Everything You Need to Know About Locking Your Tokens in the New Staking Contract
The Orbs Proof-of-Stake (PoS) ecosystem is the backbone of the Orbs network and the Universe that is being created. This ecosystem serves as the foundation for the security and operation of the network, enabling an optimal platform for enterprise blockchain applications.
Following a great first year for the Orbs PoS Universe, with over 1500 Delegators and an amazing set of active Guardians and Validators, it is time to introduce the revised Orbs staking mechanism. Staking Orbs will allow each one of the Orbs community members to contribute to the network’s security and operation, making it the first choice for enterprise applications.
During the first year of the Orbs network, token holders were only required to delegate their tokens to a Guardian in order to participate in the PoS ecosystem. While the Delegators used their power to select a trustworthy Guardian, they were still able to transfer their tokens, which resulted in a minimal commitment and only a certain level of network security. This delegation mechanism was suitable for the early days of the network where the balance of interests prioritized inclusion.
With the growth of the network, and the shift of business focus to onboarding production-grade enterprise applications, a stronger incentive and network security mechanisms are desired. As a result, a new staking mechanism is introduced. Under the new staking mechanism, members who would like to participate in the PoS universe must stake their tokens such that they are locked for 2 weeks (14 days).
We are introducing a transition period of three months during which participants may continue to use the first year staking mechanism. The transition period is a time to learn and understand the importance of the new staking mechanism and to get on board. Following the transition period, participation via the first year staking mechanism will be discontinued.
The new staking mechanism, if widely adopted by network participants, will be highly valuable for the Orbs network. The following document will explain the rationale, benefits and method of staking and locking your tokens.
Contribute to the Network’s Security and Quality
Proof-of-Stake networks rely on the network stake to maintain its security. Staking the participants’ tokens ensures a strong alignment between the interests of the participants running the network and taking governance decisions and the operation of the network itself.
Validators are the participants operating the network and providing the computational resources required to run applications. Understanding the importance of attracting enterprise applications, validators are expected to apply an extra effort in maintaining the network’s security and availability in order to maintain the value of their staked tokens. Similarly, Delegators and Guardians, who are responsible for the monitoring of the network and for accepting governance decisions are incentivized to act in an honest and timely manner.
In addition, the requirement that staked tokens be locked significantly increases the cost of an attack. In order for attackers to gain control of the network and act maliciously, they will first be required to stake tokens. Due to the 2-week locking period, the attackers will not be able to attack the network and immediately exchange their tokens. Once locking is required, potential attackers will face the risk of losing the value of their staked tokens due to the attack and will, therefore, be disincentivized to do so.
Staking one’s tokens is the best way to allow anyone that believes in the project and share its vision to actively contribute to the network success.
A Driver for Enterprise Usage
Usage is the main driver for a network’s success and for its economy. The Orbs public blockchain is designed for enterprise use. A blockchain for enterprise requires not only great technical capabilities but also a strong incentive layer assuring network security and stability.
The Orbs network provides ideal technical capabilities for enterprise use cases, including the capability of providing isolation and ensuring performance by creating dedicated virtual chains. In addition, the network offers a hybrid model architecture that allows businesses to enjoy the benefit of a public blockchain. Orbs network utilizes a strong consensus protocol, provides a flexible and developer-oriented virtual machine and smart contract languages, and applies a fee structure suitable for enterprise use.
Network security and stability are of high importance to enterprise businesses looking for blockchain-based solutions. Network interruption or misbehavior may interrupt their business, resulting in losses. The new staking mechanism provides the enterprise applications a much stronger guarantee of secure and stable operation.
Staking tokens and contributing to the network’s security and stability boosts the network value for enterprise use. Together, by staking their tokens, Orbs community members can help to bring the network more usage and in particular significant usage by enterprise applications.
Staking is the New Mining
The Proof-of-Work incentive model, initially used in Bitcoin, has been proven to ensure network security and availability while allowing the miners who operate the network to earn rewards for their efforts. However Proof-of-Work has drawbacks – high waste of resources, the high cost of mining equipment, and unfair advantage of miners with superior technology or lower electricity cost. As a result, participation in Proof-of-Work is available mostly to large scale miners with substantial resources and less for the community, even for the ones that believe in the projects and want to take part.
Proof-of-Stake, and in particular Delegated-Proof-of-Stake, systems are designed such that members of the community can participate and contribute to the network operation and in return earn rewards. Very much like Proof-of-Work miners, who are committed to the mining by spending resources on their mining operation and equipment, the community members that stake their token in a Proof-of-Stake system are committed to the network’s success. Staking ensures that only engaged members that believe in the project and want to contribute to its success earn rewards.
Staking tokens as a requirement for participation and contribution to the network’s operation is not unique to Orbs. Staking is common in the Proof-of-Stake architecture of other leading projects such as Cosmos, Tezos and PolkaDot. All these projects allow members of their community to take part in the network operation and “mining” by staking their tokens.
ORBS token holders and members of the Orbs community can participate, contribute and earn rewards by staking their tokens.
Staking Your Orbs Tokens
The ORBS token that drives the Orbs Proof-of-Stake Universe is an ERC20 token running on top of Ethereum, enjoying the benefits of the Ethereum ecosystem. Similarly, Orbs’ staking contract is deployed on Ethereum. Like the rest of Orbs network codebase, the code is open source and available for review at https://github.com/orbs-network/orbs-staking-contract. In addition, the contract went through professional auditing to ensure the security of the staking.
In order to participate in the Orbs universe, token holders are required to stake their tokens and select a Guardian to delegate their voting power to. The Guardians monitor the network activity and make governance decisions on behalf of the Delegators, such as the removal of misbehaving validators.
In order to simplify the interaction with the staking contract, a staking wallet (Tetra) was developed with a simple and convenient interface. The staking wallet allows you to stake your tokens and select a guardian to delegate to. Using Tetra to stake your tokens requires a MetaMask configured with your ORBS tokens. Metamask, supported by leading web browsers, is a secure, industry standard wallet for interaction with Ethereum contracts. Metamask supports both software and hardware wallets (such as Ledger and Trezor), which are more secure.
IMPORTANT: Always verify the wallet’s web address before signing a transaction! Please make sure to protect yourself from phishing and check that you are on the correct website before initiating any transaction.
By staking your tokens and delegating to a trustworthy and active Guardian you can contribute to the network and receive rewards. Visit Tetra staking wallet to stake your tokens and take part in the Orbs network success!
Staking has potential risks that you must be aware of before staking your tokens:
When you stake your ORBS token, they will be set to a locked state for 2 weeks (14 days). When your tokens are locked, you will not be able to transfer them. Staked tokens are perfectly safe and secure in the staking contract, and can only be withdrawn using your private key.
Make sure that you are familiar with how to stake tokens in order to avoid mistakes. When using a staking wallet, make sure that you are using a trusted wallet, check that you are on the correct URL, and beware of phishing attempts. In addition, verify the transaction content before signing it. If you choose to interact directly with the Ethereum staking contract, make sure to use only the contract interface functions.
Never transfer tokens directly to the staking contract address. Tokens transferred directly to the staking contract address are NOT staked and CANNOT be recovered.
In order for staked tokens to make a positive impact on the network, Delegators should delegate their tokens to an active and trustworthy Guardian. A guardian that does not fulfill its responsibilities can harm the network. Moreover, it is important for a Delegator to select an active Guardian, as the participation of the Guardian is required in order for the Delegator to participate in maintaining the network’s security and receive rewards.
As a Delegator, you are encouraged to delegate only to identified and reputable Guardians in order to maintain a high-quality network and avoid loss of rewards.
The new staking mechanism, once fully adopted, can provide great value to the Orbs network. Summing up our discussion:
- By stacking and delegating your power, you increase the network security and stability, and contribute to the network growth in the long-term.
- Staking contributes to a strong incentive layer that is a key factor for enterprises to build blockchain-based use cases.
- For the staking to be effective, locking of staked tokens is required.
- Staking is the new mining, and allows Orbs community members and token holders to take part in the network’s operation and earn rewards for doing so.
- By staking their tokens, Delegators take an important role in the Orbs Universe ecosystem.
- Stake responsibly, make sure you are familiar with the staking wallet and contract. Use only a staking wallet of a trusted source. Delegate to a trustworthy Guardian.
How to use TETRA, Orbs’ staking wallet | Nate Simantov
MetaMask Security Overview and Connecting to Tetra Wallet | Eran Peled
Thanks for your participation in making Orbs the best public blockchain for enterprises! To learn more about Orbs and receive updates on the project, visit the Orbs on Twitter and say hello in the official Orbs Telegram group.