Hedera

Time factors

	Protocol time	Human readable time
Protocol time	1 day	24 hours
First reward delay	1 day	24 hours
Reward frequency	At the start of each day	24 hours
Unbonding period	None

• The protocol’s staking period begins everyday at 00:00 UTC and ends 24 hours later.

Lifecycle

Must know before staking

Minimum stake amount	❌
Partial stake changes	✅
Partial reward withdrawal	✅
Compounding	✅
Penalty	❌
Slashing	❌

• Delegating is called proxy staking in Hedera Hashgraph.

• Reward rates are capped. Stakers cannot earn more than a 2.5% reward rate.

• Staking rewards expire in 365 days and must be claimed before expiry.

• Rewards are claimed if there are any changes to the account’s balances or staking information (changes to staked amounts or selected validator).

• Rewards are added directly to the staking balance of stakers.

Advanced topics

General

• Stakers could be earning higher rewards under the governing council’s decision to allocate 1 billion tokens per year to stakers. However, due to the cap, the maximum amount of rewards will not exceed a 2.5% reward rate.

• Stakers can opt out of earning staking rewards. This function is primarily used for the foundation to delegate to validators without diluting rewards for other stakers.

Rewards

• Rewards come from newly issued tokens.

  • Fixed token issuance per year. The protocol’s governing council has voted to allocate 1 billion tokens per year to be distributed as staking rewards.

Risk

• The protocol does not have any penalties or slashing.

Validators

Total validator cap	⚠️
Validator requirements	⚠️

• A validator requires the governing council’s approval to join the active validator set.

• A validator has the following minimum and maximum stake requirements. All validators must have more than the minimum stake threshold to earn rewards. Any additional stake above the maximum stake limit will not earn any additional staking rewards.

  • Maximum stake limit: $\text{total stake} * (1/\text{current validator count})$

  • Minimum stake threshold: $\text{total stake} * (1/\text{current validator count}) * (1/4)$

Resources

• Hedera Hashgraph documentation: https://docs.hedera.com/hedera/

Update notes

2023-08-11: Hedera Governing Council has voted to lower the reward rate cap from 6.5% to 2.5% (announcement).