On the hunt for the ultimate staking validator? Welcome to your comprehensive guide for making an informed and confident choice. We delve into key considerations ranging from evaluating the security and dependability of potential validators to assessing their fee structures and rewards.
Unpacking the complexities of the ideal validator is no small task. That's where we step in with our comprehensive guide, cutting through the noise to help you find your perfect match.
With the advent of the PoS system, staking has unleashed a plethora of investment opportunities, serving up appealing, steady rewards for those who entrust their voting power to validator nodes.
However, not all validators are made equal – especially when it comes to security protocols or benefits offered to delegators. With this in mind, let's dive straight into the nuts and bolts of picking your ideal validator. Your path to smart, profitable staking starts here.
1. The "perfect validator"
All of us want the perfect validator, the one that has all the advantages, but I'm afraid it doesn't exist. It's a good thing it doesn't exist, because if it were, everyone would delegate with their node, which would be a flagrant violation of the principle of decentralization. The system would cease to be “perfect” instantly.
After discarding the myth of perfection, let's examine what makes the best validators (or the best validators) stand out.
2. Exchanges are perfect for exchanging coins, but not for holding and staking
It is hard to deny that they are useful when using fiat or cryptocurrencies. You can also dispose of your capital "faster" than you would by staking with your own wallet, or you can have coins of multiple protocols without having to deal with their private keys, and even receive promotions that offer interesting return percentages when delegating.
As well as allowing delegators to use their platforms to stake, they also run validator noders in different protocols, for those users who prefer a site whose reputation makes delegators feel "secure". However, the purpose of centralized exchange validators is simple, to attract more users through staking. As a result, they tend to attract more delegation, and thus more risks for decentralization.
Even though centralized exchanges are not typically involved in governance, their voting power could influence the outcome of certain proposals. Furthermore, going bankrupt may affect their delegators.
Additionally, airdrop hunters should know that many projects do not allow centralized exchanges to participate in airdrops. "Exchanges are perfect for exchanging coins, but not for holding and staking" might be a good mantra for meditation.
3. The 0 % commission, a double-edged sword
Cast the first stone if you have ever done it! But be careful, you might miss a lot of airdrops!
In most cases, validators with 0% commissions are not eligible.
Some validators sacrifice profits in exchange for loyalty and a better position at the table. Of course, some delegators want to take advantage of those advantages as well.
It is important to monitor their behavior, trajectory, presence in networks, and other factors we will talk about later. Note that validators may use this commission to pay for infrastructure, support, and development expenses for new tools as contributions to the ecosystem.
4. Avoid delegating to the top 20 validators
A network with a greater number of validators and delegators improves security, decentralizes voting power, and offers a wider range of governance opinions. The top validators tend to concentrate more voting power, even though they are experienced and established.
Nevertheless, there are validators outside the top 20 who are similarly dedicated to their ecosystems. While some may be far from top positions, with time, they will be acknowledged as valuable co-participants.
Airdrop eligibility is another reason to choose a validator outside of the top 20. This requirement is becoming more frequent as time goes on.
If you don't intend to get airdrops and you're simply comfortable with your validator, regardless of its position, then you're fine too!
5. Consider validators that provide support and foster community engagement
In addition to ensuring their nodes work correctly, some validators also create tools and alternatives to make the user experience easier, clarify doubts, share some of their knowledge, and keep up with the latest developments in the ecosystem. When selecting the best validator, it is important to look for someone who is attentive and willing to help when doubts arise.
By the way, did you already join us on Telegram and Twitter?
For example, we have all run out of funds to pay commissions (once or several times) and that can be annoying, so we know that. Whenever you run into trouble, Stakely's Multicoin Faucet is the place where you will get help with a few tokens to get you out of trouble.
Validators who are actively involved in their communities are more likely to do things right for everyone. Another good point to consider!
6. Understanding slashing risks and the importance of staking insurance
The performance of validators is one of the risks of staking , although you should already be aware of this because you are trying to find the perfect validator. In the worst-case scenario, delegators could lose some or all of their earnings if their validator breaks the rules, and it would be permanently or temporarily reprimanded.
Some validators, including us at Stakely, include in their budgets a significant provision for insuring their users' funds (known as staking insurance) in case of unforeseen emergencies. We believe that it's always a good idea to be prepared.
In this way, if our delegators ever have to go through the terrifying slashing experience, they can get their tokens back. This security measure is part of our commitment to protecting our delegators' interests.
7. Redelegation in PoS: Change whenever you want
At this point, if you still have doubts or reservations about choosing a validator that will meet your objectives and fit your personality, do not despair. There are chains, typically from the Cosmos ecosystem, that allow you to redelegate between validators as many times as you want.
However, one essential factor to keep in mind is the unbonding periods of your chosen blockchain projects, especially in the Cosmos ecosystem. In some instances, immediate redelegation is only allowed once, with subsequent redelegations possible only after the unbonding period.
Here's an example: Let's say on December 1st, you delegated ATOM, which carries a 21-day unbonding period. However, by December 15th, you realize your chosen validator isn't the right fit and decide to redelegate. If the new delegation still falls short of your expectations, you'll need to endure a 21-day waiting period before you can redelegate again.
While this might not be the best approach for someone who has little time to keep a detailed track of validator activity, it can be very helpful for comparisons and maintaining your comfort level with your chosen validator.
'Every good effort leads to good results'
Bonus: Enhance your staking journey with these extra tips
Next, we've put together some extra tips that could significantly boost your staking experience:
If you're bilingual or multilingual, that's fantastic. However, if you only speak your native language, we recommend seeking out validators that speak your language. This can help you resolve any doubts or concerns more effectively, particularly as some topics can be technical enough without the added challenge of translation.
The practice of compounding can be a tremendous ally in your staking endeavors. Essentially, compounding is performing a consistent, organic Dollar Cost Averaging (DCA) using the rewards you've earned from staking. You can do this manually, by claiming your rewards and reinvesting them in the same node, or by using platforms that do it automatically for you. In the Cosmos network, two platforms offer this service: REStake and Yieldmos, both of which are available when you stake with Stakely!
By choosing Stakely as your validator, you're not only securing a trustworthy and experienced partner, but also gaining access to exclusive tools to maximize your returns. We hope that this guide with 7 key factors for choosing the best validator will help you harness all the benefits that the crypto world, and PoS in particular, have to offer. Start building the financial future you deserve today! With Stakely, that future is just a step away.