# Staking FAQs

### What is Matic Network?¶

Matic Network is a Layer 2 scaling solution that achieves scale by utilizing side-chains for off-chain computation, while ensuring asset security using the Plasma framework and a decentralized network of Proof-of-Stake (PoS) validators.

### What is Proof of Stake (PoS)?¶

Proof-of-Stake is a system in which the blockchain network aims to achieve distributed consensus. Anyone with sufficient amount of tokens can lock up their cryptocurrencies and the economic incentive lies in the shared value of the decentralized network. The individuals staking their cryptocurrencies validate transactions by voting on the same while consensus is achieved when a transaction or a set of transactions in a block or a set of blocks in a checkpoint receives enough votes. The threshold uses the weight in terms of stake that comes with every vote. For instance, in Matic Network, consensus is achieved for committing checkpoints of Matic blocks to the Ethereum network, when at least ⅔ +1 of the total staking power vote for this

### What role does Proof-of-Stake play in the Matic Network architecture?¶

The Proof-of-Stake layer in the Matic Network architecture serves the following 2 purposes:

• Acts as an incentivization layer for maintaining liveness of the Plasma chain, chiefly mitigating the thorny issue of data unavailability
• Implement the Proof-of-Stake security guarantees for state transitions not covered by Plasma

### How is Matic PoS different from other similar systems?¶

It is different in the sense that it serves a dual purpose - providing data availability guarantees for the Plasma chain covering state transitions via Plasma Predicates, as well as Proof-of-Stake validation for generic smart contracts in the EVM.

The Matic architecture also separates the process of block production and validation into 2 distinct layers. Validators as block producers create blocks as the name suggests on the Matic chain for quicker (< 2 secs) partial confirmations while the final confirmation is attained once the checkpoint is committed on the main-chain with a certain interval, period of which may vary depending upon multiple factors like Ethereum congestion or number of Matic transactions. In ideal conditions, it shall be around 15 min to 1 hour.

A checkpoint is basically the Merkle root of all blocks produced in between intervals. Validators play multiple roles, creating blocks at the block producer layer, participating in the consensus by signing all checkpoints and committing the checkpoint when acting as proposer. The probability of a validator becoming the block producer or proposer is based on their stake ratio in the overall pool.

### What’s the incentive to be a Matic staker?¶

Matic will be allocating 12% of its total supply of 10 billion tokens to fund the staking rewards. These 1.2 billion tokens will be the staking incentive for the first five years. This is to ensure that the network is seeded well enough until transaction fees gain traction. These rewards are primarily meant to jump-start the network, while the protocol in the long run should be able to sustain itself on the basis of transaction fees.

Validator Rewards = Staking Rewards + Transaction Fees from Matic chain

First year will see the maximum amount of tokens allocated as staking rewards. This is allocated in a way to ensure gradual decoupling of staking rewards from being the dominant component of the validator rewards.

### How are staking rewards allocated to stakers?¶

Tokens to be given out as staking rewards for the first five years of the network life are fixed. This reward is divided per checkpoint and the amount to be shared with all stakers is absolute. The reward rate will be higher during lower bonding rates and vice-versa otherwise.

The staking reward gets distributed proportionally to all stakers; proposer and signers, with the exception of proposer getting a bonus.

### How is proposer bonus calculated?¶

Let’s have a look at a scenario affecting the checkpoint cost with the following assumptions:

• ETH Price: $200 • MATIC Price:$0.013
• Gwei considered: 30
• Gas considered: 1,000,000
• Checkpoint interval: 15 mins

Checkpoint cost-to-reward ratio pertaining to the checkpoint reward during the first year of live network based on the above assumptions comes to 5.18%.

If we were to update the interval to 30 mins, then the same ratio comes down to be 2.59%

Let’s say that during the initial phase if we were to go ahead with the same assumptions as stated above with the checkpoint interval being 15 mins, then the bonus to be paid out to the checkpoint proposer will be 5.18% and the algorithm will update this bonus number dynamically depending upon the current checkpoint cost. Please note that this updated bonus value will come into effect based on the governance and consensus between the validators.

If at some point in time during the first year, and proposer bonus being at 5.18%, if the total bonded tokens in the system is 1 billion, then the network reward rate is 30% and the effective reward rate for every staker other than the proposer, after deducting the bonus component from the checkpoint reward, is 28.45%

Please note that the cost has been calculated pre-istanbul and will decrease significantly now.

### Encouraging the proposer to include all signatures¶

To avail the bonus completely, the proposer would need to include all signatures in the checkpoint. Because the protocol desires ⅔+1 weight of the total stake, the checkpoint will be accepted even with 80% votes. However, in this case, proposer gets only 80% of the calculated bonus.

### How can I reserve a validator spot?¶

If we have a vacant validator slot, anyone with any amount of stake can become a validator in the system. There will be validator auctions organized periodically (days mostly), where in anyone can replace any current validator by proposing higher stake. So, in short, it is an open system where we cannot reserve places for anyone.

In any case, there is always the possibility of stake delegation with the current validator set. Anyone can participate in the process with this mechanism and earn rewards as long as the respective validator is honest and online.

### Can I participate in the staking process, even if I do not want to run a node?¶

Matic token holders who do not wish to run their own node can delegate their tokens to a validator. Delegation increases the power of the validator. More the power, more probability of the validator to become the block producer and checkpoint proposer and more weight in the consensus.

There is no minimum amount requirement for delegation. Any amount, even 1 MATIC, will be accepted in the system. However, it is upto validators to set a minimum limit or not while accepting delegations. Validators might charge a commission in exchange for their node running services. Other than the commission charged, one needs to evaluate the track record of the validator for example, average uptime or if the node was ever compromised.

### Where will the staked tokens reside?¶

Staked tokens will be locked in a contract deployed on the Ethereum chain. Validators do not hold the custody of the delegated tokens. However, in the event of validator getting slashed delegated tokens will also get slashed.

### For how long will my funds be locked?¶

If one wishes to opt out of the system, the staked tokens undergo an unbonding period during which they are liable to being slashed for any misbehaviour committed by the validator before the unbonding period started.

Delegated tokens enter unbonding period immediately upon unbond request. However, validators will need to serve a certain notice period in active state, participating in consensus and proposing checkpoints before entering into unbonding period.

Stakers can withdraw their tokens after the unbonding period ends. Exact durations of withdraw for both delegator and validator will be announced here soon.

### What are the different states a validator can be in?¶

Active: Validator is in the current validator set, produces blocks at the Bor layer, participates in Heimdall consensus and commits checkpoint transactions to the Ethereum main-chain. Notice: Validator sends a transaction to unbond. Before entering into the unbonding period, validator needs to be in active state creating, signing and proposing blocks for a certain time. Unbonding: Validator is inactive in this state and thus earns no reward. However, the validator is still liable for slashing in case she has committed any malicious act previously.

### Is there a minimum amount of Matic required to stake to become a validator?¶

The minimum is 1 Matic.

We had earlier mentioned that we are thinking of having a minimum self stake requirement from the validators, as we do hope that validators also have their skin in the game. However, since we will be moving to a robust replacement strategy as the number of validator slots are limited as of now, this does not need any minimum self stake requirement. It is however, logical that over time, the average/median stake by a validator will tend upwards and become substantial.

### How can a new validator replace an existing one?¶

Because of the limitation criteria on the number of validator slots in the network which will be initially close to 100, if all slots are filled, then a new validator can only replace one from the current set if it can beat the score of the least ranked validator. Validator’s rank depends on certain factors like total stake, age, rewards earned and deductions if any. Exact equation to be disclosed after our public testnet event where we’ll be formulating above mentioned factors with appropriate weighting.

### Slashing conditions?¶

There will be multiple slashing conditions. It will be communicated during the public testnet event. For now, the only slashing condition is when a node double signs a checkpoint.