Delegation

The SKALE Token (SKL) is the first ERC token with Ethereum native delegation/staking functions. SKL is a modified ERC-777 with backward compatibility to ERC-20. Therefore, you may use any ERC-20 compatible wallet to hold and stake your tokens into the SKALE Network. Transfers and approvals work the same in ERC-777 as in ERC-20 – the only difference is that ERC-777 allows for certain functions/checks before transfers are executed. The SKL token uses this pre-transfer function to conduct certain checks.

SKL token holders propose delegations to stake tokens to validators. Delegators help secure the network and, in return, receive bounty rewards. Delegators may delegate to multiple validators.

Each delegation proposal must include:

All delegations in the SKALE Network are aligned over calendar months. See the Time Schedule.

Once the tokens delegate, the tokens are locked and can’t transfer to another wallet until undelegated.

A wallet that has delegated SKL tokens will incur higher gas fees for SKL token transfers. Wallets that delegate require additional checks on token operations to verify whether the token is locked in a delegation. Therefore, you should use one wallet for all delegation operations and a separate wallet for SKL token transfers.

There are several ways to delegate SKALE tokens. You can delegate through several applications built by SKALE Validators, through a CLI tool called Validator CLI, or through Etherscan.

Validators must accept each delegation and are used to stake the validator’s nodes in the network. A validator’s nodes must collectively meet the Minimum Stake Requirement (MSR) set by the network. Currently, the MSR is 20 million SKL tokens. Therefore, if a validator is operating ten nodes, the validator must have 10×MSR under stake. Validators who don’t meet or exceed MSR may have to remove or add nodes to optimize received bounties.

Validators must optimize the number of operating nodes every month based on their total stake. Delegators must submit undelegation requests 72 hrs before the end of the month to allow validators enough time to change the number of nodes. Undelegation requests can’t be made within 72 hrs of the end of the month. Therefore delegators who wish to undelegate are urged to do so at the earliest possible time.

SKALE Network supports different delegation periods with stake multipliers. For example, 2 month delegations have a stake multiplier of 1.00. The network can set new delegation periods and stake multipliers to incentivize longer staking periods. For instance, delegating for a period with a stake multiplier of 2.00 doubles your amount of stake in the network, and you would receive more bounty rewards.

Delegators receive bounties every month. These bounties are from a mix of network inflation and staked SKALE chains. This total network bounty for any month also includes any remaining bounties from the previous month due to bounty reduction or node exits.

The network calculates bounties on a per-node basis. The formula below describes the calculation.

Bounty rewards for a particular month are delivered depending on when the node registers with the network. For example, a node that registers within 72 hours after June 1 00:00 UTC will deliver bounty rewards on July 1 00:00 UTC. A node that registers outside of the 72 hour beginning of June (June 15) will fulfill bounty rewards for June on August 1 00:00 UTC.

Delegations, bounties, and MSR requirements follow a monthly schedule. The SKALE Network’s time follows the Gregorian calendar system orientated at Universal Time Code (UTC).

See the delegation FAQ.