Introduction
This tutorial will show you where you can buy $CHEQ and how to stake your tokens on the cheqd network.
Step 1: Make sure you have a Keplr wallet
Keplr is a popular wallet in the Cosmos ecosystem and offers users the ability to stake their tokens, use blockchain apps and manage multiple tokens in one wallet. You can download the Keplr wallet here.
Step 2: Get yourself some $CHEQ tokens
Currently, you can purchase $CHEQ tokens on Gate.io, BitMart, Indacoin or using the Osmosis Dex as shown below.
To get $CHEQ tokens using Osmosis, navigate to Osmosis Dex and connect your Keplr wallet. We will be using $ATOM tokens to swap to $CHEQ.
- Select ‘ATOM’ in the ‘from’ tab
- Select ‘CHEQ’ in the ‘to’ tab
- Click ‘SWAP’
- Go to the ‘ASSETS’ page and withdraw to your cheqd wallet
Great! Now you have $CHEQ tokens and can go to the staking portal to delegate your stake.
Step 3: Go to the $CHEQ staking portal and choose a validator
Go to the $CHEQ staking portal and connect your Keplr wallet.
- Now you will need to choose your preferred validator
Step 4: But how do I choose a validator?
Choosing a validator can be a daunting process for first-timers. The terminology and jargon used are new and the often-time overcomplicates the process of choosing a validator. We are here to help and will outline some good practices below:
Understanding what a validator is
In Proof-Of-Stake (POS) blockchains, validators are the ones processing transactions and securing the network, in return they receive staking rewards. To be a validator they need to put up their own stake, this costs a lot of money depending on the amount of stake (and price of the token) they need to put up to be a validator.
When you choose a validator to stake your crypto with, you are essentially adding your stake to their stake and in return for doing that, you get a share of the staking rewards. You might think this is a good deal for you, they do all the work and you get to reap the rewards right? The ‘cost’ for you is the commission rate they charge for delegating your stake with them.
Delegators
A delegator is just a fancy word for token holders who cannot, or do not want to run a validator node themselves. Instead, they secure the network by delegating their stake to validators.
Commission rate
This refers to the percentage of tokens that a validator will take as commission for running the infrastructure. Think of it as what you will have to give up of your staking rewards in order to stake with them.
- Typically the lower the commission rate the better
- Beware of a 0% commission, it may seem like a great option but keep in mind that a validator can change the commission rate. This is why it is important to check on your staking positions regularly.
Slashing
When you make the decision to stake your crypto, there is a risk you take on called ‘slashing’ risk. As mentioned earlier, validators are the ones processing transactions and securing the network, in return they receive staking rewards. To become a validator, they had to put up their own stake. The reason they put up their own money is so that it incentivizes good behavior and stops them from acting maliciously (Like processing dodgy transactions).
If they do act maliciously, then their stake will get ‘slashed’ and they will lose their money. Slashing usually occurs because of validator downtime or double signing. So ultimately, it’s a game theory concept to keep all network participants in check. Some validators may have ‘slashing insurance’, this simply means that your stake will be insured against losses that may occur due to slashing.
On the cheqd network, any tokens directly staked by the validator as well as delegated tokens are counted in what gets slashed for bad behavior. This means that if a validator exhibits a double-sign infraction or downtime, you may be slashed:
- 1% for (validator experiencing enough downtime to be put in validator jail).
- 5% (for double-sign infraction)
Active /Inactive set
Always choose a validator that is in the active set. It depends on the network the reason for an active/inactive set to filter validators that meet minimum requirements set by the team. If a validator is in the ‘Active set’ it means they are currently earning staking rewards. If they are in the ‘Inactive set’, they are not currently receiving staking rewards.
Voting power
Once you have staked your tokens with a particular validator, you can vote on something called ‘Governance Proposals’. This means that you can take part in making decisions on the network. It is good practice to steer away from validators with large voting powers as continuing to delegate to them increases centralization and can compromise the security of the network.
Self-bonded
This refers to the number of tokens that a validator has put up to stake themselves. A validator with more self-bonded tokens has more of their own stake on the line in the network and so is unlikely to perform as bad actors (Since they risk losing that money).
Choosing a validator
You will see a list of different validators, including their Voting Power and the Commission they claim.
First, check StakingRewards.com to see if there is a Verified Provider for cheqd network
If you can’t find a Verified Provider there, you can go to the cheqd explorer to get more information on each validator. This will show you more details like the voting power, commission, self-bonded, number of delegators, and if it’s in the active set.
- You want to ideally choose a validator with:
- Low commission: Remember that the commission rate is the % of your staking rewards goes to the validator. Don’t fall for ‘Zero %’ validators that try and bait you into delegating with them and then change their commission later on.
- Is in the active set: The validators in the active set are earning staking rewards.
- Voting power > 0%: The voting % represents the weight that a validator holds when making governance decisions on the network. You typically don’t want to choose a validator with the highest voting power (as this makes the network more centralized) and you also don’t want to choose a validator with zero voting power.
- Delegators > 0: A validator may be more popular or trusted if it has a higher number of delegators than others.
- Self > 0%: Remember that self-bonded refers to the amount of stake that the validator has put up themselves. The higher this number is, the more there is to lose for the validator and the more unlikely it is that they will act maliciously.
Wondering what the current staking APY is? Check it out on StakingRewards here:
To see a list of validators on the the cheqd network, scroll further down on the page:
Step 5: Stake your coins
Now that you have chosen a validator, you can stake your $CHEQ tokens and will start earning staking rewards.
Note: It takes 14 days to unstake
Conclusion
Staking your crypto is a great way to make your investments work for you. In addition, you are helping the cheqd network become more secure, efficient and decentralized as you support the validators on the network. Remember that staking is an essential part of a Proof-of-Stake (POS) blockchain and there are many benefits to staking your crypto:
- Earning Yield
- Airdrop eligibility
- You are contributing to decentralization
- Boosting network security
- Participating in governance
Let us help you with your first steps to staking your crypto. Check out StakingRewards.com for more tutorials and insights on staking.