SAFE is a Proof-of-Stake (PoS) blockchain network. Unlike Proof-of-Work (PoW) networks like Bitcoin which rely on mining (a computer, or miner, competing with other miners to solve a complex math problem for the right to write a block to the blockchain), the computers on a PoS network use voting and staking to validate the transactions. These computers are called validators, they can increase their stake (or number of SAFE assigned to them) to increase their rewards.
Staking is the act of assigning (also known as delegating) SAFE coins to a validator. You are not giving the validator access to remove your coins from your account, you are simply putting them in a locked account (that belongs to you) that allows the coins to increase the stake weight and voting weight of the Validator. In return, you get a portion of the staking rewards that the validator receives.
If you are running a validator, you can stake your own SAFE to it, and also have others stake their SAFE to it (which you can charge a fee for). The more SAFE you get delegated to your validator, the more staking rewards you get (which are divided among you and all the delegators) and the better the odds that you receive a block reward for writing a block to the ledger (which does not get shared with others delegating to you).
If you are not running a validator, you can stake your SAFE to someone else’s validator for a fee known as commission. This fee is a percentage of the staking rewards, you don’t have to pay up front. The fee helps cover the costs of running the validator.
When you stake your SAFE to a validator, you get a portion of the staking rewards equal to the percentage of the overall stake that your coins make up (minus the percentage from the validator fee if you’re staking to someone else’s validator).
There is a staking ‘warm up’ period (currently up to ~2 days) when you first delegate coins. During this period, the coins aren’t earning rewards or being counted toward the stake, and you also can’t freely move them. This further helps to prevent fraud and attacks. Once warmed up (activated), the coins earn rewards until you wish to remove them and initiate a ‘cooldown’ period, which is the same type of event as a ‘warm up’ period, but in reverse. Once the cooldown period is complete, the coins are no longer delegated or associated with the validator, and you can freely move them.
Some amount of SAFE that you don’t need immediate access to. As of this writing, delegating can only be done by making a local staking wallet in a Linux environment. Easier ways are being developed, and should appear soon.
No, you can stake as little or as much as you want. It’s recommended to spread your stake across multiple validators. This is to avoid having ‘all your eggs in one basket’ if a validator stops operating. It also helps with decentralization of the network.
There’s no initial cost, but the validator may choose to keep a percentage (usually called a validator fee or commission) of the staking rewards you earn. This validator fee should always be disclosed up front.
FrankenSense made a video on it: https://youtu.be/PL857uytrhQ
Medium Article By Martin: https://mschillhorn.medium.com/how-to-stake-safecoin-safe-ca23b52ef341
Validator List & Statistics: https://safecoin.safegw.net/status.txt (updates every two minutes)
Staking is a great way to earn passive income in the form of SAFE. Staking your SAFE will also help towards the network’s voting process, keeping the network running and increase decentralization if the network has an even spread.
No up-front costs: Running a validator requires that you dedicate resources on a computer 24 hours a day. This could mean some increased electricity costs (though not nearly as much as mining a Proof-Of-Work cryptocurrency). If you’re running a Full-History (not pruned) node, it also requires 2TB of SSD storage every year to keep the entire ledger. If you don’t have your own computer, you can rent one (called a VPS), but that costs a monthly fee too. In addition, you need to keep some SAFE available for voting fees.
Easier: If you own a validator, you also have to pay attention to it and make sure it stays up and running, and perform maintenance on it, etc. If you’re delegating, you can easily place some SAFE in a staking account and check in on it every once in a while to see what kind of rewards you are accumulating.
Your coins are still in your staking wallet, so they don’t go anywhere. If the validator ceases to operate, you just stop getting rewards as long as your SAFE is staked to it. You just initiate a ‘Cool down’ period like normal, and then delegate them to a different validator.
No, there are no penalties or minimum timeframes for staking.
When staking you will not be able to access your SAFE immediately. The warmup currently takes up to ~2 days or 1 epoch. The ‘cool down’ period is until the current epoch ends from time of initiation.
A validator requires an outlay of money up front (see previous question). By paying out a portion of your share of the rewards, you are helping to keep the validator running and doing its job without taking on the costs and maintenance of running your own validator. It’s important to note that the validator fee comes out of the rewards only, NOT out of the coins you have delegated.
Let’s say a validator has 10,000 total SAFE staked and you have delegated 5,000 of it. This means you have a 50% share in this validator. The person running the validator sets the commission fee to 10%. Let’s imagine a validator received 200 SAFE in staking rewards. Since you have a 50% stake, you get a 50% share of the rewards (100 SAFE) minus the 10% commission (10 SAFE), so you end up with 90 SAFE. (200x.5x.90)
You can only actively participate in the voting process if you run a validator. If you’re delegating SAFE, you are helping to improve the validator’s voting power, but you don’t receive any of the block reward if the validator is chosen to receive one (this is one of the perks of running a validator - it’s also not that much compared to the staking rewards that you do receive by delegating).