FAQ: DPOS token
Table of contents
- What is the $DPOS token?
- What is the $DPOS token supply?
- What is xDai and how does the xDai token work with the $DPOS token? Why does the xDai Stable Chain use two tokens?
- Is there an emission of the $DPOS token?
- How do I get $DPOS tokens?
- Can I acquire $DPOS token for fiat currencies, e.g. USD?
- Will additional stable coins like xUSDT be added to the protocol?
- What is a staking token?
- How do I stake my $DPOS tokens?
- What is a staking pool?
- How long is stake locked in a pool?
- What are the staking parameters (minimum and maximum stake amounts)?
- What is the staking algorithm for the xDai stable chain?
- What are the incentives for staking?
- What are the expected staking rewards? Does this include Bridge and xDai transaction fees?
- What are the punishments for misbehavior? Do I lose my stake during a ban?
- Are rewards tied to chain activity? If there is a low transaction volume will rewards be impacted?
- How do I collect rewards?
- How do I move rewards from the xDai chain to the Ethereum Mainnet?
What is the $DPOS token?
The $DPOS token is an ERC20 compatible token on the Ethereum Mainnet. It is a tradable asset that will be listed on exchanges. $DPOS can be bridged to sidechain networks for use as a staking token. Bridged $DPOS will first be used as a staking token on the xDai Stable Chain. Additional sidechains may adopt $DPOS for staking in the future.
What is the $DPOS token supply?
The total supply of $DPOS is 100,000,000 tokens. A large majority of this amount (73%) will be initially locked and released over time as staking rewards. Additional amounts will be released to support the xDai network during the first several years in production. Only 4,000,000 $DPOS (4% of total supply) will be available to the public on release through an Initial Exchange Offering.
More information is available here: $DPOS Staking Token Rewards and Emission Model
What is xDai and how does the xDai token interact with the $DPOS token? Why does the xDai Stable Chain use two tokens?
xDai is the stable transactional coin of the network. It is pegged directly to DAI, and used on the chain for all transactions. $DPOS is used behind the scenes by validators and delegators protecting the chain.
Using two tokens allows for a separation between the stable transactional element (xDai - the supply is contingent on the DAI supply) and the staking component of the algorithm.
The tokens have two distinct uses and do not interact with one another. $DPOS is designed as a commodity that individuals will hold and stake in order to earn more, while xDai is designed for transactions which maintain a stable and predictable value.
Is there an emission of the $DPOS token?
The token is not upgradable and the total supply of 100,000,000 is fixed. Most of this amount will be locked in a contract and released over time according to a fixed schedule. 4,000,000 $DPOS will be made available to the public during the initial offering.
The predefined release schedule is explained in detail here: $DPOS Staking Token Rewards and Emission Model
How do I get $DPOS Tokens?DPOS will be available as an initial offering to the public and will be tradable on exchanges. The initial offering is planned as an IEO (initial exchange offering) where 4,000,000 $DPOS will be available to the public. An additional 4,000,000 will be available to private investors. Details and exchanges will be announced soon.
Can I acquire $DPOS tokens for fiat currencies, e.g. USD?No, you can’t acquire DPOS token for fiat currencies. The token is an ERC20 token on Ethereum Mainnet. It will be able to acquire in exchange for native or other ERC20 tokens on Ethereum mainnet platform.
Will additional stable coins like xUSDT be added to the protocol?
This feature is not officially on the roadmap, but it is technically feasible. The staking algorithm of the xDai stable chain is extremely flexible and would allow the introduction of additional stable tokens (USDT, USDC, GUSD, PAX etc).
Here are two approaches that may be explored:
Multiple sidechains leverage the same DPOS bridge mechanism to utilize $DPOS for staking. In an example scenario, a second blockchain network is created which locks TUSD in a contract and mints xTUSD. The $DPOS token, stored in an agnostic bridge contract, can then be accessed from this xTUSD chain for staking, delegation and rewards. The [$DPOS emission model](here: $DPOS Staking Token Rewards and Emission Model) would still control the available token supply, but that supply would be spread over multiple chains.
A single stable coin could be minted (ie xStable) which is pegged to any coin from a defined “basket” of stable coins. This basket could include locked DAI, TUSD, PAX etc.
In this scenario, will I be able to swap stablecoins, such as DAI <-> USDT etc
This functionality would not be available directly on the sidechain, but is possible through third party applications such as Uniswap.
What is a staking token?
A staking token is an asset used to secure a proof of stake based blockchain. Entities (validators & delegators) provide an amount of tokens as collateral in order to participate in the consensus process and receive rewards in exchange for successful block creation. The token used for staking can either be the native token of the network or a separate token.
The xDai stable chain uses a separate and unique staking token called $DPOS for all stake related activities. Participants earn rewards (additional $DPOS) when they participate properly in the protocol, and are penalized (banned from the protocol and their staking tokens are locked for a period of time) if they misbehave.
How do I stake my tokens?
When staking tokens, you must first consider whether you would like to stake as a validator or as a delegator.
Validators are responsible for running the network nodes that provide consensus. This role requires the ability to setup, run and monitor a node. If you would like to become a validator, you will place an initial stake to declare yourself as a validator candidate. Then, depending on the amount of stake you accumulate through your own means and/or with the help of delegators, you will have the opportunity to be selected as a validator for subsequent staking epochs. Validators earn rewards for each block that they seal. See below for details.
Delegators stake tokens on validator candidates to increase the size of the candidate’s staking pool, thus increasing their odds of selection to the next validator set. Stake can be divided among several candidates or placed on a single candidate. Rewards are divided proportionally among validators and delegators based on the stake amount. See below for details.
Staking as a Validator Candidate
Stakes are placed through a user interface. UI screenshots and instructions are in progress and will be provided shortly.
Declare Candidacy (Add a validator pool)
Staking as a Delegator
Stakes are placed through a user interface. UI screenshots and instructions are in progress and will be provided shortly.
Stake on a Validator Pool
Move Stake to a Different Pool
- Note: Withdrawal is disallowed during final 6 hours of a staking epoch
What is a staking pool?A staking pool is the total combined amount of tokens amassed by a candidate or validator. This includes the amount of $DPOS the candidate/validator has contributed as well as any stake provided by delegators. The pool size (total amount of tokens) predicts whether a candidate will be selected as a validator. The larger the size, the greater the odds of selection; selection is based on pool size as well as a random number.
How long is stake locked in a pool?
Unless stake is subject to a ban (in which case it will be frozen for a period of 90 days), active stake is locked for the duration of a staking epoch, which is 1 week. Active stake is the pooled stake amount in use by a current validator. This amount is established at the moment the epoch begins and is used to determine rewards for the remainder of the epoch.
Although it cannot be immediately withdrawn during a staking epoch, active stake may be scheduled for a withdrawal during this time. The withdrawal is processed once the current staking epoch is complete.
During a staking epoch, additional pending stake may be placed on an active validator. This pending stake can also be withdrawn during an epoch, as this stake only becomes active the moment the next staking epoch begins. At the end of a staking epoch (the final 6 hours) new pending stake may not be added to or withdrawn from an active pool.
Stake can be placed, withdrawn or moved from one candidate’s pool to another at any time during a staking epoch. Since candidates are not in the active validators set, these pools are open for staking at all times.
What are the staking parameters (min and max validators, delegators, staking amounts etc.)?
What is the staking algorithm for the xDai stable chain?
xDai uses the POSDAO algorithm for validator selection and reward distribution. The initial consensus protocol uses Parity’s AuRa for Sybil control. The roadmap includes future integration of HoneyBadger BFT. See POSDAO white paper and https://forum.poa.network/c/posdao for details.
What are the incentives for users (validators and delegators) to stake their tokens?
Users receive token rewards in exchange for providing stake to secure the chain. Validators receive transaction fees, and delegators and validators earn rewards from sealing blocks as well as a portion of the bridge fees (see below for details).
What are the expected staking rewards? Does this include Bridge and xDai transaction fees?
Block rewards are determined based on the total amount of stake placed on the chain and the reward emission rate. Reward emissions will start at a high rate (32%), meaning early validator pools will have the opportunity to receive high staking rewards. See an example below (realistic example needed with approximate DPOS valuation etc.)
Each validator pool receives an equal share of the block reward. This is the reward provided for successfully creating a block. Although total stake amount influences selection to the validator set, once selected, each validator receives the same reward per sealed block.
Rewards within each pool are proportionally divided by the algorithm between the validator and its delegators. Validators are guaranteed at least 30% of the reward. Details and examples are provided in section 3.3 of the POSDAO white paper.
In addition to block rewards, bridge fees provide another incentive source for validators and delegators. Exit and entrance fees are collected whenever $DPOS or DAI/xDai is transferred between the Ethereum mainnet and the xDAI sidechain.
All validator pools active during a bridge event receive an equal portion of the bridge fee. The fees are split proportionally according to the same algorithm that determines block reward distribution, and are awarded in the associated bridge currency (DPOS for DPOS bridge events, xDai for xDai events).
Validators also receive transaction fees in xDai for any transactions they include in a block. These fees are typically very small due to the exceedingly low transaction costs on the chain.
What are punishments for misbehavior? Do I lose my stake during a ban?
Misbehavior by validators (such as repeated failure to reveal their random number, not revealing at the end of a staking epoch, or other repeated faults) is subject to a ban from the protocol. This ban is set to 90 days, during which time all assets in the validator’s pool are frozen (this includes any associated delegators stake) and the validator and its delegators are marked as ‘banned’, preventing them from participating in consensus.
After 90 days, the ban is lifted and the stake is released.
Are rewards tied to chain activity? If there is a low transaction volume will rewards be impacted?
Rewards are not tied to transactions or chain activity, and do not vary based on total stake amount. All validator pools within a staking epoch receive an equal reward per successfully validated block. This equal reward is then divided amongst the pool participants based on their percentage of stake
How do I collect rewards?Distributed at the end of an epoch.
How do I move rewards/$DPOS from the xDai chain to the Ethereum Mainnet?
Rewards are distributed in $DPOS tokens on the xDai chain. To convert these to $DPOS Ethereum tokens, you will use the bridge mechanism. Details TBD.