Staking Rewards
This document provides a comprehensive explanation of the PHRON node staking process, focusing on how rewards are calculated, distributed, and influenced by key factors such as Annual Percentage Rate (APR) and total node participation. By detailing these mechanisms, this guide will help node operators understand the staking process and optimize their rewards over time.
1. Node Overview
Node Name: Zeus The node's name, Zeus, serves solely as a label and does not influence the staking or reward calculation processes.
Tokens Required: A minimum of 200,000 PHR tokens is required to set up and operate a Zeus node. These tokens remain locked within the node for the entire duration of its operation unless otherwise modified by the validator.
Price at Public Sale: During the public sale, 200,000 PHR tokens were valued at $14,200, which equates to a price of approximately $0.071 per PHR token.
Total Number of Nodes: The total number of available nodes in this scenario is 500, and the rewards pool is equally divided across these nodes unless a portion of stake is opened for nominators.
Total Supply of PHRON: The total supply of PHRON tokens is 2.1 billion.
2. Staking Rewards Structure
Staking rewards are distributed on a monthly basis, with both the APR and the total number of PHRON rewards decreasing over time. Node operators receive rewards in proportion to the performance and duration of their staked tokens, and they can open up part of their stake for nominators to participate..
2.1 Key Factors Affecting Rewards:
APR (Annual Percentage Rate):
The APR represents the annual return on the staked PHRON tokens.
The APR begins at a higher rate and gradually declines over time, meaning the annualized return decreases as more time passes.
For instance, if the APR is 13.79%, the annualized return for stakers is 13.79% of their staked tokens, although this return is distributed monthly.
Total Rewards (PHRON):
Each month, a predetermined number of PHRON tokens is allocated for distribution to all stakers.
The total amount of rewards diminishes over time, aligning with the reduction in APR.
Distribution Among Validators and Nominators:
Validators can choose to stake up to 75% of the required node tokens and leave the 25% open for nominators. This allows nominators to stake additional tokens and share rewards proportionally based on their contribution.
Rewards System Explained:
This section outlines the PHRON node rewards distribution mechanism, focusing on how rewards are allocated between validators and nominators, and the new flexibility provided to validators in managing their stake.
1. 100% Rewards Distribution to Validators and Nominators
In the system, 100% of the rewards generated by node staking are distributed to validators (also referred to as node operators) and nominators. This ensures that all participants contributing to the node's operation receive their fair share of the rewards.
Validators: Validators are responsible for maintaining the integrity of the blockchain by validating transactions and blocks. Their contribution is critical to the network’s security and performance.
Nominators: Nominators support validators by staking their own tokens on the validators they trust to act correctly and honestly within the network.
The total rewards generated in each staking cycle are proportionally divided between the validator and any nominators, depending on the percentage of stake each party holds.
2. Flexibility in Node Staking for Validators and Nominators
In addition to managing the technical aspects of the node, validators now have the flexibility to open a portion of their node's stake requirement for public participation from nominators. Specifically, validators can set up their nodes to allow up to 25% of the required stake to be filled by nominators.
Example Scenario:
Consider the case where a validator is required to stake 200,000 PHRON tokens to operate a node. The validator has the option to modify their stake as follows:
The validator can choose to personally stake 75% of the node’s required tokens (150,000 PHRON).
This leaves 25% of the required stake (50,000 PHRON) open for nominators to contribute.
By allowing nominators to contribute, the validator enables other users to participate in the network while still maintaining control over the majority of the node's stake.
3. Staking Flexibility for Validators: Retrieving Tokens
Once nominators begin to stake on a validator’s node, the validator has the option to retrieve the extra tokens staked by nominators if they wish. This feature provides the validator with flexibility over the node’s total staked amount:
If the validator decides to retrieve the extra tokens (e.g., the tokens staked by the nominators), the validator will hold a larger percentage of the total stake and, consequently, will receive a higher share of the rewards.
If the validator does not retrieve the tokens, the total stake will remain as is, and rewards will be distributed based on the percentage each party holds.
4. Rewards Distribution Based on Stake Percentages
The staking rewards are distributed proportionally based on the percentage of total stake held by the validator and the nominators. This ensures a fair and transparent system, where both validators and nominators are rewarded according to their contribution.
Example of Reward Distribution:
Assume the following distribution on a node:
Validator holds 85% of the total staked PHRON.
Nominator 1 has contributed 5%.
Nominator 2 has contributed 10%.
The rewards generated by the node will be allocated based on these percentages:
The validator, holding 85% of the total stake, will receive 85% of the total rewards.
Nominator 1, holding 5% of the total stake, will receive 5% of the total rewards.
Nominator 2, holding 10% of the total stake, will receive 10% of the total rewards.
This proportional rewards distribution model ensures that all participants—whether they are validators or nominators—are rewarded in alignment with their respective stakes.
5. Benefits of the Flexible Staking Mechanism
The flexibility offered by this model benefits both validators and nominators:
For Validators: Validators can control the majority of the stake while allowing nominators to contribute the remaining portion. This allows validators to operate their nodes with a lower personal stake if needed while still retaining the option to reclaim the tokens contributed by nominators.
For Nominators: Nominators, who may not have enough tokens to operate a node independently, are now able to contribute to an existing validator's node and earn rewards in proportion to their stake.
This system provides an inclusive and adaptable framework, encouraging wider participation in the network while maintaining the integrity and control of validators over their nodes.
Examples:
Example of Month 1 Rewards:
APR for Month 1: 13.7927%
Total Rewards for Month 1: 24,137,262.43 PHR Tokens.
Calculation:
The total reward of 24,137,262.43 PHR is distributed evenly among 500 nodes.
Rewards per node for Month 1: Reward per node = 24,137,262.43 / 500 = 48,274.52
Thus, each Zeuss node would receive 48,274.52 PHR tokens as rewards in Month 1.
Example of Month 2 Rewards:
APR for Month 2: 13.1005%
Total Rewards for Month 2: 45,851,763.07 PHR Tokens.
Calculation:
The total reward of 45,851,763.07 PHR is distributed evenly among 500 nodes.
Rewards per node for Month 2: Reward per node = 45,851,763.07 / 500 = 91,703.53 PHR
Thus, each Zeuss node would receive 91,703.53 PHR tokens as rewards in Month 2.
Accumulated Rewards Over Time
Lets Calculate the total accumulated rewards for a node over a period of 6 months.
Month | APR(%) | Total Rewards (PHRON) | Rewards per Node (PHRON) |
1 | 13.79% | 24,137,262.43 | 48,274.52 |
2 | 13.10% | 45,851,763.07 | 91,703.53 |
3 | 12.55% | 65,891,034.48 | 131,782.07 |
4 | 12.09% | 84,661,707.04 | 169,323.41 |
5 | 11.70% | 102,416,527.58 | 204,833.06 |
6 | 11.36% | 119,326,661.82 | 238,653.32 |
Total Rewards for the first 6 months would be:
48,274.52 + 91,703.53 + 131,782.07 + 169,323.41 + 204,833.06 + 238,653.32
= 884,569.91 PHRON tokens.
Long Term Projections:
If a node is staked for 12 months, the total rewards can be projected as:
Month | APR(%) | Total Rewards (PHRON) | Rewards per Node (PHRON) |
7 | 11.06% | 135,515,183.25 | 271,030.37 |
8 | 10.79% | 151,074,585.82 | 302,149.17 |
9 | 10.54% | 166,076,782.61 | 332,153.57 |
10 | 10.32% | 180,579,208.34 | 361,158.42 |
11 | 10.11% | 194,628,744.71 | 389,257.49 |
12 | 9.92% | 208,264,354.83 | 416,528.71 |
Total Rewards for the first 6 months would be:
271,030.37 + 302,149.17 + 332,153.57 + 361,158.42 + 389,257.49 + 416,528.71
= 2,072,277 PHRON tokens.
Validators and Nominators: Flexible Staking Example
Validators can open up to 25% of their node’s stake for external nominators to participate. For example:
Validator holds 85% of the node’s stake.
Nominator 1 contributes 5%.
Nominator 2 contributes 10%
Rewards will be distributed proportionally:
Validator receives 85% of total rewards.
Nominator 1 receives 5%
Nominator 2 receives 10%
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