How to Stake Avail: An Intro to Nominated Proof of Stake (NPoS)

Introduction

Avail is enabling any blockchain to scale effortlessly by providing a verifiable data availability layer through its core product, Avail DA. Any blockchain, whether Layer 1 or Layer 2, can integrate with Avail DA, ensuring their transaction data remains constantly available - a critical component for achieving limitless scalability.

Avail has already secured partnerships with 5 of the top Ethereum L2s - Optimism, Arbitrum, Polygon, Starkware, and zkSync. Avail’s native token, AVAIL, helps secure the chains that use Avail and allows token holders to earn rewards through staking.

By staking AVAIL tokens, participants earn rewards, and contribute to the security and growth of a network that is becoming increasingly essential to the success of various blockchain use cases across sectors such as gaming, DeFi, and decentralized streaming platforms. Avail’s “stake once, secure many” approach enables nominators to support the entire ecosystem, and the next generation of applications.

Staking on Avail: An NPoS Chain

Avail employs Nominated Proof of Stake (NPoS), which it inherits from the Substrate ecosystem. NPoS is a variation of the Proof of Stake (PoS) based blockchain designs, where token holders can nominate validators to secure the network on their behalf. Validators are responsible for validating transactions, producing blocks, and maintaining the integrity of the blockchain.

To ensure the chain remains operational in even extreme circumstances, Avail uses a combination of BABE (Blind Assignment for Blockchain Extension) and GRANDPA (GHOST-based Recursive Ancestor Deriving Prefix Agreement) consensus mechanisms. BABE is responsible for block production, while GRANDPA finalizes the blocks, ensuring the chain’s security and resolving forks.

Staking plays a vital role in securing NPoS based chains like Avail’s. By staking AVAIL tokens, users contribute to the network’s security and are rewarded for their participation. The more tokens staked, the higher the network’s security, as malicious actors would need to acquire a significant portion of the staked tokens to attack the network successfully.

When users stake their AVAIL tokens, they are essentially lending their tokens to validators, who use them to secure the network. In return, stakers receive a portion of the rewards earned by the validators, proportional to their active stake. This incentivizes users to stake their tokens and actively participate in the network’s security and governance.

Staking Options: Nomination Pools and Validators

When it comes to staking on Avail, users have two main options: nominating validators directly or using nomination pools. Each option has its own advantages and considerations.

1. Nominating Validators

When nominating validators, users directly rank and prioritize the validator(s) they want to support. This ranking process is the reason staking on Avail is so efficient when compared to non NPoS chains.

Compared to nomination pools, nominating validators allows for more control over which validators receive the user’s backing. It also requires more active involvement and due diligence from the user. In return, users nominating validators can generally expect higher rewards than using nomination pools.

When nominating validators, consider the following:

• Reputation: Look for validators with a proven track record of reliability and good performance.
• Commission Rates: Validators charge a commission on the rewards they earn. Compare commission rates to find a balance between reasonable rates and quality service.
• Diversification: It’s generally recommended to nominate multiple validators to spread risk and support network decentralization.

2. Nomination Pools

For individuals that prefer not to actively monitor their nominations and are willing to pay a fee for someone else to handle the process, users can stake via nomination pools.

For small stakers, nomination pools lower the entry barrier for nomination. On Avail, you currently need to bond a minimum of 1,000 AVAIL to nominate directly to a validator, while staking through a nomination pool only requires 100 AVAIL.

In a nomination pool, a pool operator manages the selection of validators and the distribution of rewards on behalf of the pool members. The advantages of using nomination pools include:

• Simplicity: Users only need to join a pool and stake their tokens, without worrying about selecting individual validators.
• Lower Barrier to Entry: Nomination pools have lower minimum staking requirements compared to nominating validators directly.
• Reduced Risk: Pool operators typically have the expertise to select reliable validators and manage the pool effectively.

Regardless of the option you choose, it’s crucial to conduct thorough research and due diligence before staking your AVAIL tokens. By carefully selecting validators or nomination pools, you can maximize your rewards while contributing to the security and decentralization of the Avail network.

Staking Rewards

Staking rewards on the Avail network are generated through inflation. These rewards are distributed to validators and nominators as an incentive for securing the network and providing data availability services.

Inflation

Staking rewards come from the controlled inflation of the AVAIL token supply. Tokens are distributed from the treasury, and reward validators and the nominators that support them. Inflation-based rewards are distributed to nominators proportional to their staked amount.

Validators on the Avail network keep Avail functional so it can provide data availability services to these blockchains. In exchange for their services, validators collect transaction fees. These transaction fees are then paid to block producers in exchange for creating Avail DA blocks.

The combination of inflation-based rewards and transaction fees creates a sustainable and rewarding environment for anyone that stakes on the Avail network. As more blockchains integrate with Avail to leverage its data availability services, the transaction fees collected by block producers are expected to increase.

It’s important to note that the actual rewards earned by anyone that stakes may vary depending on several factors, such as:

• Stake distribution
• The total amount of AVAIL tokens staked on the network
• The performance and reliability of the chosen validators
• The commission rates set by the validators
• The overall network activity and transaction fees collected

Slashing and Validator Performance

While staking on the Avail network offers the opportunity to earn rewards, it’s crucial to be aware of the potential risks associated with validator performance. Validators are responsible for maintaining the security and integrity of the network. If a validator misbehaves or fails to meet the required performance standards, they may be subject to slashing.

Slashing is a mechanism that penalizes validators for misbehavior or poor performance by reducing their staked amount and, consequently, the staked amount of their nominators. Slashing helps maintain the network’s security by discouraging malicious or negligent behavior. Slashing will be enabled on Avail from day 1, so it’s important to consider the impacts slashing could have before deciding to stake.

When selecting validators to nominate, it’s essential to consider their performance history, commission rates, and reputation to minimize the risk of slashing. Diversifying your nominations across multiple reliable validators can also help mitigate the impact of potential slashing events.

How to Stake AVAIL: A Step-by-Step Guide

Staking your AVAIL tokens is a straightforward process that can be completed through the Avail Staking Dashboard. Follow this step-by-step guide to start staking:

Step 1: Access the Avail Staking Dashboard at staking.avail.tools

Step 2: Choose your staking method — decide whether you want to nominate validators directly or join a nomination pool.

Step 3: Connect your wallet. Make sure you have AVAIL tokens in this wallet.

Step 4: Enter the staking amount. Ensure you leave enough unstaked tokens to cover transaction fees.

Step 5: Choose your reward settings:

• Allow Withdraw: Allows anyone to withdraw your rewards to your account.
• Allow Compound: Automatically compounds your rewards back to your staked amount.
• Permissioned: Restricts reward claiming to only you.

Step 6: Review and confirm your selections. If everything is correct, sign the transaction to bond your stake.

Step 7: Wait for the next era. Your stake will become active in the next 1 to 2 eras.

Step 8: Monitor and manage your stake through the Avail Staking Dashboard. Claim your rewards periodically to maximize your returns.

Note: To remove stake from the Avail network, nominators must go through the unbonding process. Unbonding takes 28 days, during which AVAIL tokens cannot be used or transferred.

By following these steps, you can easily stake your AVAIL tokens and actively contribute to the security and governance of the Avail network while earning rewards for your participation.