NEAR Transparency Report: the State of Staking
NEAR FOUNDATION
November 21, 2022
As part of the Foundation’s commitment to transparency, each week it will publish data to help the NEAR community understand the health of the ecosystem. This will be on top of the quarterly report, and the now monthly funding reports. 

You can find the quarterly reports here.

You can find monthly reports on funding here.  

This week, the Foundation is focusing on the state of staking in the NEAR ecosystem. 

The state of staking, as of Friday 18th November 2022
At the time of writing, there is 469 million NEAR staked, which equates to approximately 42% of the total supply, or 56.5% of circulating supply. 

The staking total is spread across 131 validators, which is up on last month’s total validator number of 126, a four percent increase in the decentralization of the network. 

The seat price – the amount of NEAR required to be eligible for staking has fallen precipitously. From 100,000 NEAR in October to just 20,000 NEAR in November, this means securing the network has become more accessible than ever before. The Foundation expects the number of validators to grow significantly to approximately 300 by the end of this year, as NEAR Foundation starts to delegate to Stake Wars winning participants.

This will continue as the protocol deploys its roadmap. In 2023, for example, the number of validators will continue to climb to a maximum of 400. You can read more about the road map here. 

Staking Distribution 
Of the 131 validators, eight validators hold 33% of the total staked balance, representing 154 million $NEAR. A total of 15 validators, hold 50% of the total staked balance, and 116 validators hold the other 50% of the total NEAR available. A stake of 33% is the stake that can halt the network, according to Pikespeak. 

Distribution	Validators	Staked
0-33%	8	154m
33%-50%	7	74m
51%-75%	21	124m
76%-100%	95	116m
131	469m
To improve decentralisation, the Foundation, along with the ecosystem is continuing to improve the breadth and depth of the validators, and actively encourages stakeholders to delegate to validators outside the top 15. 

Why are validators important? 
The NEAR network is decentralized, meaning that multiple people collaborate in order to keep it safe. We call such people validators.

In order to make sure that all the transactions in the network are valid, i.e. that nobody is trying to steal money, the validators follow a specific consensus mechanism.

Currently, there are a few well-known consensus mechanisms to keep a blockchain working correctly and resistant to attacks. NEAR Protocol uses a version of Proof-of-Stake, particularly Thresholded Proof of Stake.

In Proof-of-Stake, users show support to specific network validators by delegating NEAR tokens to them. This process is known as staking. The main idea is that, if a validator has a large amount of tokens delegated is because the community trusts them.

Validators have two main jobs. The first is to validate and execute transactions, aggregating them in the blocks that form the blockchain. Their second job is to oversee other validators, making sure no one produces an invalid block or creates an alternative chain (eg. with the goal of creating a double spend).

If a validator is caught misbehaving, then they get “slashed”, meaning that their stake (or part of it) is burned.

In the NEAR networks, an attempt to manipulate the chain would mean taking control over the majority of the validators at once, so that the malicious activity won’t be flagged. However, this would require putting a huge sum of capital at risk, since an unsuccessful attack would mean slashing your staked tokens.

Why is decentralization important? 
Staking is not only about the rewards, it is the basis for security and stability of the NEAR Protocol. To avoid centralization, split your stake between smaller staking pools instead of putting everything in the largest one.

Community members like Zavodil Validator have created excellent alternatives to NEAR’s official explorer, embedding metadata from the active staking pools to help you choose which Validators to Stake with. Also, consider joining the #staking channel on https://near.chat and ask questions!

These reports will be published each week, and cover different aspects of the ecosystem.