Staking in GenLayer
Participants, known as validators, commit a specified amount of tokens to the network by locking them up on the rollup layer. This commitment supports the network's consensus mechanism and enables validators to actively participate in processing transactions and managing the network.
How Staking Works
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Stake Deposit: To become a validator on GenLayer, participants must deposit GEN tokens on the rollup layer. This deposit acts as a security bond and qualifies them to join the pool of active validators.
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Validator Participation: Only a certain number of validators, typically between 100 and 1000, with the highest stakes can be part of the active validator set. Once staked, validators take on the responsibility of validating transactions and executing Intelligent Contracts. Their role is crucial for ensuring the network’s reliability and achieving consensus on transaction outcomes.
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Delegated Proof of Stake (DPoS): GenLayer enhances accessibility and network security through a Delegated Proof of Stake system. This allows token holders who are not active validators themselves to delegate their tokens to trusted validators. By delegating their tokens, users increase the total stake of the validator and share in the rewards. Typically, the validator takes a configurable fee (around 10%), with the remaining rewards (90%) going to the delegating user.
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Earning Rewards: Validators, and those who delegate their tokens to them, earn rewards for their contributions to validating transactions, paid in GEN tokens. These rewards are proportional to the amount of tokens staked and the transaction volume processed.
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Risk of Slashing: Validators, and by extension their delegators, face the risk of having a portion of their staked tokens slashed if they fail to comply with network rules or if the validator supports fraudulent transactions.
Unstaking and Withdrawing
To stop validating or to retrieve staked tokens, validators must initiate an unstaking process, which includes a cooldown period to finalize all pending transactions. This ensures the network remains secure and all obligations are fulfilled before the withdrawal.