What is Cosmos?

Cosmos aims to be the internet of blockchains. To learn more, please take a read through their whitepaper.

What are validating and delegating?

Cosmos blocks are produced by validators, and in order for Cosmos to be stable and run securely, validators need to have the technical ability to provide a secure, always-on infrastructure.

Not everyone can do this. Some token holders participate indirectly by delegating the tokens they own to a validator. The validators are providing a service to the delegators. They usually charge a fee to cover their operating costs.

Why should you delegate?

By delegating to ATOM, you help to secure the network. You can be partially rewarded for this help provided by the protocol. If you plan to hold on to your ATOM for a period of time, delegating will help you accumulate more ATOM, counteract network inflation and contribute to the health of the network at the same time.

What happens to the ownership of ATOM after they’re delegated?

You are not giving away ownership of ATOM by delegating. The validator you delegate your tokens to is not able to access your funds at any point in time since you are only delegating your staking rights. Your ATOMs always stay in your wallet and you may re-delegate them to another validator at any time.

Where can I explore the network and create a Cosmos Hub wallet?

Wallet: Keplr

Explorer: Mintscan

What are the risks of delegating on Cosmos Hub?

In Cosmos Hub, both the validator’s self-bond and the token holder's bond are at risk of slashing.

There are two ways in which this can happen and a portion of your Staked ATOM can be destroyed.

a. If you delegate to a validator who has been offline for more than 20 hours (assuming a blocking time of 7.22 seconds), you will lose 0.01% of the tokens you have delegated to that validator.

b. If you delegate to a validator who signs the same block twice using the same key, you will lose 5% of the tokens you have delegated to that validator.

We have our own capital on the line, so we are fully incentivized to do our best to prevent such events. However, delegators must be aware that this slashing risk will always exist.

How long does it take for an ATOM delegate and undelegate?

Delegation is instant.

From the moment you initiate the unbonding process, it takes 21 days to unstake. During this time you will not earn rewards. When the process is complete, you can transfer/trade your ATOM tokens.

What is the calculation for each type of reward?

The validator receives the proceeds based on the total stake. The validator can take a commission before the proceeds are distributed to the delegator.

Example:

Assuming that the delegator delegates Atom to Terminet, Terminet's total stakes are 10% of the network, of which 80% comes from the delegator and 20% is Terminet's own funds. ( Delegation + self-stake ) Assume Terminet takes 10% of the proceeds from the delegate as commission.

Let's assume that the reward for a block is 990 Atoms and the transaction fee is 10 Atoms.

There are then a total of 1000 Atoms involved in the reward distribution.

Total stakes: 1000 * 10% = 100 Atoms

Terminet commission: 100 * 80% * 10% = 8 Atoms

Terminet earnings: 100 * 20% + commission = 28 Atoms

Total delegator earnings: 100 * 80% - commission = 72 Atoms

Each delegator is paid according to the proportion of their delegated volume to Terminet's total stakes.

How are rewards disbursed?

You need to withdraw their rewards from the protocol and then decide to delegate if you wish to compound rewards.

Terminet is never in control of the rewards.