Osmosis

Time factors

	Protocol time	Human readable time
Protocol time 1	Block	6 seconds
Protocol time 2	Epoch	1 day
First reward delay	1 epoch	1 day
Reward frequency	Every epoch	1 day
Unbonding period	14 days	14 days

Lifecycle

• Staking and unstaking get immediately reflected in the following block.

• Rewards are distributed every epoch.

Must know before staking

Minimum stake amount	❌
Partial stake changes	✅
Partial reward withdrawal	❌
Compounding	❌
Penalty	⚠️	Offline
Slashing	✅	Equivocation - 5%

• Redelegation without unstaking. The protocol allows stakers to switch their validators without having to unstake and then stake again. The redelegation function can be used only once every 14 days.

Advanced topics

General

• Superfluid staking.

  • Liquidity providers (LP) of approved pools can enter into superfluid staking with their LP positions. By superfluid staking, LPs are able to provide liquidity and contribute to protocol security simultaneously. Superfluid stakers can earn staking rewards.

  • 50% of LP values can be staked through superfluid staking. For example, if an LP had $10,000 in the ATOM/OSMO pool and decides to superfluid stake, the protocol will assume the LP is superfluid staking with $5,000 worth of OSMO tokens.

  • LPs must lock their LP positions for 14 days (the same period as the unbonding period) in order to superfluid stake.

• Governance power delegation. By staking with a validator, stakers are delegating governance power to that validator as well. Stakers have the option to overwrite their validator’s governance vote.

Rewards

• Rewards come from newly issued tokens and transaction fees.

  • Fixed issuance of tokens. The protocol started from issuing 300MM tokens in year 1. This amount keeps decreasing by 1/3 every year. For example, by year 3, 133MM tokens will be issued. Of the newly issued tokens, 50% goes to incentivizing stakers, 20% goes to LPs, 25% goes to developers, and 5% goes to the community pool.

  • Transaction fees.

• Factors that impact realized rewards.

  • Commissions.

Risks

• Penalty. A validator that fails to be online for 1,500 blocks out of the most recent 30,000 blocks will be considered offline. The offline validator will kicked off the active validator set and will be able to join after 1 minute has passed.

• Slashing. A validator that attests to two different blocks will be slashed. Stakers of a slashed validator will lose 5% of their stake. The slashed validator will be indefinitely kicked off the active validator set and will need to create a new validator.

Validators

Total validator cap	✅	150
Validator requirements	❌

• The protocol enforces a minimum commission rate of 5% for all validators.

Resources

• Osmosis documentation 1: https://docs.osmosis.zone/

• Osmosis documentation 2: https://osmosis.gitbook.io/o/

• Osmosis explorer: https://www.mintscan.io/osmosis

Update notes

2023-06-20: Proposal 534 has adjusted the allocation of newly issued tokens. Stakers get 50%, LPs get 20%, developers get 25% and the community pool gets 5%. Previously, stakers got 25%, LPs got 45%, developers got 25% and the community pool got 5%.