Delegation (Validator shares)

Overview

Matic supports delegation via validator shares. By using this design, it is easier to distribute rewards and slash with scale (thousands of delegators) on Ethereum contracts without much computation.

Delegators delegate by purchasing shares of a finite pool from validators. Each validator will have their own validator share token. Let's call these fungible tokens VATIC for a validator A. As soon as a user delegates to a validator A, they will be issued VATIC based on an exchange rate of MATIC/VATIC pair. As users accrue value the exchange rate indicates that they can now withdraw more MATIC for each VATIC and when users get slashed, users withdraw less MATIC for their VATIC.

Note that MATIC is a staking token. A delegator needs to have MATIC tokens to participate in the delegation.

Initially, a delegator D buys tokens from validator A specific pool when 1 MATIC per 1 VATIC.

When a validator gets rewarded with more MATIC tokens, new tokens are added to the pool. Let's say with the current pool of 100 MATIC tokens, 10 MATIC rewards are added to the pool. But since the total supply of VATIC tokens didn't change due to rewards, the exchange rate becomes 1 MATIC per 0.9 VATIC. Now, delegator D gets more MATIC for the same shares. Similar to slashing, if 10 MATIC gets slashed from the pool, the new exchange rate will be 1 Matic per 1.1 VATIC.

VATIC: Validator specific minted validator share tokens (ERC20 tokens)

Technical specification

uint256 public validatorId; // Delegation contract for validator
uint256 public validatorRewards; // accumlated rewards for validator
uint256 public commissionRate; // validator's cut %
uint256 public validatorDelegatorRatio = 10; // to be implemented/used
uint256 public totalStake;
uint256 public rewards; // rewards for pool of delegation stake
uint256 public activeAmount; // # of tokens delegated which are part of active stake

Exchange rate is calculated as below:

ExchangeRate = (totalDelegatedPower + delegatorRewardPool) / totalDelegatorShares

buyVoucher

function buyVoucher(uint256 _amount) public;
  • Transfer the _amount to stakeManager and update the timeline data structure for active stake.
  • updateValidatorState is used to update timeline DS.
  • Mint delegation shares using current exchangeRate for _amount.
  • amountStaked is used to keep track of active stake of each delegator in order to calculate liquid rewards.

sellVoucher

function sellVoucher() public;
  • Using current exchangeRate and # of shares calculate total amount(active stake+ rewards).
  • unBond active stake from validator and transfer rewards to delegator if any.
  • Must remove active stake from timeline using updateValidatorState in stakeManger.
  • Move active stake of delegator into withdrawal period for slashing reasons.
  • delegators mapping is used to keep track of stake in withdrawal period.

withdrawRewards

function withdrawRewards() public;
  • For a delegator calculate the rewards and transfer and depending upon exchangeRate burn # of shares.
  • i.e. delegator owns 100 share and exchange rate is 200 so rewards are 100 tokens, transfer 100 tokens to delegator, remaining stake is 100 so using exchange rate 200 now it is worth 50 shares so burn 50 shares. Delegator now has 50 shares worth 100 tokens(which he initially staked/delegated).

reStake

  • Restake can work in two ways delegator can buy more shares using buyVoucher or reStake rewards.
function reStake()
  • Above function is used to reStake rewards
  • The number of shares aren’t affected because exchangeRate is the same; so just the rewards are moved into active stake for both validator share contract and stakeMnager timeline.
  • getLiquidRewards is used for calculating accumulated rewards.
  • i.e. delegator owns 100 share and exchange rate is 200 so rewards are 100 tokens, move 100 tokens into active stake, since exchange rate is still same number of share will also remain same. Only difference is that now 200 tokens are considered into active stake and can't be withdrawn immediately(not a part of liquid rewards).
  • Purpose of reStaking is that since delegator's validator has now more active stake and she will earn more rewards for that so will the delegator.

unStakeClaimTokens

function unStakeClaimTokens()
  • Once withdrawal period is over delegators who've sold their shares can claim their matic tokens.
  • Must transfer tokens to user.
  • Once slashing is in place must check for all the slashing happened in that withdrawal period and take into account.

updateCommissionRate

function updateCommissionRate(uint256 newCommissionRate)
external
onlyValidator
  • updates commission % for the validator.

updateRewards

  • When a validator gets rewards for submitting checkpoint this function is called for disbursements of rewards between validator and delegators.

For more details here is a video explaining the whole mechanism in details:

https://www.youtube.com/watch?v=8nODLU9C3mw