Staking Rewards

This page was updated in June 2024, following the Dragon8 hard fork and the implementation of new tokenomics.

What are staking rewards?

Staking rewards refer to the rewards received by wallets which are locking or staking their CHZ in the staking pool contract. Locking or staking CHZ is an essential component of the governance of the chain.

Staking rewards come from the CHZ inflated each block, as well as from tips paid by users to get their transactions prioritised. So if a block includes 50CHZ worth inflation and 50CHZ worth of priority fees, those CHZ are used to reward stakers (Validators and Delegators) for participating in the governance of the chain.

Your rewards are compounded to your staked CHZ.

This way, even your rewards can bring you even more rewards.

How are the fees in each block distributed as rewards?

The distribution of the fees collected in each block are distributed as follows:

• 35% of the total fees in a block are taken by the network, to be reinvested into the chain. These 35% are split as follows:

  • Community Vault, $CHZ LP & Possible Shared Security Restaking Rewards: 10%

    This allocation is designed to support community engagement and ecosystem liquidity. It funds incentives for participating in liquidity pools on Chiliz Chain-native DEXs and other community-driven initiatives, fostering a vibrant ecosystem around the Chiliz Chain. This is vital for encouraging the development of a robust DeFi landscape within the Chiliz Chain, crucial for its long-term competitiveness and appeal.

  • Ecosystem and Operational (E&O) Distribution: 25% The E&O distribution is allocated for ongoing development, marketing, and operational expenses associated with the Chiliz Chain. This ensures sustainable growth of the platform and its ecosystem, covering necessary expenses for innovation, ecosystem support, outreach and continuous growth of the ecosystem partnerships, which are essential for maintaining relevance and driving adoption.

• 65% of the total fees in a block are kept by the validator, and subsequently distributed to the delegators staking on that particular validator node.

Example scenario

Let's say that a block has 100 CHZ rewards, and the validator has 10,000,000 CHZ self-staked and 10,000,000 CHZ delegated from many delegators. The delegator has also set the commission rate to 10%. The rewards will be distributed as follows:

• 35% will remain with the network (35% * 100 CHZ = 35 CHZ)

• 65% will go to the validator (65% * 100 CHZ = 65 CHZ). Those 65 CHZ will then be split 50% to validator and 50% to delegators since both are staking the same amount. We then need to reduce the commission rate from the delegators cut. This means:

  • Delegators' cut will be: 50% * 65 CHZ = 32.5 CHZ - 10% = 29.25 CHZ

  • Validator's cut will be: 50% * 65 CHZ = 32.5 CHZ + 10% = 35.75 CHZ

  The Delegators' cut is then distributed fairly among all the delegators of the specific validator, based on how much they originally staked.

Each Validator takes it in turns to create a block, so if we have 11 active validators, then each validator will create 1 out of 11 blocks, and keep the fees of that 1 block.

Validator Commission Fee

The validator commission fee is a fee taken from the cut of all delegator rewards. This is a fee that the validator keeps since they provide the service (i.e. running the validator node) so the delegators don't have to.

Therefore, if delegators keep 20CHZ and the commission rate is 10%, then 2CHZ stay with the validator and the rest is distributed among the delegators.