How to stake your Sifchain (ROWAN) for protocol rewards.
ROWAN is a native Sifchain token used for governance, fees, and liquidity across the SifDEX pools. Sifchain built with Cosmos SDK, aims to bridge different blockchains and enable affordable token swaps with ROWAN as an intermediary.
As a Proof-of-Stake token, ROWAN can be staked to validators to help secure the Sifchain network and earn blockchain protocol rewards. Staking PoS tokens to validator nodes offers users stable and low-risk rewards as compared to DeFi staking, leveraging, and borrowing.
How to stake your Rowan Token
You can stake Rowan in two main ways.
- Directly setting up a validator node and staking your ROWAN.
- Indirectly delegating your tokens to the existing custodial and non-custodial validators.
There is also a third staking option offered by the Trusted Node.
Trusted Node is a validator network that offers its users co-ownership of the validator nodes.
So let’s dig in to see what each of the options has to offer.
Becoming a Validator
That route requires you to have some hardware equipment and the knowledge of how to set up and run nodes. It’s the most independent and potentially the most profitable, but only under certain conditions.
For example, only the 100 top validators can secure the Sifchain network and participate in earning rewards. So, you have to compete with other validators by staking substantial amounts of ROWAN to your node. The required minimum stake is 10.000 of your own (self-bonded) ROWAN, worth approximately $920 (as of 15th of March 2022).
You also have to make sure to keep your node(s) updated and online (at least 99.5% uptime) and verify all transactions correctly. Going offline due to unstable internet or approving the wrong transactions (on purpose or due to software errors and update delays) can result in network penalties like ‘slashing’ that will see part of your ROWAN stake lost.
Delegating to Existing Validators
Any user holding ROWAN can delegate their tokens to any number of active validators on the Sifchain network in exchange for a share of rewards.
Here, the difficulty lies in choosing the right validators who will ensure their nodes are within the top 100 nodes to earn rewards and who can guarantee no downtimes and low enough fees.
Custodians such as centralized exchanges often allow users to stake certain tokens for the % of rewards.
Staking with custodians may seem safer and cheaper. If you bought your coins on an exchange, it could save you the fees for transferring coins to private wallets. It might be less of a hassle to let the third party handle all the decisions for you. But it also requires trust because that party now owns your tokens, and if it goes bankrupt or gets hacked, you may not see your coins again.
The custodian also decides the level of rewards they share with you (the APR) and can change it at any time. A good example is Coinbase, which recently abruptly lowered the rewards for staking Algorand from 4% to 0.45% when Algorand’s protocol rewards dropped from 6% to 3%.
Another big issue about staking with custodians is the safety and governance of your network. Not only are you not able to vote and participate in governance when staking with CEXs. The exchanges also don’t vote and often take away from the blockchains required quorum, severely impairing that blockchain’s ability to pass proposals and develop. If you love your PoS coins, the rule of the thumb is not to stake on centralized exchanges.
You can delegate ROWAN to non-custodial validators through your private wallets, mainly the native Cosmos wallet Keplr. You can also delegate the Ethereum version of ROWAN, called eROWAN, through the Metamask wallet.
In either case, you have to check, which validators are available and do your own research on the wallets and validators to use, the fees for transferring tokens from the point of purchase to your wallet, the fees for delegating your ROWAN or eROWAN, and claiming the rewards, and the commission (2–10%) taken by the validators for letting you participate in their rewards.
Pluses of the non-custodial staking are that you retain the full ownership of your ROWAN tokens even when delegated for a specified time (21 days). You can also vote on Sifchain proposals, or the validator votes in your stead. Either option contributes to the governance quorum and the protocol’s growth and agility.
Vetting a Validator
Choosing who to delegate to can be a daunting task with many variables. Unsurprisingly, many users find this kind of research overwhelming enough to stick to custodial solutions to the detriment of all the PoS networks and protocols.
Some stats that help you choose a reliable validator are:
- Uptime — percent of the time the validator is online. If it’s not 100%, you will suffer the loss of funds due to slashing penalties.
- Commission — fees you pay to the validators. You receive your rewards minus the validator’s commission.
- Transaction fees — the protocol fees you need to pay to blockchain miners to validate your transactions, such as: moving your tokens from exchanges to wallets, delegating your tokens, claiming your rewards, redelegating to another delegator. There is a so-called break-even point that you calculate to see how many tokens you should delegate to offset the overall fees. It is especially important with eROWAN on the Ethereum blockchain where the GAS fees are substantial.
- APR (Annual Percentage Rates) — a % of ROWAN you can gain annually when staking with a chosen validator minus their commission and the transaction fees. This number is often derived from the blockchain protocol inflation % caused by the creation of new coins. But within the Cosmos ecosystem, Sifchain included, the rewards rate also depends on the speed of validating the transactions (block times), the number of all the tokens staked, and the income from fees. It’s important to note that different data aggregators count the APR differently and that the APR changes over time. However, the PoS APR changes less robustly than the DeFi APYs, and it can usually be calculated based on the current protocols data and charts.
- Claiming rewards vs. auto-compounding. When using non-custodial services, you must pay transaction fees to claim and redelegate the rewards. You need to figure out the optimal time when claiming rewards makes sense, for example, when your rewards are 100x more than the fees. Some custodial services may offer auto-compounding because they effectively hold your tokens. It means they will add your rewards to your already delegated ROWAN. This way you save on the claiming fees, but the CEXs will likely bump their commissions to cover for it.
- Voting power — the number of votes and a percentage of total voting power the validator has within the Sifchain governance (1ROWAN = 1vote).
- Cumulative share % (of the voting power) — a metric of the health of the network. It combines the voting power % of validators from the 1st position onwards so that users can see how much cumulative power the top 10 validators have. Sifchain top 10 validators currently hold a cumulative 71% of the total voting power, which could be considered too high for a healthy, decentralized network and could convince people who care about decentralization to choose reputable validators of lower ranks.
- Self-bonded tokens vs. all tokens staked to a validator. Self-bonded tokens are tokens staked by the validator himself. Sifchain requires all active validators to stake a minimum of 10.000 of their own ROWAN. Otherwise, the high ratio of the self-bonded to all tokens can suggest that the node is run by a large investor (a whale), and if they back out their tokens, other delegators and the security of the Sifchain could suffer.
Other things to consider are validators’ reputation. You can search Quora, Reddit and Google by the validator’s name to see if there is something you should know about. You can also search for the validator’s address in the Cosmos ecosystem’s explorer, mintscan.io.
Another important factor mentioned by the Sifchain team is the contribution to the network’s innovation. All validators are encouraged to transparently share the tools and developments they’ve added to the network’s safety and growth.
Delegating to Trusted Node
Trusted Node offers something in-between staking ROWAN to your own node and delegating to other validators.
Trusted Node is a non-custodial validator network, which also offers its users co-ownership of various validator nodes, including a Sifchain Node.
In effect, your delegated stake earns higher APR rewards than other non-custodial validators and you can participate in the PoS project’s governance.
The current APR (Annual Percentage Rate) for staking coins with the Trusted Node is 251.6% (as of 15th of March 2022), which is higher than all other validators’ APRs. If you see a lower number within the Keplr wallet or on Mintscan, just remember that theirs is an estimate, while we calculate our APR based on direct inflation data from the Sifchain blockchain.
You also contribute to the Sifchain network’s security by choosing a node that’s non-custodial, participates in the governance, adds to quorum, and has many different delegators rather than whales.
If you are a TNODE token holder, you’ll also soon be able to vote and make proposals through the upcoming Trusted Node DAO, for example, to add more Sifchain nodes to increase the network’s resilience and decentralization.
To stake your ROWAN with the Trusted node, you can choose Trustednode validator in your Keplr wallet or stake directly through the Trusted Node web app for additional $TNODE promotions and airdrops.
To stake directly with us, go to our app and connect your Keplr wallet extension, choose the ROWAN amount to delegate, and press STAKE. You’ll still need to approve the transaction in your Keplr and pay the standard transaction fee like with any delegation process.
The same as with any other non-custodial delegating through Keplr, you are retaining your ownership of the ROWAN, and you can withdraw your tokens within the standard unbonding time of 21 days (the same for all Sifchain validators).
Whenever you’re unsure which validator to choose, you can always go with Trusted Node, the official Sifchain partner.