A recent article on the RadixDLT website explains the upcoming staking features on the Radix network, which will be available in the Babylon version. Staking is a way to secure the network and also earn rewards. The new staking system makes it easier for investors to participate.
To stake Radix (XRD), investors will visit a web page specifically designed for staking. They can also use third-party staking sites. Staking is as simple as sending XRD to a validator, like RadixRadar.de. In return, investors receive tokens called Liquid Stake Units (LSU) that represent their stake. These tokens can be freely transferred or used as desired.
If investors want to retrieve their staked XRD, they can unstake by sending their LSU back to the validator. The validator calculates the amount of XRD to be returned and moves it to a separate pool. A special NFT token called a claim token is given to the investor, specifying when and how much XRD they can claim. Once the waiting period is over, investors can exchange the claim token for their XRD.
The value of the stake and the rewards earned by stakers depend on the overall staked amount and the network’s performance. The Radix Wallet will provide information on the value of stakes and when rewards can be claimed.
Overall, the new staking system makes it simpler and more accessible for investors to stake their Radix tokens and participate in securing the network while earning potential rewards.
Tax Implications
Since the number of LSU tokens does not change during the staking period, and you don’t have immediate access to the staked XRD, one could argue that the reward emmissions in each epoch may not be considered taxable income. Only unstaking would be taxable, since only then is the gain or loss realized. However, both the IRS (US) and the HMRC (UK) don’t provide clear guidance on how liquid staking will be taxed.
We are working on a tool that will provide stakers on RadixRadar exports of the staking rewards per epoch, in case these will be needed for tax purposes.
This article is for discussion purposes only and does not constitute tax or legal advice.
Why you should diversify your Stake
When it comes to staking your cryptocurrency, diversification is key. Instead of putting all your stake into a single validator node, consider spreading it across multiple validator nodes to enhance network security. Distributing your stake among several validators helps to safeguard against potential downtime, attacks, or other technical issues that may affect individual nodes. By supporting multiple validators, you contribute to a more resilient and decentralized network, increasing its overall security and stability.
By diversifying your stake, you reduce the risk of relying on a single validator, as any issues or vulnerabilities specific to that validator could potentially impact your investment. If a validator performs badly, it can be affected by “slashing”: The validator will lose some staked XRD (the tokens are burned as penalty). This means when unstaking, you could get back less XRD than you put into the validator. This is another good reason to spread your stake over multiple validators – don’t put all of your eggs into one basket!
RadixRadar.de is a long-running Radix validator node that has been around since the betanet launched in April 2021. So please consider staking with us! Our validator address is rv1qw6m5nrwnjx2estgkv8zsvp77es6yea0p99zkregud6dqad8q5wg7yvr4na. See our article Learn how to stake for more information.
Starting today, July 21st, at 19 UTC, https://ociswap.com is holding an airdrop which will will run for exactly two days until July 23rd 19 UTC. Don’t miss out! To participate and get a load of free $OCI all you need to do is register your Radix wallet with @ocicatbot on Telegram (/wallet rdx...) and then stake some of your Radix with our RadixRadar validator (address: rv1qw6m5nrwnjx2estgkv8zsvp77es6yea0p99zkregud6dqad8q5wg7yvr4na).
Instabridge.io is now online and can be used to exchange Ethereum-based eXRD tokens for native XRD tokens. The service promises inexpensive and fast swaps and should also support other tokens such as Bitcoin, Litecoin or Doge in the future.
Tokens can be exchanged 1: 1 and in both directions. All details can be found in the Instabridge User Guide from Radix. To use the service you need a valid Instapass ID.
The first epoch starts on August 11th – from this point on, staking rewards can be earned. In order not to miss any rewards, you should stake before August 11th. Read ours Instructions for staking Radix to learn how. RadixRadar is of course already available as a validator node: You can also find us in RadixExplorer at the address rv1qw6m5nrwnjx2estgkv8zsvp77es6yea0p99zkregud6dqad8q5wg7yvr4na .
Each of you have a different level of knowledge about staking. So we have written a small guide on how to stake in the future to receive rewards.
For the German speakers among us we additionally have uploaded a video that shows of all of this in detail. If you prefer reading or can’t speak German, keep reading below.
Guide
What does staking actually mean?
In short means Staking To stake cryptocurrencies to get rewards. Here you will find a detailed explanation.
How can you earn more Radix by using your Radix coins?
Step 1: Buy Radix
So far you can only buy eXRD (the Radix ERC20 token on the Ethereum blockhain). You can get eXRD via decentralized trading platforms (DEX) like uniswap. In addition, some central platforms (CEX) such as Bitfinex , Gate or KuCoin let you trade and buy Radix as well. You can find further options here.
Step 2: Convert eXRD to XRD
In order to be able to stake it, the eXRD must first be converted into the native XRD (Radix) tokens. In the future, this will be possible directly on Bitfinex, among other platforms. Until then, you can use Radix’s own instabridge platform to exchange eXRD for XRD.
To be able to exchange your eXRD on instabridge, you have to register with instapass.io and complete the KYC (know your customer, i.e. identity check) process there. Then you have to register both the address of your Ethereum wallet, which contains the eXRD, and your Radix wallet address. For the former, you can either use your Ethereum wallet via Metamask, or you can use WalletConnect.
When converting you transfer your eXRD to the instabridge account. After a delay, the same amount will be transferred in XRD, the native Radix token, to your registered Radix address. Usually this should happen in a few minutes. You can see the status of the conversion on instabridge.io. In some cases the transfer can take longer. But don’t worry, you’ll get your XRD eventually!
Radix wallet
If you don’t have a Radix Wallet yet, you can go here to download the application for Windows, OSX and Linux. There you can then create a new address or import an existing one using the seed phrase. You can find detailed instructions for setting up the wallet on the Radix website .
Step 3: Stake Radix (XRD)
Open the wallet and click on “Stake & Unstake” in the menu on the left.
The staking view then looks like this.
There is currently no view in which you can directly select a validator (also called staking pool). You have to enter or copy the address directly where you want to stake.
In the Radix Explorer you can view the list of registered validators and then copy the addresses of the validators you want to stake with. Our address, for example, is the following.
More on the topic of how to pick a validator (or staking pool, more information also here ) at the bottom of the page.
Now you enter the address of the validator (or validators) of your choice and set the desired amount of XRD (Radix) before you stake them. On the right side you can see your current stakes.
Important: Make sure not to stake all of your XRD as you will still need some XRD (between 0.5 and 1) to pay for the unstaking transaction later should you want to unstake.
Rewards
Depending on the size of the stake, you will receive rewards for each epoch. How exactly these are calculated can be found on the official Radix website here. Here is a quick summary:
Every year around 300 million XRD of network emissions are generated by the Radix network. This is an incentive for XRD token holders to stake their tokens for the proof of stake mechanism in order to secure the network.
This means that these 300 million XRD are paid out proportionally to all those who stake XRD, depending on how large their share of the total stake in the network is.
Let’s assume all owners together staked (as described above) 1,000,000,000 (1 billion) XRD. Let’s also assume that you staked 1000 XRD yourself. Then that’s 0.0001% of the total stake in the network. Let us also assume for the sake of illustration that the situation does not change for a year, i.e. no one adds or removes new stakes.
Then after one year you will have received 0.0001% of the emissions (the 300 million). 0.0001% of 300 million are 300 XRD . That corresponds to an APY 1 of 30% .
The real amount will be a little smaller, however, since the delegators charge a fee for the operation of their servers. You can see the respective fee for a validator in the e xplorer before you choose one. You have to weigh up yourself what you think is a fair value.
Let’s say your chosen validator takes a 2% fee. Then that’s 2% of your 300 XRD. So 6 XRD. That means you only get 294 XRD, so 29.4% APY.
Exactly how high these numbers are varies with the amount of stake in the network and with how large your share of it is. In the future the current exact value will be displayed here on our home page.
The rewards are generated proportionally for each epoch. That means if you didn’t join the staking straight away, that’s by and large not a problem. An epoch consists of around 10,000 “consensus rounds”, which corresponds to around 30 to 90 minutes, depending on the activity in the network.
Risk
When staking you cannot lose any XRD. They are only reserved for staking and can be released again at any time (see below).
The only thing you can lose is potential rewards. If selected validators do not work reliably, e.g. because their servers fail, then a penalty is applied to their generated rewards. That would then reduce your profit beyond the fees mentioned above. It is therefore important to choose validators who you trust will be permanently available.
We ourselves staked the majority of our XRD with ourselves instead of with other validators. In other words, if we perform poorly, we will also be punished directly because we receive fewer emissions.
On the one hand, this should show that we are convinced of ourselves and, on the other hand, it is a good additional motivation to keep our servers as reliable as possible.
One more word about unstaking. If you want your stake back, you have to request a reduction in your stake via the wallet.
Important : It can take 1 to 3 weeks (500 epochs) until the removed part of your stake is actually available again.
Selection of validators and further information
You can find more information about staking, unstaking, and what validators actually are on the Radix website.
We want to briefly explain to you how you can best select the validators for which you want to use your XRD (Radix). In short, you should pay attention to the following points.
5×5 rule: Split your stake over at least 5 validators, each with a maximum of 5% of the global stake.
You can see the size of the percentage in the explorer.
Choose validators with a good geographical distribution. Some in Europe, America, Asia etc.
Choose validators who make a professional and reliable impression.
Don’t just vote for the top representatives. It is important to distribute the stakes well. If everyone just sticks to the biggest validators, it endangers the security of the network and can also slow it down.
