Proof-of-Stake (PoS) is a type of consensus mechanism, like Proof-of-Work (PoW). PoS requires a user to stake tokens in order to run a validator and help to validate transactions on the the blockchain.
Validators function similar to miners, in that they help to determine the ordering of transactions, and form blocks. Validators differ from miners in that you do not need to purchase numerous ASIC miners, but rather can simply stake more tokens against your validator.
The general benefits that Proof-of-Stake can provide are better energy efficiency and lower barrier to entry.
Staking is the process of bonding your tokens against a validator or depositing your tokens into a staking contract allowing you to earn rewards for validating
Generally speaking, staking rewards come from inflation and transaction fees.
Inflation refers to newly minted tokens released to the network. The amount of inflationary rewards a validator receives is defined at the protocol level. For example, if a protocol has an annual inflation rate of 3%, that means the circulating supply of tokens is growing 3% year-over-year.
Validators receive a portion of those newly minted tokens in return for their services. The percentage of inflationary rewards that validators receive is defined at the protocol level.
Transaction fees refer to what users pay to make transactions on a given network. Validators are eligible to receive some or all of these fees, depending on the protocol.
Common risks associated with staking include slashing and smart contract risk. Slashing refers to the process by which a percentage of staked funds are lost due to poor validator performance. Smart contract risk refers to flaws in a protocol’s logic that can be exploited by hackers.
Before staking, it is important to understand the risks. For more detail on how Foundry addresses these risks, please refer to our Terms of Service.
Foundry takes a commission of the total staking rewards. We determine these rates based on our costs and market rates. Alternatively, sometimes these rates are set at the protocol level so all that validators receive the same percent of total staking rewards
Tokens cannot be purchased directly from Foundry, but we would be happy to put you in touch with our sister company Genesis for any trading needs
No, Foundry never takes custody of your funds. If you need a custody provider, please contact us at guide@blockchain-stake.com and we can connect you with the Custody team at Genesis, a fellow Digital Currency Group company.
An unbonding period is a period of time set by some protocols to protect from malicious attacks or gaming of their rewards system. For validators and/or delegations, this means that once you decide to unstake or undelegate your tokens you will have to wait a set amount of time before you can withdraw or transact with them
Customer demand and token popularity are the two biggest factors that drive the staking tokens that Foundry supports. If you would like to request support for additional tokens please fill out the Contact Form on our Homepage, or email guide@blockchain-stake.com