On the way to complete, internet-scale decentralisation: The Elrond Blockchain progresses to the next round. There are a lot of things to discover for EGLD investors and those interested in staking. We are happy to share the information from Elrond with you.

The Elrond network is now live, setting a remarkable standard of performance in the Blockchain technology. The Elrond DeFi 2.0 module will also be coming live soon and feature a new set of financial microservices that will be offered to governments, institutions, banks, businesses, and individuals.

Elrond is ushering in a new era, especially in token distribution and decentralisation. By taking this step, Elrond is strengthening the Blockchain security and, at the same time, enabling a variety of new business models for staking-as-a-service providers. By enabling more EGLD to be staked, more people and validators will participate, more tokens will be locked (‘staked’), and security will improve. A secure environment will give further investors the confidence they need to start relying on Elrond.

According to Elrond, the key changes in Staking Phase 3 are as follows:

  • Staking providers can offer non-custodial delegation services
  • Staking pools are expected to be created starting from 26 March 2021
  • The validator nodes will be increased from 2,169 to 3,200
  • The max node increase is expected to be activated on 05 April 2021
  • Staking will also be possible using the Maiar app
  • Waiting list: change to 6% p.a., starts on 05 April 2021; ends on 03 May 2021

The key features of Phase 3 Staking

1. Introduction of staking pools

A staking pool is the combination of a delegation smart contract, the associated nodes, and the funds staked in the pool by participants. Node operators can set up a staking pool for one or several nodes.

A staking pool requires 1,250 EGLD deposited by the node operator at the time of its creation. 2,500 EGLD are required to stake a single validator node and start earning rewards.  Everything in addition to the base stake of 2,500 EGLD is called a “top-up”. Elrond taking pools were initially presented in this blog post.

2. Base stake and top-up

The ‘base stake’ consists of the 2,500 EGLD required to operate a validator node. This value is fixed and does not change as we transition to Phase 3. The ‘top-up’ represents additional EGLD staked directly on top of a validator node, or in a staking pool. Adding more EGLD as top-up will earn you more rewards, but the average APR will gradually decrease as you increase the top-up amount. For example, it will be more profitable to operate two validator nodes with 2,500 EGLD each than only one validator node with 5,000 EGLD.

You can find more details in this Elrond post.

3. Delegation Manager

Elrond has embedded the most important staking mechanisms directly into the protocol. The ‘Delegation Manager’ is the part of the protocol responsible for managing these mechanisms.

Simply put, every staking provider has the option to create their own delegation system smart contract for the delegation system. This is a smart contract with a code that is completely identical with a pre-checked template. Only the parameters (e.g., service fee and maximum delegation cap) can be changed.

  • The staking provider does not keep the coins in custody, users have full control over their funds. The staking provider cannot influence them in any way.
  • The delegated funds are secured by the protocol and are not affected by risks like an un-checked or non-conforming smart contract of a third party.

It is possible for staking providers to create their own staking smart contracts. At the current stage, Elrond recommends using the smart contracts in the system to avoid unnecessary risks.

4. Next steps:

If you are already a validator, the transition to Phase 3 does not affect you.

To transition your nodes into a staking pool, you need to unstake the nodes first, and then proceed to create the staking pool. There is no other option.

Already in the Validators Queue? Then we have great news for you! Your nodes will become validators once Elrond transitions into Phase 3 and the maximum number of validators is increased to 3,200.

You can now either add a validator to the waiting list, or wait until 22 March 2021 and create a staking pool of your own and become a staking provider for family, friends or customers.

If you are in active delegation, the transition to Phase 3 does not affect you. You have the option to un-delegate from the Elrond Foundational Nodes, wait 10 days, and then delegate to a new staking provider. We recommend you start looking for new provider – check out the dedicated section below for helpful guidance.

If you are delegating on the waiting list, we encourage you to withdraw from the waiting list, select a staking provider and delegate to them.

Elrond will provide an interactive guide and instructions on how and you will be able to do this. No further action is necessary until then.

If you do nothing, the waiting list delegations will continue to replace those who withdraw from active delegation and will therefore be delegated to the Elrond Foundational nodes.

Important note: Between 05 April 2021 and 03 May 2021, the waiting list will return 6% p.a. to allow waiting list delegators enough time to migrate their EGLD.

5. Selecting the right staking provider

Anyone can become a staking provider in phase 3. This is a key decentralisation feature that allows you to earn money while securing the Elrond Network. Still, being a staking provider is not for everyone –running multiple validators is not an easy job.

Here is what you should be looking for when selecting the right staking provider:

  • Reliability: Give preference to providers with proven experience in validating on the Elrond Network. aaurelion is a good choice: based in Germany, aaurelion offers security for investments.
  • Communication: Make sure you select a staking provider that operates transparent communication channels such as telephone, email or social media channels and can be contacted when you need assistance.
  • Economic viability: Look for reasonable service fees. While “the lower, the better” may sound nice in theory, you should stay well clear of 0% fees – validating on the Elrond Network is not easy and therefore not available for free or at cut price.

Elrond has partnered with a number of infrastructure partners that will act as staking providers. You can find them in the “Staking Infrastructure” section on the website.

6. Timeline

The network is undergoing one final intense testing phase to ensure the security for Phase 3. Provided that no security issues are discovered, we are tentatively aiming for the following timeline:

  • Activation of the Delegation Manager and the staking pools is expected to take place on 26 March 2021
  • The number of nodes is expected to increase on 05 April 2021

Staking Phase 3 is perhaps the most important development of the Elrond Network and will increase security and decentralisation to the point where everyone anywhere in the world will be able to join the Era of Autonomous Banking.

You can find the original post at elrond.com