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Staking is a vital part of the Covalent Network. It’s a chance for participants to play a role in advancing a querying and indexing protocol for web3.
Covalent Network aims to empower operators and CQT holders to strengthen and improve the web3 experience.
Why staking matters
Staking is a fundamental component of the Covalent Network.
This mechanism is in place to align incentives and maintain quality operations within the network.
Only operators who stake the minimum required CQT (currently, 175,000 CQT per Block Specimen Producer) can submit proofs for correctly extracting blockchain data from indexing blockchains and earn rewards for doing so.
In the event of malicious or dishonest actions by operators, their rewards are slashed.
On the flip side, operators can enhance their income by providing valuable utility to the network.
Moreover, CQT holders who choose not to run a node can delegate their tokens and earn rewards for helping secure the protocol.
The Covalent Network’s initial staking yield and rewards are fueled by the staking allocation of 8% of the total supply.
This allocation is designed to supplement rewards for up to four years.
As time progresses, the staking smart contract will emit rewards based on a rate determined by the contract. This approach ensures that network operations remain profitable.
The reward emission rate is denominated in CQT per epoch (24 hours), which means that the staking yield will adjust according to the amount of staked CQT.
As the contract owner, Covalent monitors and updates the CQT emission rate to maintain a reasonable staking yield as the quantity of staked CQT grows.
How to stake on the Covalent Network
Here’s a quick overview of how to stake:
- Connect your wallet: To begin, navigate to the Covalent Network Staking Dashboard. You’ll be prompted to connect your wallet. If you still need to, follow the instructions to connect to the Moonbeam via your wallet.
- Delegating to network operators: On the staking dashboard, you can delegate your CQT to operators. Delegators earn CQT rewards proportionate to their staked amount.
- Selecting a network operator: When choosing an operator, consider factors like commission rates and available delegation for staking.
- Stake your CQT: To stake, select an operator, click “stake,” and specify the amount of CQT you want to delegate. You must approve the contract, interact with your wallet, and confirm the transaction. Once both actions are completed, your CQT will be officially staked.
- Top up your staked amount: If you wish to increase your stake, select the “Top Up” option after delegating your CQT. Follow the same process described above, and the new staked amount will be reflected on the dashboard.
- Redeem your CQT rewards: Rewards can be redeemed without a cooldown period. Under “My Delegators,” you can view the redeemable amount. Select “Redeem,” choose the desired amount, pay the transaction fee, and receive your rewards.
- Unstaking your delegated CQT: Unstaking involves a cooldown period. This period is 28 days for delegators, while Network Operators face a 6-month unstaking period. Recovering your unstaked amount can be done during the cooldown period that follows unstaking your CQT.
Staking on the Covalent Network secures the network and allows participants to earn rewards.
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