Investors looking for high yields flocked to the sale, buying all U$ 42 million worth of AVAX coins in just 4.5 hours.
What’s driving such fast adoption of the first Avalanche protocol cryptocurrency?
Coming soon: AVAX Staking
There’s more than one factor driving AVAX’s monumental success: its innovative consensus protocol and potential staking rewards.
Since we’ve already published a bit about the Avalanche protocol, in this article we take a quick look at what users will need to do to get started staking their AVAX once the mainnet launches.
There are two main options to stake your AVAX coins and generate passive income :
- Delegate your stake to a validator;
- Run your own validator node.
We’ll take a look at each case, but first we need to get ourselves an AVAX wallet.
Download AVAX Wallet
First of all, you’ll need to download the official AVAX wallet.
The wallet app will be made available soon after the AVAX coins are released to the general public a few days from now (August 2020). The current wallet is very limited and was meant to be used as a key and address generator for the AVAX public sale.
Choose an AVAX Validator
The official AVAX wallet application will show you a list of currently live validator nodes. This list is read straight from the AVAX network, so you get fresh, working validators you can delegate your stake to.
Any AVAX node is capable of verifying blocks and minting new AVAX. In fact, validator nodes aren’t special at all. You can even run your own AVAX node very easily. The only difference is that validators will stay online 24×7 so it never misses a vertex, so you may turn your wallet off the validator will remain online working for you.
You’ll find detailed statistics on AVAX validators in specialized sites to be released soon with the mainnet. Choose a validator that is always online and which has been proven to solve vertices reliably. As the AVAX network progresses, more and more data will become available to stakers.
Once you’ve chosen a validator, it’s time to delegate your AVAX.
Delegate your AVAX to a Validator
The AVAX wallet will offer a function so you can easily delegate your coins to a validator. It’ll be in the lines of right-clicking a validator icon and choosing “delegate to this validator” option.
What’s happening in the background is really interesting, though.
Your wallet will create a special transaction called a “certificate”. Which is a cryptographically “legal document” that tells the network you are designating a certain validator the right to vote on your behalf.
You will then be asked for your wallet password in order to sign this certificate. Once signed, the cert gets broadcast to the network and everyone become aware that your coins are now delegated to the chosen validator.
You will begin receiving rewards on the next network cycle.
Note that validator choice never puts your AVAX at risk. Delegation certificates don’t give the validator the right to spend your AVAX, ever. it simply tells the network you’re delegating your voting rights to a validator so that it can stake the coins on your behalf.
Or Become an AVAX Validator
You also have the option to become a validator node. Since the node software is very lightweight and is also what powers a full node wallet, you’ll be a validator as soon as you run your wallet.
The main difference is you’ll be responsible for keeping the node online 24×7. Also, to become a validator, you’ll need to stake a minimum of 2000 AVAX. This relatively high cost is required so malicious parties can’t create thousands of rogue nodes to act like a majority of stakers, which would allow them to defraud the system (sybil attack).
Any AVAX node is capable of verifying blocks and minting new AVAX. In fact, what we’ve come to know as validator nodes aren’t technically special at all. Which means you can run your own AVAX node very easily. The only difference between a dedicated validator node and a general purpose wallet, is that dedicated validators should stay online 24×7 so it never stops working.
AVAX Staking Yield
According to our sources, AVAX staking yield will be approximately 10% APY.
Keep in mind that this is an estimated, and therefore unofficial, number.
In fact, there is no such thing as an official yield. It’s a dynamic parameter that will be a result of several different variables on the AVAX network.
It’ll only be possible to know the exact yield once AVAX mainnet is launched and validators begin to compete, providing us with precise amount of staked AVAX and the overall network difficulty (how much competition there is). The more AVAX are staked, the bigger the competition.
Early stakers will surely be rewarded more than late arrivals, so make sure to stake early!
Staking your Locked AVAX
If you took part in the public sale options A1 and A2, then your AVAX are most likely locked up for 1 and 1.5 years respectively.
Don’t worry, though, because your AVAX will be working hard for you during the lockup! All AVAX bought during the public sale are locked in the vesting contract, which is automatically staked. You will receive the same returns as everyone else who has their AVAX released.
The policy for choosing AVAX validators for the public sale’s locked AVAX has not been decided yet, but Ava Labs will most likely go for round-robin alternance through various live validators in order to incentivize the staking network and promote decentralization.