What is staking?
Staking is the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network. Essentially, it consists of locking cryptocurrencies to receive rewards in return. Users lock digital assets in the form of ‘stake,’ delegate it to selected nodes that do all the upkeep work, and later get a share of the reward. It’s similar to a fixed deposit in the traditional banking system which rewards you with a defined interest at the end of the period, as stipulated in the contract.
Ontology uses the VBFT consensus mechanism to secure its network. At any given time, there will be 7 nodes who have been voted in by the community to participate in consensus every block. Users vote for nodes by staking ONT tokens in multiples of 500 tokens per stake. Users are free to stake ONT in any node, change their stake, or withdraw their stake back.
Staking is managed in terms of rounds, which are comprised of 60,000 blocks each (previously 120,000). Each block can range from 1 second to 30 seconds, which means each round can range from 16 hours to 20 days.
You can check how many blocks left till the next round here.
When a user stakes their ONT with a node, they are actually locking their ONT in a smart contract for one round to secure their vote. Any time a user would like to add or remove stakes for a node, they can submit a request to carry out that action only in the following round.
Read more below: ONT Staking
What are the benefits of staking?
Besides securing the Ontology network, staking ONT for a node is rewarded with ONG tokens. For every block that a consensus node processes, it will earn a portion of the ONG paid per transaction. At the end of each staking round, the node will distribute earned ONG to users who staked with the node.
The nodes can set an individual Fee Sharing Ratio, which is a percentage of the earned ONG to distribute to users. Currently, most of the nodes are contributing 80–100% of the rewards back to users who stake with them. The amount of ONG you receive from fee-sharing will be based on the amount of network traffic from transactions for each round.
There are three types of rewards you can get through staking:
- Regular ONG generation. Hold ONT in an ONT compatible wallet or supported exchange and receive ONG tokens. Any ONT address with a nonzero ONT balance generates ONG, with or without staking. This ONG has to be claimed manually. There is around 6,696 ONG distributed total per month in this way.
- ONG network fees. Earn a share of all fee payments, including network transactions, storage fees, smart contract fees, etc. This ONG also has to be redeemed/claimed manually from your contract.
- ONG Ontology Foundation Bonus. Stake ALL rounds for 1 calendar month and you will be eligible to receive an Ontology Foundation bonus. The bonus will be distributed directly into your wallet early the following month. This bonus is available for the first 3 years since the initial launch.
Note: only the 7 nodes managed by Ontology currently distribute the Foundation bonus. The other node owners in the top 49 nodes can choose to distribute this bonus at their discretion. (in OWallet they are marked with an asterisk)
Other nodes do not pay out a bonus from the Foundation but can provide other incentives. For example, the Sesameseed node pays out all rewards in SEED tokens and the MovieBloc node will soon pay out additional MBL tokens.
The earnings are variable, and there are community projects that can help you to calculate the ONT-ONG generation rate, such as OntCalc. Keep in mind that actual results may differ. We have also outlined the yearly ONG unbinding schedule in our official Medium article here.
Where will I receive the staking rewards?
The ONG Foundation Bonus [C] will be sent directly to your wallet.
The other 2 components [A] + [B] will be in the wallet Stake Authorization screen, which is the screen after selecting a node. You will need to click on “Redeem”.
Read more information:
- Everything you need to know about ONG
- Returns of Ontology (ONT) Staking — Part 1 here, written by a community member, @liquidsteel
How to Stake
First, check the Ontology Staking page. In order to stake, you will likely need at least 500 ONT since each stake is in multiples of 500 ONT. However, with some nodes like Sesameseed, you can stake with as little as 1 ONT.
ONT Staking wallets:
- ONTO mobile app staking guide here
- OWallet Stake Authorization Guide, video and FAQ
- O3 Wallet guide
- Cyano Wallet staking guide for Sesameseed node that allows staking with as little as 1 ONT.
- Ledger Nano S/X cold wallet staking guide here
If you can’t sign the transaction while staking authorization:
- Check that you’re not using a VPN
- Check that you have at least 0.01 usable ONG in that wallet address (cannot be in unbound or claimable mode)
- Ensure that the app you are using is updated to its latest version
- Ensure that you selected only 1 stake per 500 ONT, not 500 stakes
Staking ONT on Exchanges
You can stake ONT by simply holding tokens in your exchange wallet on the following cryptocurrency exchanges:
Hold ONT tokens on these exchanges and start earning rewards right away.
Is the staking reward better through a wallet or on an exchange?
As mentioned above, the three rewards apply if you are staking with a node.
Exchanges are more convenient but usually only pay out monthly, whereas on wallets you can claim your ONG more frequently.
Which Node to Choose
The returns depend on the node. Not all nodes are equal. In general, you’d want to choose the node that has a higher Fee Sharing Ratio and a lower current total stake (Progress). The size of a node’s reward depends on the number of stakes placed on it. The more stakes, the lower the reward because it is divided between all the participants. Keep note that the number of participants is constantly changing because users react quickly and switch between nodes. For example, if a staker joins node X, the total number of participants increases and the return per participant decreases, incentivizing participants to leave the node, thereby reducing the return to its original value. Since this pattern is cyclical, it is not a drastic concern when choosing a node.
How to cancel staking and when will I get my stake back?
Rewards are given at the end of each consensus round.
If you cancel your stake, you will receive your reward at the end of the 2nd consensus round after you have canceled, you can track the progress of each consensus round here.
If the stake authorization is canceled at any time in round 2, then ONT will be unlocked at the beginning of round 3 (for candidate nodes) or at the beginning of round 4 (for consensus nodes).
Find up-to-date node participants list below:
How to Become a Validator
These are tools useful for staking Ontology: