Cudos Staking FAQ🥩
Tags: Cudos, Cryptocurrency, Staking, Crypto, Blockchain

What is the difference between CUDOS ERC20 staking and CUDOS native coin staking?

CUDOS is currently an Ethereum based ERC20 token which we launched in January 2021. This was part of our strategy whilst we researched which architecture we built our own Cudos layer 1 blockchain on. With the decision to build on the Cosmos-SDK/Tendermint architecture made following the token launch, we are now planning the transition of the CUDOS token from the Ethereum blockchain to our own Cudos blockchain where it will act as the security backbone of the network and its native currency. As a result, the CUDOS token will transition to our own native Cudos coin.

What will we have to do, when the Cudos mainnet goes live and staking transition to the CUDOS native coin?

As a Staker, we will ensure that the process is as smooth as possible. Tokens staked in on-chain staking will be migrated across to the Cudos Network upon release of the mainnet. there will always be the same total amount of CUDOS; 10bn. Across both blockchains the maximum supply will remain fixed at 10bn. Therefore 1 CUDOS ERC20 token = 1 CUDOS native coin.

With the Gravity bridge in place, this also provides the ability to convert back to the CUDOS ERC20 token to retain full interoperability with the Ethereum ecosystem.

What is the APR for CUDOS ERC20 staking?

The CUDOS ERC20 staking will start with an estimated APR of 30% which will be distributed directly to Validators and Delegated stakers via the smart contract. This APR is variable as it depends on the total amount of tokens being staked at any one time, and also for Delegator, on the commission charged by the Validator.

What is the APR for CUDOS native coin staking?

This is yet to be confirmed and our team is busy modelling the economics based on a number of variables. These variables include; launch date and the amount or total supply staked. Our community will be updated as soon as this exercise is completed, in the lead up to mainnet.

When can I delegate my stake to a Validator?

Anyone with CUDOS will be able to stake on-chain by delegating their stake to a Validator. You will be able to delegate your stake to a Validator node of your choice through the Cudos staking portal once it goes live on August 2nd. CUDOS staked via a Validator is subject to a small commission taken by the Validator, Users will want to select a Validator to stake with that is offering a fee they are happy with.

Will I earn a share of the network transaction fees?

Yes, from mainnet all delegated stakers and Validators will earn a proportionate share of the Cudos Network transaction fees. There are no transaction fees available with the Ethereum staking offering.

Validators will charge a small commission to those delegating their stake to the Validators node.

Why have the staking rewards bonuses and staking contract terms been removed?

We’ve seen, and we’ve been strongly advised by our external blockchain specialist team, that in PoS networks it’s better if there are no lockup periods available, as that would translate into increased sell pressure happening in a much shorter period of time.

Another benefit would be, in our PoS network, the ideal case scenario is when all Validators have the same stake and are all equal. If we categorise them depending on the lockup bonus, that creates strong imbalances in the network, which would have affected the decentralised nature of the network, and could potentially create difficulties in the long term. As a starting point, this was the lowest risk approach/the best decision we thought with the information we have.

However, this is an ongoing effort which we will continue to investigate going forward, to make sure that our network stays on the edge of ours and the community’s research.

Will I earn less with staking rewards bonuses removed?

No. Originally, we planned to provide bonuses to those stakers agreeing to a staking contract term period of 3, 9 and 18 months, with 18 months providing the highest bonus of 100%, based on the rewards they had earned (not the amount they staked). Both the staking rewards and bonuses were to be paid from the same size annual allocation pot.

By removing the bonuses, the annual allocation pot is still the same size, with the total amount of that pot to be paid proportionally to each of our stakers, as staking rewards only.

What is the unbonding period?

When you remove some stake, you need to wait for those tokens to unbond, i.e. become available for withdrawal. This period is called the unbonding period, which is 21 days long.

One of the purposes of the unbonding period is to reduce any reactive selling caused by a black swan event or token pump. This will protect the Cudos Network health and protect CUDOS holders generally by keeping value locked in and limiting sharp market fluctuations.

The APR was once promoted as starting at over 100%, has this changed?

The APR is variable based on the amount of total supply staked into the network. The more staked, the lower the APR, the less staked the higher. This is because the rewards paid are all coming from the same size annual allocation pot. APRs will initially be very high (100%+) as stakers onboard to on-chain staking but from the amount of interest we expect to see based on pre-staking, they will quickly rebalance to something closer to 30% as more CUDOS is locked up.

The upcoming CUDOS ERC20 staking that we will be launching with on the 2nd August, is a stepping stone to the mainnet staking and we have therefore set the starting opening APR similar to current AscendEX exchange pre-staking service (30%).

For full transparency, the time to market with our staking service has been delayed and this has meant that we have paid more of our annual allocation pot for year 1 in prestaking, than we initially planned. This has reduced the allocation pot for mainnet staking and so APR’s will very likely be nearer to 30% than the previously estimated 100%. Again, this is variable based on the amount of total supply, so we cannot provide an exact APR.

However, the high APR offered by some new projects is only temporary. This then decreases each month as more people stake. It’s a temporary incentive scheme provided by the project to incentivise adoption. As the Cudos Network grows in demand for services, the earnings from transaction fees will increase significantly and eventually overtake the staking rewards as the prevailing revenue stream for our delegated stakers and Validators.

When can I become a Validator?

Validators can sign up on the 2nd of August as Validators (with 2m CUDOS as the minimum stake) and anyone with CUDOS can then stake through them as Delegators. In order to become a Validator, please contact the Cudos team to receive further details on the process and requirements.

As we are starting with staking on the Ethereum network, Validators will not actually be validating at this stage. They will be emulating the staking functionality only. They will however, earn a commission fee that they set, with the minimum commission fee to be set above 2%.

Validators signed up now will be migrated to real Validators once the Cudos Network goes live, at that point they will need to have their node & software running. Right now it’s just the tokens being locked from an address.