Ontology Staking Guide

Published on: 20.05.2021

Ontology Network introduced Ultimate Staking Guide to find answers to all your staking questions for you to get on the road to a successful staking experience.

🔸Part 1: Theory

1.1) What is staking?

Staking is the process of delegating your tokens to node. To put it simply, it’s process where you lock your ONT tokens to earn ONG rewards. You will never lose your staked ONT tokens, because nodes do not ever hold or manage staked tokens. The only risk may be the staking lock period, which may not be suitable for active traders or short term holders. If a node operator cancels their node, your staked tokens will behave as if you had canceled your stake, and will be available to claim after the respective lock period.

1.2) What are block and consensus rounds?

A block is a fundamental part of blockchain which stores information about transactions. At Ontology, production of 1 block takes from 1 second to 30 seconds, which means, that if someone performs a transaction every second, the block will be produced every second. For comparison, production of 1 bitcoin block takes approx. 10 minutes. This shows how ultra-fast the Ontology blockchain is- it has almost instant transactions. If no transactions appear for 30 seconds, an empty block is produced to keep consensus rounds flowing while giving it finite duration. It is set that 1 consensus round consists of 60 000 blocks. Through simple calculation means consensus round duration is from 16,66 hours to 20,83 days. So the higher the traffic, the faster the rounds. Currently the average duration of a consensus round is approx. 7 days. To track rounds use node.ont.io/stake which displays the start/end times of the last 5 rounds as well as an approx. time until the end of the current round.

1.3) What role consensus rounds play in the staking?

Staking is dependent on consensus rounds. So how do they work? Each staking event or change happens when a consensus round ends. That means, for example, if you submit your ONT stake during round 139, it will become active and locked when round 139 ends and it will then start generating ONG rewards. Until then, your stake is not active, hence it does not generate ONG rewards. Same applies when you decide to cancel your stake. If you cancel your stake during round 139, it will stay locked until round 139 (or 140) ends, depending on the node type. Moreover, respective ONG rewards are claimable by stakers after each consensus round ends.

1.4) Node types

There are 2 node types, consensus nodes and candidate nodes. Full list and ranking of nodes is available at node.ont.io.

1.5) Where do the staking rewards come from?

There are 3 ONG rewards for ONT stakers. I’ve broken down which node types distribute these rewards to stakers:

transaction fees collected during consensus round (both node types)
released ONG based on release model (both node types) — read more about this in point 4 (here)
foundation bonus (top 7 consensus nodes only)

Learn more details about staking rewards from the Ontology Staking Incentive Calculation published by Ontology.

1.6) Why do candidate nodes have better rewards?

Consensus nodes and candidate nodes split the rewards (transaction fees and released ONG) 50/50. Currently there is approximately 167,7m ONT at consensus nodes while only 25,1m ONT at candidate nodes. Due to the fact that candidate nodes currently have much less ONT tokens in staking/nodes and they distribute the same amount of rewards as consensus nodes, their rewards per 1 ONT are much higher.

1.7) Are there any special nodes?

Nodes can, of course, decide to use different ways of rewarding their stakers. For instance, they can distribute their own token, or some airdrop. Currently there is only one such node, Sesameseed. They distribute all staking rewards using their special SEED token. In this case, your staking reward isn’t ONG, it is SEED token. Read more about that in the article. In the past, the MovieBloc node also used to distribute to stakers extra rewards in the form of MBL tokens, but that has ended.

1.8) What is the lock period?

Lock period is time you need to wait until your ONT tokens are unlocked from staking. Consensus nodes have 1 full round extra lock period, while candidate nodes have lock period until end of current consensus round. Example: You cancel stake at consensus node during round 110. That means your ONT tokens will be unlocked and ready to claim when round 111 ends. If you cancel stake at candidate node during round 110, your ONT tokens will be claimable when round 110 ends. If you want to be flexible, it is better to stake with candidate nodes, because lock periods are much shorter.

1.9) How to understand data at node.ont.io?

There are 2 lists — Top 15 nodes are consensus nodes and the rest are candidate nodes. Let’s explain the meaning of all the columns.

🔹Part 2: Practice

2.1) How to stake?

Altough there are third-party options, to get the highest rewards I recommend using an official Ontology wallet such as ONTO mobile or OWallet for PC. Step-by-step guidelines for both wallets on how to stake your tokens can be found directly at node.ont.io/stake.

2.2) What is the minimal amount of ONT to stake?

You can stake from as low as 1 ONT token since July 2020. First staking version required 500 ONT units but that is history now.

2.3) How to select best node?

Based on all above information in part 1, it is clear that best rewards are currently offered by candidate nodes. How to pick the best? It is essential to check the sharing ratio column 7 and APY column 8 at node.ont.io. When checking the sharing ratio, keep in mind that first % is how much of the rewards, which the node generates by their initial stake, they distribute to stakers. The higher that number the better, but if the node does not reach full staking capacity, it is also important how big their initial node stake is (5% from 100K is more than 10% from 10K). Then check the second % of share ratio. I would not recommend staking with nodes offering lower than 90%, if possible. Also be careful if you stake with nodes offering high ratio. They often use this tactic to attract new stakers and once they collect enough stake, they will drop the rewards. In case you stake with nodes that offer 90/90 or 100/100, check regularly at node.ont.io whether to see if they lowered the ratio, thus giving you fewer rewards. Some nodes like our admins node ►CZ/SK Ontology community node◄ made a public promise to not change our ratio. It can be good to know who is the node operator when selecting a node for staking. Read the article about our node here.

2.4) Where to get ONG?

If you do not know where to get ONG tokens, here at CMC you can find the list of exchanges that offer ONG trading pairs. The most popular is definitely Binance. In case you have your ONT tokens in ONTO Wallet andhave no ONG for fees, you can use this guide to use the fee-less swap for 1 ONT to ONG at market rate — https://ontology-1.gitbook.io/onto/guides/assets/swapping-ont-for-ong. Lastly, you can also ask somebody to donate a few ONG to get started, if the above options are not available to you.

2.5) When will I get rewards for staking and how to claim?

You will get rewards after each fully staked consensus round, for example, you stake during round 110, you will get first rewards for round 111 when round 111 ends. The rewards balance updates once the round ends. Then you can either claim your rewards or keep accumulating. There is no need to claim after each round.

2.6) What to do with ONG tokens?

This depends on everyone’s personal strategy, some possibilities are:

HODL ONG tokens for possible future higher price appreciation
Sell ONG for ONT, and keep increasing your staking position
Sell ONG tokens for different tokens/projects
Provide ONG tokens as liquidity for example at wing.finance or ontology.unifiprotocol.com

2.7) When will ONT tokens be unlocked after canceling your stake?

Read section 1.8 of this article to learn when your tokens will be unlocked. Estimated duration of current round, plus duration of previous rounds you can find at node.ont.io/stake