Elrond Staking Phase3 is coming soon – Get Prepared!
We are approaching very fast the Elrond Staking Phase3. Get prepared and understand all the technical and economic details behind this change and how it will impact your earnings if you’re an existing or new Elrond Network supporter!
Phase3 will bring a few technical changes that target the Elrond Protocol, which is at the core of the Elrond Network:
- The maximum number of nodes will increase from 2169 to 3200
- A minimum number of nodes is introduced: 1920
This changes mean that a new level of flexibility is added to the network, validator nodes being able to get in and get out of the network. Getting nodes in or out is only possible as long as the number of nodes in the network stays between 1920 and 3200.
Having the above technical changes applied to the network, the economics of the reward system will also be changed. Here’s how it will be, once Phase3 starts:
The current APR% for 2169 nodes is 36%. This is the reference point for Phase3, meaning that 36% is still going to remain as a reward for validators if the number of nodes remains 2169. But as additional nodes are going to join the network, additional rewards are not going to be added. Instead, as more nodes join the network, the APR% will start decreasing. Let’s make a simple calculation in order to better understand this:
Phase3 Total Annual Rewards Amount:
36% * (2169 nodes * 2,500 eGLD/node) = 36% * 5,422,500 eGLD = 1,952,100 eGLD
After Phase3 starts, the max annual rewards will be: 1,952,100 eGLD, regardless of the number of nodes.
Example of APR calculation for the max number of nodes:
1,952,100 / (3200 nodes * 2,500 eGLD/node) = 1,952,100 / 8,000,000 = 24,40%
Example of APR calculation for the min number of nodes:
1,952,100 / (1920 * 2500) = 1,952,100 / 4,800,000 = 40,66%
The outcome is clear, if less nodes participate in the network, the APR increases, if more nodes are being added, the APR decreases up to 24,40% , when the max number of nodes is reached.
How is APR calculated for delegators
Currently, when being part of the active delegation, the APR is around 29%. That means that from the total of 36% APR that the protocol provides, a commission is applied by the node operator, so the delegator receives 29%.
The commission calculation is simple:
1 - (29 / 36) = 19.44%
What is the commission applied by ARCStake
We announced that the minimum APR will be 23%. This is calculated based on the APR% when the max number of nodes is reached. We take this scenario as the default one, because there is a high interest in staking on the Elrond network and we estimate that the limit will be reached in a couple of days, if not earlier, after Phase3 starts.
APR scenario for staking with ARCStake when max number of nodes (3200) is reached:
ARCStake Commission: 15%
APR for delegators: 23%
APR scenario for staking with us when min number of nodes (1920) is reached:
ARCStake Commission: 15%
APR for delegators:
40,66% - (15% * 40,66%) = 34.56%
ARCStake is committed to sustain the minimum APR for our delegators, which is 23%.
This results in an approximatively 5,73% commission, that will not increase if the number of nodes fluctuates.
If the number of nodes decreases, the more APR%, you, as delegator, will earn.
The calculations provided in this document are based on the last Phase3 Proposal document, link below. Figures may be changed in order to align with Elrond’s final APR%.
Elrond recently announced a max 25% APR for validators, when the max number of nodes is reached. Our calculations in this document are based on a max 24,4% APR, which is taken out from the latest official document related to this.
We recommend going through it, if you want to dive in into much more details:
It’s Time to Grow: Phase 3 Staking Proposal – Economics – Elrond Community Forum
- If 25% APR is going to be the official APR once Phase3 staking starts, we will keep our commitment to offer 23% to our delegators.
- If less than 24,4% APR is going to be the official APR, then our commission might suffer changes.
Don’t hesitate to ask questions to our team on Telegram: https://t.me/arcstake
Happy Staking with ARCStake!