What is MINA Staking?
Staking is essentially participating in the formation of blocks in any blockchain, based on a consensus algorithm. ie Proof of Stake.
Unlike Bitcoin for example, Mina is an inflationary coin so by staking Mina it also means there is less volume available on the open market to buy which can in turn counterbalance the additional Mina coins being minted and the effects of the inflation (see below for inflation rates for the first 4 years).
Anyone who holds Mina can produce blocks (and be entitled to receive rewards (based proportionally to your stake) by running a node using Mina Software (more info here). It is a relatively straightforward thing to do, however, you will need to regularly connect to the network and update the data continuously to do this.
Because of Mina’s lightweight blockchain size in the future, the Mina Foundation has plans to enable Mina holders to become validators just from their mobile phones. When this happens it will increase the decentralisation and decrease the likelihood of bad actors attempting to take over the system (which would not be possible).
In this article:
- What is MINA Staking?
- About Mina Protocol (MINA)
- Delegating your Stake
- How Much Can I Earn from MINA Staking?
- Let’s Get To Staking!
- What are the tokenomics of MINA?
- What are the risks of staking MINA?
- Mina Inflation
- Do I need to maintain my staking in any way?
About Mina Protocol (MINA)
Mina is a proof-of-stake blockchain that uses zero knowledge smart contracts, known as ‘zkApps’, which are written in TypeScript. The goal of the Mina blockchain is to overcome the scalability and accessibility issues that have hindered the wider adoption of other blockchain platforms. Unlike many other blockchains, Mina Protocol is a lightweight blockchain that keeps a consistent size of only 22 kB, no matter how many transactions are added to the network.
MINA is the native token of the Mina network and it is used to perform various important functions within the network:
Token Utilities
- Staking: Users can temporarily lock up MINA to contribute to the security of the network. In return for the service, both the validators and stakers are compensated with staking rewards.
- Gas token: Every transaction on the network incurs a small fee that is paid to the validator in the form of MINA.
- Governance: MINA is used to vote on governance proposals on the network. All MINA holders are able to vote on a particular proposal, unlike many other networks where delegation of votes to validators is required. As a result, as a MINA holder, you are able to participate directly in governance, rather than having to pass your votes to the validator.
Delegating your Stake
Easy way to earn rewards is to just delegate your Mina to a node operator. They would then pay you rewards for using their service — again the amount of rewards is based on the amount of Mina you are staking. The more in a the more rewards. You would pay a small service fee to the node operator (between 1 & 10% of your profits).
You can find a good staking validator here.
How Much Can I Earn from MINA Staking?
The rate of interest depends on the term of the placement:
30 days — 12,5% APR
60 days — 13% APR
90 days — 14% APR
180 days — 15% APR
365 days — 16% APR
Let’s Get To Staking!
1. Install Wallet
At the time of writing, there are only two wallets that offer Mina staking. The first is clor.io, and the second is Auro Wallet. We think the Auro Wallet seems more user-friendly, we will be using this wallet for the guide.
The Auro Wallet is available as a browser extension and a mobile app; it supports mina protocol and is entirely open-source. The wallet lets you easily send, receive, and stake your MINA and view the transaction records at any time.
To get started, visit: https://aurowallet.com and download wallet.
2. Deposit MINA tokens
On the dashboard, select “receive” to send $MINA to your wallet address. Copy the public address or scan the QR-code and use this code in your exchange or wallet holding MINA to send it to your Auro Wallet.
3. Staking MINA
A) Visit the website of the largest MINA token staking provider — XBANKING.
B) Click “Launch App” button.
C) Find the MINA staking pool and deploy it.
D) Connect Auro Wallet
E) Specify the amount of MINA tokens for staking.
F) Specify the term of the placement, the longer it is, the higher the steaking reward.
G) Click “Confirm staking”.
DONE!
Useful information:
What are the tokenomics of MINA?
MINA is a token with an unlimited supply. The annual inflation rate for MINA is set at 12% for the first two years, and will decrease by 1% every six months thereafter until it reaches a stable rate of 7% per year by around April 2024. New tokens will be continuously released at a gradually decreasing inflation rate that gets adjusted downwards by 1% every six months, until tokens are continuously released at a fixed 7% inflation rate indefinitely.
Initial Distribution Breakdown
Any tokens that have been minted are free to be used and staked.
- Community: 42.34%
- MINA Foundation Endowment: 6.00%
- 0(1) Labs Endowment: 7.52%
- Backers: 20.52%
- Core Contributors: 23.62%
What are the risks of staking MINA?
We strive to make staking as safe and transparent as possible, however, it’s important to consider factors that may influence whether a particular staking option is appropriate for you.
- Slashing risk: There is no protocol-enforced slashing for cases of missed blocks.
- Unbonding risk: The unbonding period is approximately 15–30 days, and it begins from the time you initiate the unstaking process. During this time, your tokens are locked and cannot be sold. The reason for this delay is that updates to your account’s staking status are made during the 1–2 epochs (approximately 15–30 days) following your request to unstake. As the crypto markets are known to be highly volatile, it is recommended that investors take into consideration the lockup period when deciding to stake their MINA tokens. If you do not intend to hold onto MINA for the long-term, it may be wise to keep your funds liquid and avoid staking them.
- Dropping out of the active set: Your validator may drop out of the “active set” — this means that even though they won’t be slashed, they will no longer earn rewards and thus you will lose out on the potential rewards from delegation. To minimize these risks, it’s recommended to periodically check your validator’s status to ensure they are still active, not jailed, and has not raised their commission fees.
- Protocol security risks: There is an inherent risk that the protocol could contain unknown bugs, this risk applies not only to staking but also the investment in MINA.
Mina Inflation
Most PoS networks implement continuous token emission to incentivize node operators and delegators. Mina is not an exception. There is no cap of a max MINA supply as it grows every block. Every canonical block (successfully produced block written in the main chain) contains a coinbase (block reward) that is distributed to a node operator that produced it.
Currently, block rewards are fixed at 720 MINA to constitute the inflation of 12% assuming that all tokens are staked. In future it is expected for block rewards to be dynamic targeting inflation depending on a staking ratio to incentivise participation in staking. The less tokens are staked the higher will be the coinbase.
Token emission will decrease periodically until it reaches 7% annually. This schedule can be changed by the community via governance procedure in future.
Do I need to maintain my staking in any way?
After delegating your MINA tokens, there are a few things to keep in mind:
- Be aware that there is a delay of approximately 15–30 days before a delegation becomes active on the protocol after being initiated.
- If you wish to switch your delegation to another validator, this can be done at any time without waiting for the unbonding period, However, it may take up to 1–2 epochs (about 15–30 days) before the updates to your delegation are reflected on the network. This may be something to consider if your current validator is found to be misbehaving or dropped out of the active set.
- Rewards are auto-compounded, but with a delay. The rewards from one epoch are reflected in the staking ledger of the following epoch, so any rewards you receive on epoch 10 will be active on epoch 12.
- As a participant in the Mina ecosystem, you have the option to delegate your voting power to a validator, which will vote on your behalf based on the amount of stake delegated. You can also change your delegation to a different validator if you disagree with their voting stance. Additionally, you can use your own tokens to vote directly. Keep in mind that participating in governance does not affect the amount of rewards you will receive.
Useful links:
- How to stake Avalanche (AVAX)? Passive income from AVAX tokens.
- Staking Toncoin (TON). How to stake TON and Earn Passive Income?
- Staking Solana (SOL). How to stake SOL and Earn Passive Income?
- Staking Ethereum (ETH). How to stake Ethereum? The Ultimate Guide.
Links used in the article: