The term “staking” is used for any action that contributes to a delegated proof of stake consensus system.
A prime example is allocating or bonding funds in the form of BCNA coins to a validator of choice. By doing so, a delegator votes for a particular validator to be elected, making them eligible for validating data within the blockchain.
Backing a validator by delegating BCNA coins also contributes to their voting power. Voting power partially determines which validator is elected to sign blocks and earn rewards.
Any BCNA coins delegated to a validator are held and unable to be used in other blockchain functions. The only exception to this rule is the use of BCNA coins for voting in governance proposals.
At any time—keeping in mind the unbonding period of 14 days—the delegator can unbond their BCNA coins and return them to their BitCanna wallet. At no point will a validator own or be able to use delegated BCNA coins for their own gain. They simply count as votes for this validator to be elected to sign blocks.
Since validators perform an essential task within the BitCanna blockchain, they have strict rules to follow. Failing to follow these rules can result in disciplinary action (slashing).
Misbehaviour impacts both the validator and its delegators, making finding a reliable, dedicated, and trustworthy validator essential. Delegators should also consider the "reward share" (commission earned on successful block signings) when deciding which validator to back.
When elected, a validator must successfully verify a transaction to earn a reward. These rewards are then shared with the respective delegators (if applicable). Several factors have an impact on which validator is elected to sign a block.
The factors that contribute to assigning a validator include:
• Voting power
• Time spent actively signing blocks
Validators can set their own commission rate (the percentage of rewards they keep themselves), with the remaining rewards shared evenly between delegators based on their stake. This commission rate might be an important factor in finding a trustworthy and profitable validator to stake your BCNA coins with. Often, this is referred to by the term “Annual Percentage Yield (APY)”.
Annual Percentage Yield (APY)
Yearly earnings for staking your BCNA coins are often calculated using annual percentage yield, or APY for short. This is calculated on the assumption that a delegator will lock their BCNA coins with the same validator for an entire year.