Nominated Proof of Stake

Many blockchain projects launched in recent years substitute the highly inefficient Proof-of-Work (PoW) component of Nakamoto’s consensus protocol with Proof-of-Stake (PoS), in which validators participate in block production with a frequency proportional to their token holdings, as opposed to their computational power. While a pure PoS system allows any token holder to participate directly, most projects propose some level of centralized operation, whereby the number k of validators with full participation rights is limited. Arguments for this design choice are that

• the increase in operational costs and communication complexity eventually outmatches the increase in decentralization benefits as k grows;

• while many token holders may want to contribute in maintaining the system, the number of candidates with the required knowledge and equipment to ensure a high quality of service is limited; and

• it is typically observed in networks (both PoW- and PoS-based) with a large number of validators that the latter tend to form pools anyway, in order to decrease the variance of their revenue and profit from economies of scale.

Therefore, rather than let pools be formed off-chain, it is more convenient for the system to formalize and facilitate pool formation on-chain, and allow users to vote with their stake to elect validators that represent them and act on their behalf. Networks following this approach include Polkadot, Cardano, EOS, Tezos, and Cosmos, among many others. While similar in spirit, the approaches in these networks vary in terms of design choices such as the incentive structure, the number of validators elected, and the election rule used to select them.

Polkadot introduces a variant of PoS called Nominated Proof-of-Stake, with design choices based on first principles and having security, fair representation and satisfaction of users, and efficiency as driving goals. In NPoS, users are free to become validator candidates, or become nominators. Nominators approve of candidates that they trust and back them with their tokens, and once per era a committee of validators is elected according to the current nominators’ preferences. In Polkadot, the number k of validators elected is in the order of hundreds, and may be thousands in the future as the number of parachains increases.

Both validators and nominators lock their tokens as collateral and receive staking rewards on a pro-rata basis, but may also be slashed and lose their collateral in case a backed validator shows negligent or adversarial behavior. Nominators thus participate indirectly in the consensus protocol with an economic incentive to pay close attention to the evolving set of candidates and make sure that only the most capable and trustworthy among them get elected.

Introduction to Nominator

In GEEK network (as well as Polkadot ecosystem), nomination refers to staking your token to validators. It is the same meaning as the staking action in other PoS projects. A user who stake his/her GEEK to the validator is called a nominator.

A nominator can nominate up to 16 trusted validators simultaneously, pledging certain amount of GEEK to them. If the validators you nominated are elected, the nominator will be rewarded by the amount of tokens s/he pledged. If not, then there will be no rewards. By that time, you can nominate others again.

Different to validators, there is no limit to the number of nominators in GEEK network. As long as a nominator chooses validators without misbehavioral background, the risk will be under control, and the nominator can enjoy rewards during the entire nomination period.

Restrictions to becoming a Nominator

In GEEK network, you can become a Nominator as long as you hold GEEK, no matter how much you own.

How to Nominate

Anyone can apply to become a nominator. The validator list is open to all of them and each nominator can choose up to 16 validators. As long as you are holding GEEK, you are able to become one validator, but we hope that nominators take the performance and reputation of validators into full consideration before nominating them.

Some key factors to consider before nominating

Commission: Check explorer (opens new window) for details, but other than that, you should consider other factors of a validator. If a validator is cut off the connection to the network from time to time, its nominator's gain may be harmed. More importantly, if the consensus process is suspended due to some validators' not responding to the network, slash will take place.

Therefore, you should comprehensively consider the attributes of validators, such as their block-producing records, reward records, slash records, etc. Beside, you can fully investigate your validator, such as who are they behind the screen, their reputations, ambitions, etc.

Timing

In GEEK network, it is stipulated that 1 Epoch = 1 Hour, and 1 Era = 6 Epoch

Suppose: Now is the Nth Era of GEEK network

If a nominator nominate by the first three quarters of the fifth Epoch in this Era, and the validator is in selected validator list in the (N+1)th Era, the nomination reward will be generated from the (N+1)th Era, and the nominator can claim reward from the (N+1+1)th Era.

In the last quarter of the 5th Epoch, the nomination is suspended. Anyone shall not nominate.

If a user nominates in the 6th Epoch of the Nth Era, by that time the election for the next Era has already completed, so that user's nomination will take effect in the (N+1+1)th Era and rewards can be claimed by the (N+1+1+1)th Era.

Valid & Invalid Nomination

When a nomination takes effect in which the nominator picks 5 validators, and 3 of them are elected. These 3 are valid validators and the remaining 2 are invalid ones. The nominator cannot get reward from the invalid ones.

Therefore, GEEK recommends you to pick as many validators as possible (up to 16), to guarantee more validators elected.

Nomination Process

Setup Stash account and Controller account

Like Polkadot, a GEEK need 2 accounts, the one for storing assets (Stash Account) and the other for delegation (Controller account). Although a nominator can set the two as a single account, it is not recommended by us.

A nominator can create 2 accounts as Stash account and Controller account respectively. The one used for the nomination is Controller account, in which some tokens for transaction fees will be needed, or the transaction will fail if the balance is 0.

Nominate a validator (delegate a validator)

In GEEK network, a user may nominate (vote for) one or multiple (up to 16) validators.

Cancellation of Nominations and Staking

When a nominator needs to change their nominations, he can choose to cancel and then re-pick validators from the validator list. But it will not be effected until the next Era.

When a nominator needs to cancel nomination, he can do it by cancel part or all of GEEK that are in Staking, which will be further locked for 2 days.

GEEK for nomination

GEEK strongly recommends any nominator to create 2 different accounts as Controller and Stash ones respectively, and make sure that there's enough balance for transaction in each of them. Besides, you can store most of assets in Stash account.

Please don't Stake all of your GEEK or you will not have enough balance for the transaction fee.

For more details please refer to this guide: How to staking

Resources

How Nominated Proof-of-Stake will work in Polkadot (opens new window)