We strongly recommend each individual to perform their own research and mitigate the risk by spreading delegations among multiple node providers. Staking also involves a certain degree of risk and there is always the possibility of loss.Do your own research!
- Risks for a delegator (that is you)
- Technical setup of the node
- Amount of self-bonded coins
- Commission rate
- Total amount and number of delegations
- Community Involvement and History
- Website and team information
If you want to delegate stake and forget it, pay attention to maximum validator commission. You can check on a validator page using network explorer.http://explorer.unification.io
Risks for a delegator
- To get rewards you need to delegate to a validator in the top 96 by total amount of FUND delegated
- Double sign: if your validator double signs you will get slashed 5% of your FUNDs and you will be automatically unbonded having to choose another validator.
- Downtime: Validators should have DDoS attack protection mechanism in place like sentries and a close to 100% uptime in a top data center.
- Inflation (and losing transaction fee rewards later): if you don’t stake your FUNDs, your tokens will be diluted constantly and wealth will be transferred from you to FUND holders that stake their coins.
Technical setup of the node
This evaluation is the hardest thing to do as it requires at least some level of technical expertise. Moreover, this information is not always readily available on the validators website and/or structured in the different formats. In this case, we encourage you, reaching out directly to validators to get more details. Some things that you can ask your validator?
- Is Validator infrastructure redundant/scalable?
- How Validator private key is secured?
- How are they making sure double-signature doesn’t occur?
- What will happen if the node is censored or under the network attack?
- Is Validator shielded with sentry nodes?
This type of set up is recommended by the community to protect the node against malicious blocks and network attacks. You could also ask for URLs of public sentries to act as proof of their existence.
Amount of self-bonded FUND
This is a definitive factor that will provide a clear picture of how serious the validator is and how much skin in they’ve got in the game.
Commision rates: current, maximum, commision change
Commission rate is the percentage of your reward that will be auto-allocated to the validator. Low commission means more reward for you but it could also be an indicator of a low operational cost that often times equals to weaker security. Commission rate could be updated by validator once a day for a maximum amount specified until the max-rate is reached. Keep that in mind. If you want to delegate stake and forget it, pay attention to maximum validator commission.
Total amount and number of delegations
This criterion shouldn’t come up as a surprise to anyone as it is one of the most intuitive things to do — delegate to a validator with a high amount of stake to maximize the reward. But remember that those nodes are a better target for attackers. Supporting smaller validators might look at a bigger risk, however, if the network becomes dangerously centralized the overall value of the network and its’ staking token can go down. It will also expose the network to a higher risk of potential double-spending attack.
Community Involvement and Longevity
Community Involvement is hard to measure for people not involved in network on a day to day basis but should still be taken into account. The easiest way to answer these metrics is to look where validators commission money will be spent. Do validators plan to invest in the ecosystem by building tools, apps or dApps and/or doing some research? In other words, check if validator cares about the long-term success of the network.
Longevity is also a good factor to consider. Those who did actively participated in bug discovering, tweaking configs and contributed to overall readiness of the system.
You may also want to check if a validator has a website like we do here at Validator.cc.