Mina Staking

How does staking in Mina protocol work?

Proof of Stake (PoS), Consensus Mechanism, Block producers, and the taxonomy of any blockchain are intimidating. On the contrary, Mina staking brings an easy, simple, and safe way to receive continuous yield by supporting and securing the project.

This article shows anyone how to quickly benefit from it. Besides, it gives a couple of yield optimizations based on each situation.

Mina succinct blockchain

Mina the first succinct blockchain

Mina will be the world’s lightest blockchain. It realizes Satoshi’s vision with a succinct trustless blockchain that anyone will be able to sync and verify in seconds.

Also, its Proof of Stake consensus mechanism allows Mina holders to accumulate more tokens for free. Let’s see why you should leverage this feature by staking or delegating your mina accounts.

What is Mina Staking?

First, Mina is a Proof of Stake (PoS) blockchain.

It is a more efficient consensus mechanism than Proof of Work used in the first-generation blockchain like Bitcoin. Indeed, PoS elects the creator of the next block using a random selection based on staked amounts.

Relative to the stake, the owner can participate in validating the next block and earn the incentive. So, network actors work together instead of competing with each other. For this reason, it saves a lot of energy and computing power.

MINA PoS: the things to know

With no slashing and no bonding, every Mina user should be staking or delegating.

In other words,  staking your MINAs brings only advantages. Indeed, you keep your hands on your tokens and they stay usable. Also, there is no penalty, only rewards!

While staking requires some work, delegating takes one minute.

Delegate your public key to a staking-as-a-service provider, that’s it. It stakes all your MINAs held there. And, you can re-delegate at any time.

There is no further action, even if you receive or spend your MINAs. Your provider will pay a reward share each time he produces a block.

The last thing you must know, Mina doesn’t handle the reward distribution at the protocol level. It is the block producers’  responsibility (staking-as-a-service providers are block producers). To illustrate,  you will receive fewer rewards if your delegate is a bad actor. For example, he won’t receive a reward when he produces an invalid block.

You can see how to delegate on our delegating page. For advanced users, here is our bloc producer public key:

B62qmM9KDeqvu3TVpQStGJARgg7KppxE8UF3xMdtKV9TDc33kSUGug5

Mina Staking features

The key features of PoS in the Mina protocol are:

  • you can’t be penalized when staking or delegating, no slashing ( https://minaprotocol.com/docs/architecture/block-producers).
  • MINA is an inflationary currency with no supply cap. All token holders can stake or delegate to receive their proportional fraction of the inflation, with no lockup or bonding required to do so (https://minaprotocol.com/blog/mina-token-distribution-and-supply).
  • when you stake or delegate a public key, it applies to every MINA held by this address
  • it is possible to re-delegate at any time. Active delegations are those present in the ledger at epoch-2. In other words, any delegation and re-delegation will have a latency comprised between 2 weeks and 1 month.
  • block producer reward contains
    • the coinbase: a fixed block reward define in the Mina protocol
    • plus the transaction fees: what the users pay to make a transaction
    • less the snark fees: block producer have to purchase SNARKs in order to keep the blockchain succinct.

(see details here)

Stake yourself

This solution requires technical skills,  time commitment, and costs:

  • install a block producer on your server and connect to the network
    • system administration
    • server cost
  • maintain high uptime
    • run and schedule scripts
    • follow Mina version updates

The list is obviously non-exhaustive, you will find all details on the Mina website and their Discod.

 

 

Delegating MINAs

Delegating MINAs is the easiest task.

You will basically let a professional do the job for you.

On the one side, you get rewards for staking your tokens. But you have nothing to do, except to delegate in the first place.

On the other side, the block producers compensate their costs with a small fee applied to the reward. Which is way less expensive than running your own server.

If I can add a piece of advice, don’t be afraid of the fee.

A fair fee is profitable for both delegators and the block producer. Indeed, it allows paying for a performant server and human resources.  That’s the secret for high uptime and to produce more blocks. More blocks imply more rewards. 😉

Inflation and Supercharged rewards

Mina has an inflation rate that will start at 12% during the first two years and will decrease to 7% afterward.

In addition, Mina incentivizes new participants and unlocked token-holders with a supercharged reward. It will be 24% at launch time and progressively decrease to 15%.

Mina staking yield and Supercharged reward

Since the supercharged period stops after 15 months, it is a great way to accumulate MINAs in the early days.

Supercharged yield applies to accounts holding unlocked Mina tokens only. Even dust of Mina disables supercharged rewards for the account.

If you have some time-locked Mina, we advise moving your unlocked token to a new account.

Finally, we structured our pool to separate time-locked and unlock accounts at distribution time. It gives a more accurate payout to our delegators.

Yield projections

As we saw in the previous section, supercharged rewards significantly increase annual yield.

However, many user accounts come with time-locked tokens that will progressively unlock. We draw some projections, let’s see how their token gets eligible to supercharged rewards over time.

Mina tokens eligible to supercharged rewards (based on vesting period)

Unlocked accounts / Strategic unlock investors: 100% supercharged rewards

Exchange buyers that withdraw to a new ledger account are in this situation. Also, investors that participated in the strategic (unlocked) round will be totally unlocked in about 3 months after the mainnet launch.

idea Be sure to delegate to a node producer that genuinely distinguish time-locked and unlocked account at distribution time.
For example, see How do you calculate payouts?

18 or 23 months time-locked accounts

There will be a period where a significant part of your Mina tokens (between 16% and 91%) qualify for supercharger rewards.

But you will be earning base rewards if you do nothing!

warning Three simple steps to get supercharged rewards
Step 1: -> create a new Mina address
Step 2: -> delegate this address to a block producer that distributes supercharger rewards
Step 3:
(repeat)
-> keep transferring unlocked tokens to this address while the supercharged reward feature is live

Time-locked accounts for 4 years

It is the situation of Genesis Member.

There will 3 months where you can get supercharged rewards for 25%. But, this graph is a simplification, and you still get one year of unlocked token rewards.

So, it is approximately 31% of your MINAs that you could be supercharged.

While it may be true it is not a huge profit, who doesn’t like free tokens 😅?

As a Genesis member, I will move my unlocked tokens to a new public key. 

warning Three simple steps to get supercharged rewards
Step 1: -> create a new Mina address
Step 2: -> delegate this address to a block producer that distributes supercharger rewards
Step 3:
(repeat)
-> keep transferring unlocked tokens to this address while the supercharged reward feature is live

Unlocking notification

As we saw, supercharged rewards require that you move unlocked Mina tokens to another public key.

For security reasons, you have to keep your private key secret. So, you will make this transfer by yourself. 

However, we made a convenient bot that will notify you when an action is required. Email and public key are required fields. Optionally, the threshold limit lets you define the minimum amount of unlocked MINAs before getting notified.   

Time-locked MINAs notification bot

Request a Feature or Stay in Touch

We have other innovations coming and we will keep providing the best yield.

If you are interested in it, or if you have any questions about this page, don’t hesite to contact us.

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