THORChain

Time factors

Lifecycle

Must know before staking

  • Limited delegations. The protocol does not support unlimited delegations. Validators can receive delegations from up to 6 addresses. The protocol expects this to only occur between trusted relationships.

Advanced topics

General

  • Churn cycle. The validator set can only change at the end of each churn cycle. Up to 1/3 of the active validators can exit and up to 2 new validators can join.

  • Mimir governance. The protocol has preset genesis constants that can be overwritten through Mimir governance. Only validators are able to vote on these parameter changes.

Rewards

  • Rewards come from the reserve and liquidity fees.

    • Reserve. The protocol maintains a reserve created at genesis that is dedicated to incentivizing liquidity providers and stakers. The reserve also accrues all transaction fees, penalties and slashed amounts. A portion of the reserve is constantly paid as rewards to both

    • Liquidity fees. Liquidity pools of the protocol accrue liquidity fees that are provided as rewards to liquidity providers and stakers.

    • Rewards coming from the reserve and liquidity fees get split between liquidity providers and stakers using the following formula.

  • Block units. The protocol keeps track of the number of blocks that a validator has been active for. At the end of each churn, the reward amount is calculated by taking accrued block units into account and is added to a validator’s stake.

  • Factors that impact realized rewards.

    • Any penalties incurred will deduct block units and affect rewards received by a validator.

Risks

  • Penalty.

    • A validator that fails to observe transactions for all supported chains will have 2 block units deducted.

    • A validator that does not sign outbound transactions when requested will have 600 block units deducted.

  • Slashing.

    • A validator that signs two different blocks will be slashed. The slashed validator will lose 5% of their stake.

    • A validator that sends funds without authorization will be slashed. The offending validator will have 1.5x of the value of the funds sent deducted from their stake.

Validators

  • Validator cap and bond requirements have been overwritten by the Mimir governance process. The protocol targets to have 100 validators and a 1,000,000 THOR bond requirement in the long run.

  • Up to 2 new validators can join every churn period. If multiple validators are waiting to join, the protocol chooses 2 new validators with the most stake.

Resources

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