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App Chain

Consensus​

Synternet’s App Chain is built on top of Cosmos SDK and uses CometBFT flavor. There are two types of actors engaged in this layer of the protocol:

  • Validators who are responsible for running consensus protocol
  • Delegators who delegate their stake and thus make the chain and overall protocol more secure

Staking and delegation​

Stake refers to tokens bonded to a particular Validator as a security guarantee for its best behavior. Validators are required to own some stake themselves, however, their stake can consist largely of tokens delegated by others. There is also another constraint: a maximum number of active Validators that are actually engaged in the block formation and consensus and, therefore, only Validators in this active set are earning rewards.

The maximum number of allowed active Validators, which is a system parameter, will be set when drawing near the mainnet phase. Expect this number to not exceed 100 Validator nodes at launch.

Validation rewards​

Validators ensure security of the chain and validate transactions. The Validators earn their income from the two sources:

  1. Gas fees they collect from on-chain transactions. Every on-chain state transition costs processing power, which is translated into gas fees. Gas fees are collected in tokens from the address signing the transaction, which could include one or more atomic state-transitions.
  2. Block formation rewards that are generated with every block unlocks Synternet tokens from an incentives pool at a predetermined rate. Their release algorithm is known beforehand and should be taken into account when valuing Synternet tokens. With every block, each Validator earns the block formation reward proportional to the size of their own stake as compared to the total amount of tokens delegated to the active set of delegators. Each Validator also earns the commission applied to the tokens delegated to it by Delegators.

Delegators’ actions​

  • Delegate. Delegators can bond their tokens to a selected Validator.
  • Withdraw rewards. For bonding their tokens to the Validator, Delegators are getting block formation rewards based on the amount of tokens they have bonded. However, Validator is taking a commission fee applied to the amount of Delegators’ reward. This percentage is set by the Validator itself but cannot be lower than the minimum commission, which is a system-wide parameter.
  • Undelegate. Delegators can unbond their tokens. These tokens will be locked for the period of 14 days. After the lock is released, unbonded tokens can be retrieved back to their wallet.
  • Redelegate. Delegators have the ability to redelegate the tokens directly to a different Validator without the need to undelegate and delegate them again. This is for convenience to bypass the lock-up period.

Stake slashing​

Extended Validator node downtime and malicious behavior, usually evident as the double-signing, result in penalties in the form of slashing of the tokens bonded to it. As a result, both the Validators and Delegators that have delegated to it lose the same share of their tokens.

Therefore, it is recommended that Delegators spread their token holdings across multiple Validators increasing the decentralization as well as decreasing the risk of such loss.