Staking Overview (WIP) 🚧

Staking on Starknet involves locking STRK tokens in the staking protocol, contributing to network security and performance. Users can either stake directly or delegate their tokens to others, with rewards based on their level of participation and contribution.

The key terms used in this document are:

  • Stake: Locking STRK tokens into the staking protocol.

  • Delegate: Assigning STRK tokens to a validator to participate indirectly.

  • Reward: Earnings from participating in staking.

STRK tokens never leave the Starknet protocol during these operations.

Staking Protocol Details

Overview

The staking protocol features two main options:

  • Staking: Users can stake any amount of STRK, with a minimum threshold set at 20,000 STRK. Validators are expected to run full nodes and eventually handle additional responsibilities as the protocol evolves.

  • Stake Delegation: Users can delegate their STRK to validators without running their own nodes. Delegators share in the rewards earned by the validators they choose.

Validators and delegators can both unstake their funds, subject to network-defined latencies for security.

Staking Rewards

Rewards are distributed based on the amount staked and the commission policy constant \(CP\) set by the validator. The rewards are calculated using the following formulas:

\[\begin{align} \text{Validators: } & \; \left[\text{self_stake} + \text{total_stake_delegated} \times CP\right] \times \text{rewards_constant} \times \text{time_interval} \\ \text{Stake Delegators: } & \; \text{stake_delegated} \times (1 - CP) \times \text{rewards_constant} \times \text{time_interval} \end{align}\]

Here, \(\text{rewards_constant}\) is determined by the minting curve, which adjusts rewards based on the total staked amount.

Minting Curve

The minting curve balances participation and inflation by adjusting rewards based on the total STRK locked in the protocol. It is defined by the formula:

\[M = \frac{C}{10} \times \sqrt{S}\]

Where:

  • \(S\) is the staking rate as a percentage of the total token supply.

  • \(M\) is the annual minting rate as a percentage of the total token supply.

  • \(C\) is the maximum theoretical inflation percentage.

For the first stage, \(C\) is proposed to be 1.6%.

Latencies

  • Current Version: Immediate entry and exit from the staking protocol. However, funds are subject to a 21-day security lockup after withdrawal.

  • Future Versions: Introduction of epochs to determine entry/exit latencies and continued 21-day lockup after withdrawal.

Stake delegators can switch between validators without waiting for the full lockup period, promoting a competitive delegation market.

Economic Parameters

The proposed economic parameters are:

  • Minimum STRK for Staking: 20,000 STRK

  • Withdrawal Security Lockup: 21 days

  • Minting Curve Yearly Inflation Cap (\(C\)): 1.6% (see here for the relevant voting proposal)

  • Commission Policy Parameter (\(CP\)): Set by the validator (0 - 1)

These values are our proposed starting points for this version of the protocol. As part of the rationale behind this version, they are subject to change and may be adjusted to better suit the protocol’s needs under the proper governance procedures.