Native Aptos Staking is Live on Liquidswap Testnet

Holding APT long-term? Then stake it to earn passive rewards -- and help secure the network at the same time. Delegated staking in Liquidswap is already live on testnet and coming to mainnet soon.

TL;DR

• Delegated staking with Liquidswap is live on Aptos testnet! We will implement it on mainnet soon. You have a chance to try it on testnet without committing any real funds, so that you are ready for the mainnet.
• Native APT staking is one of the safest yield-bearing instruments on Aptos, because the rewards are generated by the blockchain itself.
• Validators participate in Aptos governance  by voting for blocks and as leaders, whenever they get selected according to a special formula. The leader gets the reward in each round of voting.
• The bigger a validator’s stake, the higher their chances to be selected and the larger the maximum reward. Validators vie for stakers’ funds to improve their own position,and share the rewards with stakers in return.
• Before, one needed a node and 1 million APT to stake. But from now on, Liquidswap offers delegated staking. Select a validator, enter the amount of APT to be staked, and confirm. Rewards will accrue automatically.
• You can unstake any time. The funds should be unlocked for withdrawal at the start of the next epoch (around 2 hours).
• When partially unstaking, the remaining part of the position should be above 10.001 APT, or the whole balance will be unstaked.
• APT staking is still in test mode, with the parameters and the list of validators subject to change. In some cases, it may not work as expected.

How do staking and delegated Proof-of-Stake work on Aptos?

In Aptos, staking is a key part of governance, consensus, and transaction validation. Every validator node needs to have funds staked on it in order to vote on new blocks. Moreover, stake size is one of the variables in the special formula that selects a leader among all the validators.  The leader proposes a block and gets the reward after a round of voting, as long as the block is accepted.

Leader selection happens many times during an epoch (approximately 2 hours), so every  validator has multiple chances to become the leader and get rewarded.  The incentive to be an Aptos validator is to become the leader as often as possible. To maximize one’s chances of being selected, a validator node needs to have a good performance record and  a large stake.

The reward itself depends on how successful the leader’s previous block proposals were. For example, if a  leader was elected 10 times, and 7 of the blocks  they proposed were accepted by the voters, they would  get 70% of the maximum reward. The maximum reward depends on the leader’s stake.

As of March 2023, there were 104 validators on Aptos mainnet. The top validators  managed to be elected leader and score a reward more than 500 times in an epoch.

Where does a validator’s stake come from? Previously, validators had to stake their own funds - at least 1 million APT. But in December, AIP-6 (Aptos Improvement Proposal no.6) was passed, making it possible for users to delegate APT to validators and participate in staking.  This is known as Delegated Proof-of-Stake (DPoS).

That’s right: every APT holder can now participate in staking as an owner. If you have an account on the Aptos blockchain with some APT in it, you’re automatically an Owner.

As an Owner, you can stake your APT and appoint a node as a validator to vote on your behalf. (Of course, an Owner can also operate their own node, but that is technically complex.) Whenever the validator node you appointed earns a reward, you’ll get part of it. At the same time, the validator won’t have access to your funds, and you can withdraw the appointment and assign it to another validator any time. It’s a win-win!

How to stake APT on Liquidswap testnet

Before you start: everything that happens on testnet is experimental and occasionally may not work as expected - or may not work at all. Testnet APT has no market value and can’t be transferred to a mainnet account!

1) In Pontem Wallet , switch to testnet. Click on the words “Aptos mainnet” at the top of the wallet window and choose Aptos testnet from the dropdown menu. (Instructions may differ for other Aptos wallets.)

2) Make sure you have at least 10.5 testnet APT, as the minimum amount stake  is 10.001 APT, and you’ll need some for gas fees, too. Ideally, you need 20-21 APT because of how the stake withdrawal formula works (more on that later).

You can get testnet coins from this faucet.  Simply enter the wallet address and click on Send Testnet. Repeat as needed - though there’s no guarantee that you’ll be able to get enough APT this way.

3) Connect the wallet to Liquidswap on testnet and go to the Staking page. Pick a validator and click Stake. Note that each validator can decide how much of the rewards to withhold, but the commission is generally around 10-12%.

Remember that the reward amount depends on how often your chosen validator is selected as leader, their total staked value, and their proposal success rate. For this reason, it’s not possible to display a precise APR.

4) Enter the exact amount of APT you want to stake or choose Half or Max. As you can see, the reward rate for this validator is 13%.. Click Stake and confirm in the wallet. If you get an Out of Gas error, try increasing the gas fee. (Gas calculations should be improved in the next release.)

5) Once processed, the stake will appear in My Holdings. You can always add to your stake later.

6) To withdraw the funds, click Unstake and enter the amount. Confirm in Pontem Wallet. If you get an Out of Gas error, repeat with a higher gas fee.

Warning: staking is still in test mode

APT staking is an experimental product - and, like everything on testnet, its parameters are subject to change. Validators can be added or removed without warning, and the math described below can be modified at any moment.

In some cases, you may have to wait for several hours to withdraw your tokens, or your staking position can temporarily disappear from the list altogether. We’ll do our best to keep this tutorial updated, but the Pontem team will not be responsible for any staking errors. Remember: this is testnet, so the whole point is to find and fix bugs. If you discover any unexpected behavior, please tell us about it on Telegram.

Unstaking Math

The system uses the following rules:

1. The minimum unstaking amount is 10.001 APT. If you set a smaller amount, 10.
2. For partial unstaking, the remainder should be at least 10.001 APT.
3. If any of these 2 conditions isn’t met, the whole position will be unstaked.

Example 1: You stake 20 APT and then enter 15 APT in the unstaking window. The result is 20-15 = 5 APT, which is less than 10.001. As a result, the entire  20 APT will be unstaked.

Example 2: You stake 20 APT and set 9.9 APT to be unstaked. The difference is 20-9.9 = 10.1 APT, which is less than 10.001, so 10.001 APT should be unstaked. However, in this case the remainder will be (20-10.001)=9.999, which is less than the minimum allowed remainder (10.001). So the entire 20 APT will be unstaked.

Example 3: You stake 22 APT and set 10.5 APT to be unstaked. The remainder is 22-10.5=11.5 APT. Both the unstaking amount and the remainder are higher than 10.001, so 10.5 APT will be unstaked and 11.5 APT will remain staked.

The position will move from Staked to the Unlocking tab in My Holdings. The unlocking period lasts until the end of the epoch (around 2 hours).

7) Once the epoch is over, the funds will appear in Available for Withdrawals. From there, you can easily withdraw APT back to the wallet. Click on Withdraw and confirm. If you get an Out of Gas error, repeat with a higher gas fee. Your staking position in My Holdings will be updated.

That’s it - you’ve just staked APT natively on Liquidswap! We recommend that you practice on testnet first while we are preparing the mainnet release. Especially make sure you understand the math of unstaking - and do report any bugs to the Pontem team.

Pontem has many new features in the pipeline for Liquidswap and Pontem Wallet, so follow us on Telegram, Twitter, and Discord for the latest updates!

About Pontem

Pontem Network is a product studio building foundational dApps for Aptos. Our products  include Pontem Wallet; Liquidswap, the first DEX (AMM) for Aptos; browser code editor Move Playground; the Move IntelliJ IDE plugin for developers; and the Solidity to Move translator ByteBabel -- the first implementation of the Ethereum Virtual Machine for Aptos.