Staking

The process of locking tokens on the chain is called staking.

VNE holders can stake their funds on the chain to receive staking rewards. There is an economic incentive for VINE community members to become participants on the blockchain, but it also contributes to the economic security and stability of the network.

Learn more about Proof-of-Stake and how the system works here.

Rewards

Validators who produce a block are rewarded with tokens, and they can share rewards with their nominators. Both validators and nominators can stake their tokens on chain and receive staking rewards at the end of each era. The staking system pays out rewards according to the work done by each validator. Thus, having more stake in a validator does not influence the amount of block rewards it receives. This avoids the centralization of power amongst a few validators.

Network Benefits

The security of Proof of Stake networks is dependent on the amount of staked tokens. For an attacker to successfully launch an attack on the network, a bad actor would need to accumulate a large quantity of the tokens, or the actor would need an exceedingly large number of participants to collude and act maliciously.

Penalties

If the case of an attack on Vine's NPoS, both the validator(s) and nominators gets slashed, resulting in their stakes being consfisicated by the network and deposited to the treasury. These penalities discourage rational network participants from acting in ways that don't align with the health and interests of the chain at large.

Learn more about slashing in the next section.