The Cosmos network is a blockchain layer 1 protocol that focuses on Web3 development and interoperability with other chains. ATOM is the native utility and governance token of Cosmos Hub. ATOM is used in governance and block production in the Cosmos network. Cosmos was the first chain to be built on Tendermint, a PoS and BFT based mechanism for consensus building.
As mentioned, Cosmos is built on the Tendermint framework, which works as its main consensus mechanism and is a Proof-of-Stake (PoS) system. Staking ATOM is not particularly difficult, but there are some things you need to know. Things like:
This should not stop you from staking ATOM yourself and earning rewards from doing so.
Proof-of-Stake (PoS) is a consensus algorithm that aims to improve on some of the problematic aspects of its predecessor Proof-of-Work. It is more popular as it is more environmentally focused and efficient. It works by locking up some of the native tokens with rewards being an incentive for doing so.
By locking a protocol’s native tokens (ie ATOM) to give “validators” the right to secure a chain. Validators propose new blocks or attest other validators’ blocks, gaining rewards for doing so.
Staking brings new tokens into the ecosystem in the form of rewards. It is considered the most organic way to receive income in the crypto world, and to participate in the appreciation of the token’s value, as the value comes from the blockchain’s currency inflation. By staking ATOM you are adding to the security of the chain and making a profit from your tokens too.
If you do not stake, your assets’ value will be eroded from protocol inflation.
The minimum amount you will need to start staking is 1 ATOM.
Detailed information about Kiln validators can be found here.
As an incentive for helping to safeguard the network, you can earn up to 22.16% GRR* from each validator you stake through Kiln. (Source: https://protocolstaking.info/)
Kiln is the leading enterprise-grade staking platform, enabling institutional customers to stake ATOM, and to whitelabel Solana staking functionality into their offering. Our platform is API-first and enables fully automated validators, rewards, data and commission management.
We are serving thousands of businesses worldwide. Our goal is to allow everyone to securely and seamlessly stake their coins from our dashboard. In addition to our dashboard you can also use a hardware wallet, a browser wallet, a B2B custodian, a crypto exchange or just their favorite investment app. Kiln makes staking ATOM easy, secure, and accessible to everyone.
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Proof-of-Stake (PoS) is a type of consensus mechanism used to validate cryptocurrency transactions. Through PoS, validators can contribute to the block production of a chain while keeping environmental concerns to a minimum, which is becoming an increasingly large issue in Proof-of-Work.
By staking capital rather than energy, validators risk losing a portion of their value and future potential for staking by misbehaving while creating blocks. This incentivizes collaboration and minimizes malicious activity in the consensus process.
ATOM rewards are distributed after each block produced, this is roughly every 7.23 seconds. Rewards are calculated based on the proportion of your stake delegated to the pool.
The risks associated with staking ATOM comes from double signing and downtime. Double spending on the Cosmos protocol comes with a 5% slashing penalty and a 0.01% slashing for downtime. Kiln’s technology helps mitigate these outcomes by providing the required maintenance. When delegating with Kiln these issues are therefore taken care of so you don’t have to worry.
The minimum amount that you will need to stake to contribute to the Cosmos network is at least 1 ATOM.
While you may maintain self-custody of your staked ATOM (ideally using a Ledger hardware wallet), you may also choose a third-party custodian to control the withdrawal of your staked ATOM (ie Fireblocks).
The Cosmos protocol has a longer unbonding period than most, making it in-ideal for those who may need to access their assets promptly. The unbonding period comes in at 21 days for the Cosmos blockchain.
Rewards are distributed every time a block is produced (every 7.23 seconds), rewards account for 21% to 25% GRR. Penalties, on the other hand, are at 5% slashing for double signing, and 0.01% for any downtime.
The average block time on ATOM is ~7.23 sec.
To stake, or delegate, ATOM coins, you will need a wallet that holds accessible ATOM for staking along with a 1 ATOM fee. To delegate you will need to find an active ATOM validator to delegate your coins to.
In the context of Proof-of-Stake blockchains, the gross reward rate (GRR) refers to the total or gross amount of rewards earned from staking before deducting any fees or expenses. This is a reward rate that fluctuates with the operations of the protocol and the performance of validators, it is not set by Kiln. The net reward rate (NRR), on the other hand, takes into account the deductions or expenses, providing a measure of the actual rewards received after subtracting fees or costs.