Sui Network adopts a Delegated Proof of Stake (DPoS) system to protect and operate the network, and the importance of this system cannot be ignored. The operating mechanism of the DPoS system and its impact on network security and efficiency make it an important part of current blockchain technology. This article will introduce the DPoS system in the Sui network in detail and discuss how to participate in this system by staking SUI tokens.
How the DPoS system works
In the Sui network, a validator’s voting power is determined by the amount of pledge entrusted to them by SUI token holders. This means that the more SUI tokens staked to a validator, the more voting power they have. During the process of processing transactions and executing consensus, validators earn corresponding rewards based on the gas fee rewards collected, and these rewards are then shared with stakers as staking rewards.
How to Stake SUI Tokens
The process of staking SUI tokens is relatively simple. You need to send a transaction to the network that calls the staking function implemented by the system Move package. The transaction wraps SUI tokens in a self-hosted staking object that contains information about the validator staking pool ID and staking activation epoch.
Pledge steps
Choose a validator: Before staking SUI tokens, you need to choose a validator. This choice may affect the amount of staking rewards you receive. Validator commission rates and performance are two main factors that affect staking rewards.
Send staking transactions: Send staking transactions using a Sui-compatible crypto wallet. These wallets usually have the ability to stake and redeem starting from your Sui address.
Participate in the Liquid Staking Protocol: With the introduction of SIP-6, you can use your pledge objects to participate in the Liquid Staking Protocol, which will make the staking process more flexible.
Calculation of staking rewards
You only receive rewards while the stake is active for the entire epoch. Rewards drawn from a validator’s reward pool are calculated based on the activation epoch and redemption epoch of the stake.
Reward Calculation Factors
Validator Commission Rate: Validators can choose to set a non-zero commission rate, which will affect the rewards stakers receive. For example, if a validator's commission rate is 10%, then 10% of each staker's staking reward will be given to the validator.
Validator performance: Validators with poor performance may be penalized according to tallying rules. These validators will not receive any staking rewards during the punished epoch, and when you withdraw your stake from that validator, you will not receive any rewards for that epoch.
How to redeem your pledge
Similar to staking, users can withdraw their pledge from a validator by sending a transaction that calls the redemption function in the system's Move package. This transaction unlocks the pledge object and sends the principal and accumulated rewards to the user as SUI tokens.
Redemption steps
Send a redemption transaction: Send a redemption transaction using a Sui-compatible crypto wallet.
Receive rewards and principal: After the transaction is completed, you will receive the unlocked pledge object, including principal and accumulated rewards.
Choose the right validator
Choosing the right validator is a critical step in the staking process. You need to consider the following factors to make the best choice:
Commission rate: The validator’s commission rate will directly affect your staking rewards. Please choose a validator with a low and stable commission rate.
Performance: High-performance validators can receive rewards more stably and avoid being penalized for poor performance.
Crypto wallets and browsers compatible with Sui often provide validator information such as commissions and APY. Please see the appropriate documentation for these tools to learn how to retrieve this data.
Summarize
The Delegated Proof of Stake (DPoS) system in the Sui Network provides users with a way to participate in network operations and receive rewards. By staking SUI tokens, users can support the operation of the validator and obtain corresponding staking rewards. Choosing the right validator and understanding the staking and redemption process are keys to successfully participating in a DPoS system. I hope this article can help you better understand the DPoS system in the Sui network and conduct staking operations smoothly.