Top 10 Validators
What are Validators?
Validators are the miners of the Terra blockchain. They are responsible for securing the Terra blockchain and ensuring its accuracy. Validators run programs called full nodes which allow them to verify each transaction made on the Terra network. Validators propose blocks, vote on their validity, and add each new block to the chain in exchange for staking rewards from transaction fees. Users can stake their Luna to validators in exchange for staking rewards. Validators also play an important role in the governance of the Terra protocol.
https://docs.terra.money/Concepts/Protocol.html#validators
Let’s take a look at the top 10 validators on Terra by total voting power (total LUNA staked/delegated to them). Then we will discuss the factors that go into choosing a validator to stake with/delegate to.
Top 10 Validators - by total voting power
This is interesting! Most people who stake on the Terra network have known Orion.Money to hold the #1 spot by voting power for a long time. It looks like this has finally been flipped! We will go over why that happened later on.
Let’s highlight the top 5 to start.
Staking Fund - 25,058,003 LUNA
Orion.Money - 24,755,636 LUNA
B-Harvest - 18,633,804 LUNA
Certus One - 13,596,953 LUNA
DokiaCapital - 10,713,162 LUNA
Of these top 5 validators, they hold a total of 92,757,558 LUNA - 27.83% of all delegated LUNA.
So what attributes are important when selecting a validator?
Staking/Validator Criteria
We've taken a look at the top 25 delegators and the validators that they stake to, but why are choosing these validators? There can be many reasons why.
https://docs.terra.money/validator/faq.html
Things to keep in mind when choosing a validator to delegate your LUNA to can include:
Voting Power
Self-Delegation
Validator Commission
Uptime
Voting Power
Voting power represents the amount of LUNA that is delegated to a validator. In the percentage value above, that represent the percentage of LUNA out of all the total staked LUNA in the ecosystem. So in this case, B-Harvest has 6.93% of all LUNA voting power.
"Voting power is more an indicator of decentralization but not a validator rating. Moreover, in order to support decentralization, delegators are encouraged to split their stake between several validators and delegate to validators with less voting power. "(https://mlolalime.medium.com/how-to-pick-a-validator-in-the-terra-luna-ecosystem-fce4c9ea7826)
Self-Delegation
"Self-delegation shows what percentage of the staked Luna belongs to a selected validator. By checking this indicator you can assess the investments of the validator and how deeply it is involved in the chain. However, this percentage can be misleading because validators may also delegate to themselves from another address." (https://mlolalime.medium.com/how-to-pick-a-validator-in-the-terra-luna-ecosystem-fce4c9ea7826)
Validator Commission
Validator Commission is a bit more important to me as a LUNA delegator if we compare it to the last 2. It is basically what it sounds like - validators take a certain commission of the rewards from your staked LUNA. Many validators have 0% commission, meaning that all of your staking rewards go directly to you, but there are pros and cons to it.
"There are only several validators that have 100% commission meaning that their delegators will get only the rewards from airdrops. All other validators on the Terra Station have a commission rate of 20% or lower. It is worth mentioning that the validator commission is a percentage of the block rewards but not from the amount of the delegated Luna. For example, while staking 100 Luna with a delegation return of 12% annually, you are supposed to get 12 Luna. But with the validator commission at 10%, your final reward will be 12–12*0.1=10.8 LUNA. The validator gets 1.2 Luna in this case." (https://mlolalime.medium.com/how-to-pick-a-validator-in-the-terra-luna-ecosystem-fce4c9ea7826)
Uptime
Finally, we have uptime. It is exactly what it sounds like. 🙂
"Uptime shows the stability of the work of the validator, the higher the uptime the better the chances that the validator will not be offline and you will not miss your rewards." (https://mlolalime.medium.com/how-to-pick-a-validator-in-the-terra-luna-ecosystem-fce4c9ea7826)
Conclusion/Insights
I mentioned before, that most people who delegated LUNA on the Terra network have recognized Orion.Money as the #1 validator by voting power. There is another factor that I didn’t mention above, because it is not tied directly from the Terra Documentation.
Validators can incentivize delegators to stake with their validator by offering additional rewards in the form of tokens, NFTs, and other benefits!
Orion.Money guaranteed every delegator a percentage of ORION tokens - in addition to all LUNA stakers. If you staked LUNA, you got the airdrop. But if you staked LUNA with the Orion validator, you got an additional airdrop.
There are quite a few validators that offer incentives like this - a newer concept that was recently offered by the Galactic Punk validator. They offer the ability to win Galactic Punks by delegating LUNA to their validator!
I look forward to seeing how validators continue to come up with creative ways to incentivize their delegators!
Thanks for reading!
-Brian
brian_#3619 on Discord
https://twitter.com/brian_terra_
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Excellent detail. Really helps in explaining the importance of validators and the incentives of each.
Nice read!