Staking and Delegation

Bonding Auctions

Because the present blockchain model relies on universal validation of blocks included in the consensus history, there is a sharp tradeoff between intuitive notions of decentralization/security and performance. Choosing the correct balance requires setting proper incentives, or even hard rules, for validator entry, in a manner that ensures performance remains acceptable without exposing the platform to oligopolistic capture.

An open auction with open bids, a simple, first-“price” resolution and a fixed number of slots solves the issue with imprecise control over the security/performance tradeoff, while offering prospective validators an easy to understand procedure for joining. There is no minimum stake and the security/performance tradeoff is handled by an automatic on-chain slot number adjustment mechanism.

Delegation

Users are able to delegate their own CSPR to validators without having to become validators themselves. Validators, in turn, take a commission out of the rewards and transaction fees earned through delegated CSPR. Delegated tokens are subject to the same unbonding rules as the tokens staked by validator from their own accounts. Further, delegated tokens can be used in bidding for validator slots and can be lost due to equivocations.