Tech Cave

You can think of the deposit contract as a transfer of funds between LUKSO accounts and Beacon Chain validators. It specifies who is staking, who is validating, how much is being staked, and who can withdraw the funds.

As a validator, you’ll need to have funds at stake so you can be penalized for behaving dishonestly. In other words, to keep you honest, your actions need to have financial consequences.

Before you can run a validator and start to test the network, you need to stake 32 LYXt. This forms your initial balance. You can apply for free LYXt at the l16 Faucet.

This has not be disclosed yet.

No, there is no advantage to having more than 32 LYX staked.
Limiting the maximum stake to 32 LYX encourages decentralization of power as it prevents any single validator from having an excessively large vote on the state of the chain.  Remember that a validator’s vote is weighted by the amount it has at stake.

If you go offline for a few days under normal conditions, you will lose an amount of LYX roughly equivalent to the amount of LYX you would have gained in that period. In other words, if you stood to earn ≈0.01 LYX, you would instead be penalized ≈0.01 LYX.

The answer to this question very much depends on how much LYX you have at your disposal. You should certainly top up if your balance is close to 16 LYX. This is to ensure you don’t get kicked out of the validator set (which automatically happens if your balance falls below 16 LYX). At the other end of the spectrum, if your balance is closer to 31 LYX, it’s probably not worth adding the extra LYX required to get back to 32.

You can signal your intent to stop validating by signing a voluntary exit message with your validator. However, bear in mind that for the foreseeable future, once you’ve exited, there’s no going back. There’s no way for you to re-activate your validator, and you won’t be able to transfer or withdraw your funds until after the post-merge cleanup upgrade, currently planned to follow the merge (which means your funds will remain inaccessible until then).

As a validator you are rewarded for proposing / attesting to blocks that are included in the chain.On the other hand, you can be penalized for being offline and behaving maliciously – for example attesting to invalid or contradicting blocks.

The key concept is the following:
– Rewards are given for actions that help the network reach consensus
– Minor penalties are given for inadvertent actions (or inactions) that hinder consensus
– And major penalties – or slashings – are given for malicious actions
– In other words, you maximize your rewards by providing the greatest benefit to the network

Your balance is updated periodically by the LUKSO network rules as you carry (or fail to carry) out your responsibilities. Your validator has its own balance – with the initial balance outlined in the deposit contract. Your rewards and penalties are reflected in your validator’s balance over time.

Rewards and penalties are issued roughly every six and a half minutes – a period of time known as an epoch. Every epoch, the network measures the actions of each validator and issues your rewards or penalties appropriately.

There is no easy answer to this question as there are many factors that go into this calculation.Arguably the most impactful factor on rewards earned for validating transactions is the total amount of stake in the network. In other words, the total amount of validators. Depending on this figure the max annual return rate for a validator can be anywhere between 2 and 20%.

Given a fixed total number of validators, the rewards/penalties predominantly scale with the balance of the validator – attesting with a higher balance results in larger rewards/penalties whereas attesting with a lower balance results in lower rewards/penalties.

Note however that this scaling mechanism works in a non-obvious way. To understand the precise details of how it works requires understanding a concept called effective balance. If you’re not yet familiar with this concept, we recommend you read through understanding validator effective balance.

Block rewards are calculated using a sliding scale based on the total amount of LYX staked on the network. In other words: if the total amount of LYX staked is low, the reward (interest rate) is high, but as the total stake rises, the reward (interest) paid out to each validator starts to fall. Why a sliding scale? While we won’t get into the gory details here, the basic intuition is that there needs to be a minimum number of validators (and hence a minimum amount of LYX staked) for the network to function properly. So, to incentivize more validators to join, it’s important that the interest rate remains high until this minimum number is reached.Afterwards, validators are still encouraged to join (the more validators the more decentralized the network), but it’s not absolutely essential that they do so (so the interest rate can fall).

It depends. In addition to the impact of effective balance there are two important scenarios to be aware of:

1. Being offline while a supermajority (2/3) of validators is still online leads to relatively small penalties as there are still enough validators online for the chain to finalize.
   This is the expected scenario.
2. Being offline at the same time as more than 1/3 of the total number of validators leads to harsher penalties, since blocks do not finalize anymore.
   This scenario is very extreme and unlikely to happen

Note that in the second (unlikely) scenario, you stand to progressively lose up to 50% (16 LYX) of your stake over 21 days. After 21 days you are ejected out of the validator pool. This ensures that blocks start finalizing again at some point.

Overall, we’d expect your validator to be net profitable as long as your uptime is greater than 50%.This means that you don’t need to go to extreme lengths with backup clients or redundant internet connections as the repercussions of being offline are not so severe.

Again, it depends. Behaving maliciously – for example attesting to invalid or contradicting blocks, will lead to your stake being slashed. The minimum amount that can be slashed is 1 LYX, but this number increases if other validators are slashed at the same time. The idea behind this is to minimize the losses from honest mistakes, but strongly disincentivize coordinated attacks.

Slashing has two purposes: (1) to make it prohibitively expensive to attack the network, and (2) to stop validators from being lazy by checking that they actually perform their duties. If you’re slashed because you’ve acted in a provably destructive manner, a portion of your stake will be destroyed. If you’re slashed, you’re prevented from participating in the protocol further and are forcibly exited.