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Validator Staking

This is an overview of staking on Enjin Relaychain, known as liquid staking.

Staking Interfaces
  • NFT.io: Use NFT.io for a simplified experience. It provides a convenient, user-friendly interface to manage your stake and nomination pools.
  • Enjin Console: For advanced features and the full user interface referenced in this document, use console.enjin.io.
    • Note: Ensure you connect to the Enjin Relaychain network in the top left corner, as staking takes place on the Relaychain.

Concepts​

  • Direct staking - A user stakes directly to one or more validators and is paid directly by them.
  • Nomination Pool (indirect staking) - One account stakes funds that represent a group of users. This account handles the nominating and receives the rewards.
  • Liquid staking - a token is received that represents the user's stake. The staked token can be used (is liquid) while the user is staked. It is minted when the user stakes and burned when they unstake. It can also be exchanged for the real token.
  • Validator - Provides security for the network and receives rewards for doing so. On Enjin, these rewards are distributed to nomination pools. (A list of active validators can be seen on Subscan.)
  • Nominator - The account that chooses a validator to stake with. In the case of Enjin, this is the nomination pool's account.
  • Commission - A percentage of the rewards taken for offering a service. This can be either or both: a commission set by a validator, for their contributions to progressing and securing the network; and/or a commission set by a nomination pool owner, for having created the pool for which the active validator(s) were selected and the user(s) of the pool benefited.

Nomination Pools vs Direct Staking​

On Enjin, we use nomination pools to handle staking due to the increased simplicity and lower minimums. Another type of staking supported on substrate is direct staking, where a user stakes directly to a validator, but it has several disadvantages.

Nomination Pools with liquid staking​

With nomination pools, there is one account that multiple users put their funds into. This account acts as the nominator and receives the rewards. The liquid token, sENJ, is used to represent a user's stake in the pool.

  • Low minimum (1 ENJ) - pools can have lower minimums per user because all of the pool's funds are staked together
  • Easy to use - users only need to choose a pool, no need to choose validators
  • Receive liquid token - a liquid token, sENJ, is received that represents the user's stake. This can be transferred or even exchanged for ENJ
  • Immediate exit - due to the liquid token, the user can exit immediately by exchanging their sENJ for ENJ

Direct Staking​

note

Direct staking is not supported on Enjin. This information is just for comparison.

  • High minimum - direct staking has a high minimum balance. On polkadot, it's 250 DOT.
  • Must choose validators - each validator must be manually chosen. This can be difficult for new users.
  • Staked token is locked - the staked token cannot be used while staked
  • Stash / controller accounts - multiple accounts must be created, increasing complexity
  • 28 days unbonding period - users must wait 28 days after unbonding to receive their funds

Tokens Overview​

There are three tokens relevant to staking:

  • ENJ - ENJ is the native token of the Enjin network. It is the token staked in the pool.
  • sENJ - sENJ is the liquid token that represents staked ENJ. It is minted when ENJ is staked and burned when ENJ is unstaked. It can also be exchanged for ENJ through the stakeExchange pallet.
  • Degen Token - The degen token is an NFT in a special collection. It is required to create a pool and is also used to manage the pool. The owner of this NFT can optionally receive a commission. Each token is only usable in one pool at a time.

Deposit​

A deposit is reserved when the pool is created. This deposit will be released to the holder of the degen token when the pool is destroyed. Here's an example:

  1. Alice creates a pool with degen 3 and 5000 ENJ
    1. ENJ is locked in a pool as deposit
    2. Degen 3 is associated with the pool
    3. Alice receives commissions
  2. Alice transfers degen 3 to Bob
    1. Bob begins receiving commissions
    2. Bob can now manage the pool
  3. Bob destroys the pool and everyone withdraws
    1. Bob gets the 5000 ENJ deposit because he holds the degen
    2. Bob would actually get slightly more than 5000 ENJ because the deposit is staked, so he would get the rewards as well

ENJ & sENJ​

Here's an example to show the relationship between ENJ and sENJ. The important thing to understand is that although the number of sENJ does not change as rewards are distributed, its value increases because it represents a proportion of the total ENJ in the pool.

Payouts​

Reward payouts are automated by validators, eliminating the need for manual intervention. However, understanding the distribution logic is helpful:

  1. Reward Collection: Staking rewards are collected from the validator into the reward account for the current era.
  2. Reward Distribution: Rewards are distributed for the previous era (one era lag) to ensure all validator rewards are fully collected first. This stage involves:
    1. Sending the commission to the Degen token holder.
    2. Staking (reinvesting) the pool's remaining reward balance to maximize future returns.

Extrinsics Overview​

Here's an overview of the extrinsics (operations) in pallet-nomination-pools.

Administration​

These extrinsics are for creating or modifying pools and require special permissions. Some must be called directly by the owner of the degen NFT, and a few can be called if assigned to a specific role.

  • create - creates a new pool. Requires the degen NFT and the deposit.
  • chill - stops the pool from receiving rewards.
  • destroy - puts the pool into the destroying state
  • nominate - nominates validators for the pool
  • mutate - makes changes to the pool

Members​

These are the extrinsics that will be called by users (members) of the pool.

  • bond - bonds ENJ to the pool. The user receives sENJ.
  • unbond - Unbonds sENJ. The user burns sENJ.
  • withdraw_unbonded - The ENJ is received from unbonding after the unbonding period has passed.

Permissionless​

These extrinsics can be called when the pool is in the Destroying state, by anyone.

  • unbond_deposit - Unbonds the deposit. Only callable after the pool is destroyed and all members have left the pool.
  • withdraw_deposit - Withdraws the deposit. Can only be called after the deposit is unbonded. The pool will be destroyed (deleted) after this is called successfully.