finalisation protocol. They also earn a commission for their services in the form of CPAY.
Who chooses which validators will be elected?
This is the combined job of nominators and the election protocol.
Nominators choose to put their CENNZ stake behind one, or several validator nodes that they think will reliably secure the network and stand a good chance of being elected. The more stake and the more nominators a validator has behind them, the more likely they are to be chosen by the election protocol. This indicates that they are the most trusted validators on the network.
How does the election protocol work?
At the end of an era, the election protocol runs in two parts to choose the next validator set.
First, it tallies all nominations along with the staked amounts to find out which validator nodes are the most trusted on the network. From this calculation, the protocol selects the most trusted validators to hold the available active/elected slots.
Once the active validators have been identified, a second optimisation process runs. This optimisation aims to reallocate the distribution of stake behind the elected validators so that it is as high and as equal as possible. Let’s look at some examples of this process.
Example: 3 nominators voting for 3 validators for only 2 slots. Assume validators have an equal stake.
The nominations
Nominating
Election Part 1: Winners identified by the total stake. V2 wins 1st slot with all nominators stake behind it and V1 gets 2nd slot with 2 nominator’s stake behind it. V3 misses out, having the least stake backing
Election Part 2: Optimise stake distribution for security
Election results are the same but stake weightings are evened out. Notice that N2 still has it’s full stake allocated even though one of it’s choices, V3, was not elected.
Why does the protocol work like this?
The election process is designed to ensure that the most tokens are at stake, while also respecting the individual nominations made. By reallocating the stake of all elected validators as equally as possible (while still respecting nominator preferences) the algorithm ensures that all validators have an equal risk/reward incentive to follow the protocol correctly. This has the added benefit of raising the minimum stake any validator will need to become elected, raising the bar for entry into the system and making it more secure.
How does this affect my rewards as a nominator?
As a nominator, you can choose multiple validators which you trust. Your total stake will then be distributed between your choices by the election protocol in the way that best secures the network. No stake is ever wasted. Some of your chosen validators will return a reward each era, while some may not as a result of not being elected or your stake being reallocated between your other picks.
There are two situations where reallocation of stake occurs.
- When a validator you have chosen is not elected, the stake behind them is reallocated to another one of your choices which did succeed in getting elected. This means that your rewards are not lost or diminished.
- If one of your validators is already highly staked by others. Your stake could then be reallocated to one of your less staked choices to even the overall stake distribution. This works out better for the nominator and the network. The nominator’s stake will earn a higher share of reward from the lesser staked node and the lesser staked node will have higher total stake due to the nominator’s larger contribution.
In short, it means you can earn more rewards by staking fewer validators rather than staking small amounts on a large number of validators. This is because staking more validators means your stake is split multiple times, reducing your share of any rewards. If other nominators are staking large amounts on fewer nodes, your contribution to each validator node becomes very diluted, making your reward very small.
Let’s continue the example election, this time considering the reward payout:
V2
N1 has 1/6th of total stake/reward
N2 has 1/6th of total stake/reward
N3 has 2/3rd of total stake/reward
V1
N1 has 1/6th of total stake/reward
N2 has 5/6th of total stake/reward
What happens if I nominate all the available validator nodes?
Due to the stake optimisation step of the election process, your stake will be reallocated between your preferences appropriately. This will likely result in your stake being redistributed behind 1–3 individual validators even though you have nominated for example all 12 validators.
Think of this as splitting your stake by a third for each of those nodes instead of by 1/12th for all 12 nodes.
Nominating more than one validator is still important as it allows more flexibility in your stake distribution, reward potential, and means you have less risk on an individual validator node if it misbehaves.
Where can I get support?
Support for nominators can be found on our Discord channel here.
