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Kusama FAQ

What is Kusama's reward rate*?

Kusama has two participatory reward mechanisms. Its native rate of participatory rewards is determined by the staking rate of the protocol, capping out at 10% when 50% of the protocol’s tokens are staked.

Additionally, 1% of DOTs (native to Polkadot) will be distributed as rewards to Kusama participants. The reward distribution mechanism has not yet been determined, as the Polkadot protocol is still under development.

We increase participatory reward earnings by enabling customers to easily scale their validator count and distribute stake to increase presence in the active validator set.

* Reward rates published by Coinbase Cloud are estimates based on publicly available information from third-party sources. Coinbase Cloud has not verified and does not guarantee the accuracy of this information. Reward rates on some protocols may vary based on the amount staked and/or other variables, including validator performance, so you should not rely on the accuracy of any reward rate ranges we publish, which are intended to provide an estimate. The actual rate of rewards earned may vary substantially and may change over time and Coinbase Cloud does not guarantee that you will receive any staking rewards. Staked assets may be subject to slashing penalties and risk of loss is possible, including up to the full loss of principal.

Does everyone who delegates to the validator receive rewards?

In Kusama, only the 256 largest delegators to a validator will receive rewards. You can see the list of all delegators on Coinbase Cloud's validators in the Polkadot UI when searching for Validator 1.

What are the risks associated with delegating?

If a validator doesn't follow protocol rules, Kusama slashes their bonded tokens as well as the KSM delegated to them.

Slashing primarily happens for one of the two reasons outlined below.

  • Double signing: If someone reports on chain A that a validator signed two blocks at the same height on chain A and chain B, the validator will get slashed on chain A.
  • Downtime: If a validator’s signature has not been included in the last X blocks, the validator will get slashed by a marginal amount proportional to X. If X is above a certain limit Y, then the validator will get unbonded.

Coinbase Cloud takes these risks extremely seriously and have built our infrastructure to protect our customers and minimize slashing risk.

Why should I select all Coinbase Cloud validator addresses to nominate when staking?

When you nominate multiple validators, each era the protocol will automatically allocate your stake to the validator(s) you have nominated which have also been selected to participate in the active set — and to earn rewards in exchange for doing so.

Because of this ability within Kusama, your performance will be optimized by nominating all of the validators in the list, as the more validators you nominate, the greater the likelihood that at least one of those validators will be selected to earn rewards each era.

You can learn more about Active and Inactive Nominations, and how this allocation works, in Polkadot’s documentation, which inform's Kusama's system as well.

How does Coinbase Cloud's service fee work?

Coinbase Cloud charges a percentage service fee on all rewards earned by tokens delegated to our Kusama validator. The service fee is paid to Coinbase Cloud automatically by the protocol. You can withdraw your rewards from the protocol directly.

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