Cosmos / ATOM Delegation Guide
The Cosmos Hub MainNet is officially live!
The Cosmos Hub mainnet officially launched on Wednesday, March 13th, 2019 at 7 PM EST (23:00 UTC).
To delegate your ATOMs to Staked, please use the following validator address:
There is a 21-day unbonding process for staked ATOMs during which delegator ATOMs do not earn rewards and cannot be transferred, exchanged or spent. ATOMs can, however, be slashed during the unbonding period.
Delegation is non-custodial and delegates cannot spend your ATOMs. Staked pays 90% of the block rewards to delegates, and offers the industry’s only 100% SLA on block production.
Staked has been operating validation nodes on Cosmos testnets for the past 9 months and recently participated in the Game of Stakes competition, earning 1 of 27 ‘never jailed’ designations for remaining in the set of ~ 185 validators the entire game and adapting to adversarial network conditions. This represents a key criterion for successful mainnet operation, particularly as it relates to slashing risk prevention.
Cosmos’s staking model uses “hard slashing”, which means that customer funds are at risk of being slashed in the event of a) double-signing blocks and b) extended validator downtime. Slashing risks are further detailed on page 8. You could lose a portion, or potentially all of your investment by participating in staking. Consider the risks and choose a validator carefully.
Cosmos is a network of independent blockchains connected by the Cosmos Hub, a proof-of-stake (PoS) blockchain based on Tendermint, a byzantine fault tolerant (BFT) consensus protocol. The annual yield for staking ATOMs, the native cryptocurrency of the Cosmos Hub, is currently 12.7% with a total of 131,700,319, or 55.3% of the total ATOM supply staked as of May 5, 2019. The mainnet launched successfully on Wednesday March 13th at 7 PM EST (23:00 UTC).
Token Economics (07/23/19)
Cosmos Delegation Instructions
Open the Ledger Live app. Connect your ledger via USB and update to the latest firmware. Enable Dev Mode in the Settings of Ledger Live.
Go to the ledger live app store, and download the “Cosmos” application.
Your Ledger is now ready to connect with Lunie, the Cosmos wallet UI with delegation (staking), rewards claiming and voting.
With the Cosmos app open on your ledger device (Tendermint Cosmos should be displayed on the screen), visit https://lunie.io. Click on the blue Sign In button in the upper right hand corner of the screen.
Click on the Staking tab in the global menu on the left hand side of the screen.
In the Staking tab, click on the Validators section and then click on Staked from within the list of validators or copy and paste the following link directly in the browser address bar:
Click on the blue Delegate button to open the delegate modal. Enter an amount to delegate and click Submit.
To claim rewards earned from staking, click on the Withdraw link under Rewards at the top of Lunie, proceed through the withdraw modals and click Submit. After claiming rewards, they need to be delegated in a separate transaction to earn staking rewards.
Token Distribution at Genesis (07/23/19)
Cosmos Hub validators participate in consensus by broadcasting cryptographic signatures, or votes, to commit blocks. Tendermint requires a fixed known set of validators, where each validator is identified by their public key. Validators attempt to come to consensus one block at a time, where a block is a list of transactions. Voting for consensus on a block proceeds in rounds. Each round has a round-leader who proposes a block. The validators then vote in stages to accept the proposed block or move on to the next round. The proposer for a round is chosen deterministically from the ordered list of validators in proportion to their voting power, which is determined by the percentage of ATOMs delegated to a validator.
Tendermint-based blockchains slow down with more validators due to the increased communication complexity. On genesis day, the maximum number of validators will be set to 100 determined by the validators with the most delegated stake, and will increase at a rate of 13% for 10 years for a maximum of 300 validators. Staked has enough ATOMs committed for delegation to ensure a slot in the initial validator set of 100.
ATOMs are the native and only staking token of the Cosmos Hub. ATOMs represent the right to participate in consensus (vote, validate or delegate) for the Hub and earn inflationary ATOM block rewards and transaction fees in exchange.
Block rewards are paid to validators and delegators in newly issued (inflationary) ATOMs as an incentive for staking. The target stake rate for Cosmos is 66% of the total ATOM supply. At genesis, the initial inflation rate will be 7%. However, the rate will fluctuate around the target stake rate of 66% such that if the total bonded stake is less than 66% of the total ATOM supply, the inflation rate will increase until it reaches a maximum of 20%, and if the total bonded stake exceeds 66% of the ATOM supply, the inflation rate will decrease until it reaches the 7% floor. The target annual inflation rate is recalculated each block.
Block rewards and transaction fees are distributed at the protocol level. However, delegators need to submit a withdrawal transaction to claim rewards, and then another transaction to re-delegate the rewards in order to compound the yield earned.
While delegators can change validators automatically, there is a 30 day unbonding process for staked ATOMs to prevent long range attacks during which delegator ATOMs do not earn rewards and cannot be transferred, exchanged or spent. ATOMs can however be slashed during the unbonding period.
Staking ATOMs is not risk free. Slashing penalties where both validator and delegator funds are destroyed exist at the protocol level for malicious behavior and uptime, making the operation of Cosmos validation nodes best suited for full-time, experienced operators.
The 2 main slashing conditions in Cosmos follow:
- Double signing: If someone reports on chain A that a validator signed two blocks at the same height on chain A and chain B, this validator will get slashed on chain A. At launch, there a 5% penalty will be imposed on both validator and delegators for double signing.
- Unavailability: If a validator’s signature has not been included in the last X blocks, the validator will get slashed by a marginal amount proportional to X. If X is above a certain limit Y, then the validator will get unbonded. At launch, a .01% penalty will be imposed if a validator misses 95% of the blocks in a rolling 10,000 block window. With an average block time of 5 seconds, a validator would need to miss 95% of the blocks over a period of 13 hours and 54 minutes.
Frequent hard forks, often requiring full network re-starts, are expected until the Inter-Blockchain Communication (IBC) specification has been implemented, further increasing the management and participation requirements for successful mainnet operation.
The Cosmos Staking Guide was heavily excerpted using the following sources:
Staked helps institutional investors reliably and securely compound their crypto by 5% — 100% annually through staking and lending. Staked runs validation nodes for proof-of-stake currencies and offers access to on- and off-chain lending options that provide an annualized yield of in-kind currency.
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