Unpacking the CUDOS validator rewards and how to become a validator

Cudos recently launched its testnet as well as the staking mechanism on selected exchanges. Within the Cudo platform and Cudos network, node validators and computing resources providers are rewarded. Node validators are selected resources providers who operate specialised software to validate transactions. On the Cudos Network, developers, and anyone else, can deploy next-generation smart contracts that leverage Ethereum Virtual Machine (EVM) and Ethereum Web Assembly(eWasm)-based smart contracts.

Validator and Staking Rewards

Validators play a special role in the Cudos Network’s ability to process workloads. They validate blocks, perform complex security checks on proposed transactions, interact with other stakeholders in various Governance votes that ensure the network’s security, integrity and viability on an ongoing basis. For performing validation jobs, they get rewarded with the cudos utility token as an incentive. Different types of staking rewards mechanisms have been designed as aligned in figure 1 below.

There staking rewards where individuals or node providers lock their tokens for the health of the network and get rewarded for it.

Delegated staking allows others to stake their cudos tokens by backing other validators and earn rewards in the process. For every workload the is processed, there are gas and transaction fees that are charged to consumers. These fees are rewarded to validators and resource providers.

Becoming a Validator

When Cudos launches on the mainnet, users will be onboarded on the Ethereum blockchain via the staking rewards smart contact. While still in Ethereum, validators will earn revenue from two different sources thanks to staking:

  • Staking rewards on their own stake
  • Commission fee on the rewards of all stake delegated through them

The minimum stake to be a validator is 2,000,000 CUDOS. Once that amount has been staked, validators can add more stake calling a special function in the contract written for this purpose called increaseServiceProviderStake.

Very soon we will provide precise instructions on how to onboard to our initial staking offering in Ethereum. Validators familiar with other staking projects will know some of the actions, as our Ethereum staking contract borrows some methods from the SushiSwap one.

The process for validators, which are known as Service Providers (SPs) in the contract, to be able to set up the staking account is as follows:

  • SP applies to be a validator, for Cudo to approve
  • The SP sends their wallet address to a Cudo admin
  • Cudo whitelists that validator’s address
  • Cudo shares a new smart contract, called SPClone, which is specific for that SP
  • That validator can then be fully set by staking the minimum 2,000,000 CUDOS, following one of these two options:
  • They stake themselves the tokens calling stakeServiceProviderBond
  • A Cudo admin stakes on their behalf, however, the SP is the one who receives the staking rewards
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