What are Osmosis' inflation and reward rates
The current annual reward rate for Osmosis is 160% per annum for validators. Each epoch (daily) 25% of released tokens will be issued to validators and their delegators as reward for their work participating in the chain’s security.
Inflation on Osmosis is structured around a “thirdening” model, with token issuance cut by one-third each year. Following the initial released supply of 100m OSMO in June of 2021, in year one 300m tokens will be released, in year two 200m, and so on, until a maximum supply of 1 bn OSMO issued is reached.
* 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.
What are the risks associated with delegating?
Slashing is enabled in Osmosis. A validator committing a slashable offense will result in loss of funds and missed rewards for both the validator operator and any delegators who have staked their OSMO to that validator.
There is no slashing for downtime, however, after 50 hours of downtime, validators are jailed and must wait for a cooling period to elapse (60 seconds) before submitting an un-jail transaction to rejoin the active set. While jailed, validators are not eligible to participate and earn rewards. However, a delegator may choose to redelegate their stake to a new validator at any time during which the validator to which they were delegated is jailed.
Double-signing results in a 5% slashing penalty deducted from the validator’s overall stake, including self-bonded and delegated tokens. The validator is also jailed and is not eligible to submit an un-jail transaction, effectively removing the validator permanently from participating in the network.
What are the risks associated with Superfluid Staking?
Token holders will not be able to use their tokens engaged in Superfluid Staking to vote and will effectively give up their governance power. Superfluid Staked OSMO can only be delegated to one validator, and will inherit the votes of that validator with no ability to override the validator’s vote.
As the value of liquidity pools are not static, any participation in a liquidity pool — including participating in Superfluid Staking — carries with it the risk of impermanent loss, along with other risks. Impermanent loss is when the value of assets provided as liquidity is lower than if those tokens were simply HODLed. Users may find themselves in a scenario where their asset would have gained more in value from market changes — earned at a set rate — than from being a liquidity provider due to pool rebalancing in an AMM.
Staked tokens are also at risk of slashing if the validator they are staked to does not operate as expected on the network. While slashing events are rare, it is important to know how slashing will impact Superfluid Staked assets. Even though only a portion of the LP token’s value is earning staking rewards, the entirety of its value is subject to slashing penalties. If the validator that you have delegated to is slashed 5% for double-signing, the entirety of your Superfluid Staked LP tokens will be slashed by 5% and sent to the community pool.
These factors make it important to pick a validator that is proven trustworthy, secure, and that you align with. Of course, always conduct your own research and be aware of the high-risk environment any DeFi participation entails.
These parameters, along with all of the parameters in this article, are set by the protocol and subject to change at the protocol’s discretion. Coinbase Cloud does not oversee or have control over these network dynamics.
Do I have to unbond to participate in Superfluid Staking?
An unbonding period is a protocol-enforced period of time between when a token holder un-stakes their tokens (or removes them from a liquidity pool) and when those tokens are actually available to sell, swap, or otherwise use in a liquid fashion.
For regular staking, Osmosis has a 14 day unbonding period during which time the unbonding tokens do not earn rewards. For regular LPs, liquidity providers on Osmosis can choose to enter a 1, 7, or 14 day unbonding period when entering the liquidity pool. The longer the unbonding period, the greater the expected reward rate.
- To participate in Superfluid Staking, those who are currently staking OSMO or ATOM to a validator on the Osmosis or Cosmos blockchain will need to un-stake their tokens and go through the full 14 day unbonding period before depositing their tokens to Pool #1 ATOM/OSMO and re-staking their Superfluid Staking attribution.
- Those who are participating in any liquidity pool other than Pool #1 ATOM/OSMO will need to go through their pool’s full unbonding period before taking part in Superfluid Staking. Rewards will not be earned during this time.
- Token holders who are currently deposited in Pool #1 ATOM/OSMO, with a 14 day unbonding period selected, can choose to transition their ATOM/OSMO LP tokens directly to Superfluid Staking OSMO without needing to go through the unbonding period.
- Those with funds bonded in Pool #1 ATOM/OSMO with a 1 or 7 day bond selected will need to go through the unbonding process and re-enter the pool with a 14 day bond.
- Once engaged in Superfluid Staking, one must also unbond in order to change one’s Superfluid Staking delegation from one validator to another.
When exiting Osmosis superfluid staking, unstaking from the validator and unbonding from the pool occur simultaneously, so users only need to wait one 14 day period before their assets are liquid again. For more, see the Osmosis Superfluid Staking FAQ.
What are the maximum service fee and maximum service fee change?
The Maximum Service Fee is the highest percentage that this validator’s Service Fee can ever be raised to, and the Maximum Service Fee Change is the most that the Service Fee can ever be changed in one day. While any Osmosis validator can choose to adjust their Service Fee, these two parameters cannot be changed and dictate how that fee can be adjusted.
How does Coinbase Cloud's service fee work?
Coinbase Cloud charges a percentage service fee on all rewards earned by tokens delegated to our Osmosis 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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