What is Delegation?
Delegation is the process of contributing your $FLIP tokens to support validators in return for a share of network rewards. Unlike traditional Proof of Stake networks, Chainflip uses a unique auction-based system where validators compete for authority slots.
Delegation Rules
There are two important rules to understand when delegating:
- One operator per Ethereum address: You can only delegate to one operator per Ethereum address. This is because we use the Ethereum address to create a State Chain account, which simplifies the staking process.
- One operator at a time: You can only delegate to one operator at a time. This simplifies the accounting process considerably. You can always switch operators between epochs if needed.
How to Delegate
To delegate your FLIP tokens to an operator:
- Visit the Delegate App.
- Connect your Ethereum wallet that contains FLIP tokens.
- Follow the on-screen steps to complete your delegation.
The delegation process will guide you through selecting an Operator and confirming your delegation transaction.
How Chainflip Delegation Works
The Auction System
Chainflip is not a traditional Proof of Stake network. Instead, validators compete for authority slots through regular auctions. Rewards are distributed equally among all authority slots rather than proportionally based on stake amounts.
Operators: The Middle Layer
In Chainflip’s system, delegators don’t delegate directly to validators. Instead, they delegate to Operators, who manage pools of one or more validators. Operators:
- Aggregate delegated funds from multiple delegators
- Strategically distribute these funds across their managed validators during auctions
- Handle the complexity of auction bidding on behalf of delegators
- Take a commission fee for their services. The minimum commission is 15%.
This system reduces the need for delegators to actively monitor auction states while optimising the chances of earning rewards.
Delegation Timing
Delegation in Chainflip is not immediate. When you delegate, you’re expressing intent to contribute your $FLIP to a specific Operator. Actual rewards depend on whether that Operator successfully wins authority slots for their validators in the next auction.
Delegators can withdraw their support or switch to another operator at any time, but their reward rate remains unchanged (and funds remain bonded) until the conclusion of the next auction.
Getting Started with Delegation
For Delegators
The simplest way to delegate is through your Ethereum wallet. If you already own $FLIP tokens:
- Visit the Delegate App
- Connect your Ethereum wallet
- Follow the instructions to complete your delegation
For Operators and Validators
If you’re interested in becoming an Operator or are an existing Validator, check out the detailed guides in the Validator Documentation.
Withdrawing Your Delegation
Bonding Period
As a delegator, you can withdraw your support for an operator at any time, but your funds will remain locked (bonded) until the end of the following auction. This bonding period lasts at most three days.
Redeeming Funds
After the bonding period ends, you are free to withdraw your funds. This process is called redeeming in Chainflip terminology. You can then:
- Redeem your funds back to your Ethereum wallet
- Delegate to a different operator
- Keep your funds uncommitted until you’re ready to delegate again
Gross Earning Potential Estimates
This is just an estimate. The actual numbers may vary. Please use these figures as a guide for understanding the potential economics of Chainflip delegation.
This section provides an estimated breakdown of potential costs and revenues for Chainflip Operators. These calculations are designed to give you a foundational understanding of the economic factors involved in participating in the network, taking into account different operational setups.
Constants and assumptions
The following variables and assumptions underpin these example calculations. These figures are crucial for interpreting the revenue and cost estimates provided in the subsequent case studies:
| Network Estimates | |
|---|---|
| FLIP Price ($) | $0.70 |
| Nodes in Active Set | 150 |
| Operator Commission | 15.00% |
| Operator Revenue Estimates | |
| Min Operator Stake per Node (FLIP) | 20,000 |
| MAB per Node (FLIP) | 100,000 |
| Total Emissions per Month (FLIP) | 310,455.75 |
| Min Operator Stake per Node ($) | $14,000.00 |
| MAB per Node ($) | $70,000.00 |
| Total Emissions per Month ($) | $217,319.03 |
| Operator Costs Estimate | |
| Managed RPC per Node ($/mo) | $300.00 |
| Managed Validator Overhead per Node ($/mo) | $50.00 |
| Self-Hosted Base RPC ($/mo) | $1,700.00 |
| Self-Hosted Validator Overhead per Node ($/mo) | $50.00 |
Case1: Managed RPCs
This scenario outlines the estimated earnings and costs for Operators utilizing a managed Remote Procedure Call (RPC) service. Managed RPCs typically offer convenience and lower operational overhead but may incur higher direct service fees compared to self-hosting.
| 1 Node | 3 Nodes | 5 Nodes | 10 Nodes | |
|---|---|---|---|---|
| Total Node Revenue (FLIP) | 2,069.71 | 6,209.12 | 10,348.53 | 20,697.05 |
| Revenue for Operator (FLIP) | 413.94 | 1,241.82 | 2,069.71 | 4,139.41 |
| Revenue from commission (FLIP) | 248.36 | 745.09 | 1,241.82 | 2,483.65 |
| Net Operator Revenue (FLIP) | 662.31 | 1,986.92 | 3,311.53 | 6,623.06 |
| Net Operator Revenue ($) | $463.61 | $1,390.84 | $2,318.07 | $4,636.14 |
| Validator RPC (managed) | $300.00 | $900.00 | $1,500.00 | $3,000.00 |
| Validator cost | $50.00 | $150.00 | $250.00 | $500.00 |
| Total Cost | $350.00 | $1,050.00 | $1,750.00 | $3,500.00 |
| Minimum Token Cost (FLIP) | 20,000.00 | 60,000.00 | 100,000.00 | 200,000.00 |
| Minimum Token Cost ($) | $14,000.00 | $42,000.00 | $70,000.00 | $140,000.00 |
| Revenue Yield Monthly | 3.31% | 3.31% | 3.31% | 3.31% |
| Revenue Yield Yearly | 39.74% | 39.74% | 39.74% | 39.74% |
| Net Yield Monthly | 0.81% | 0.81% | 0.81% | 0.81% |
| Net Yield Yearly | 9.74% | 9.74% | 9.74% | 9.74% |
Case 2: Self Hosted RPCs
This scenario details the estimated economics for Operators who choose to self-host their Remote Procedure Call (RPC) services. Self-hosting can potentially reduce recurring costs but often requires more technical expertise and management.
| 1 Node | 3 Nodes | 5 Nodes | 10 Nodes | |
|---|---|---|---|---|
| Total Node Revenue (FLIP) | 2,069.71 | 6,209.12 | 10,348.53 | 20,697.05 |
| Revenue for stake (FLIP) | 413.94 | $1,241.82 | $2,069.71 | $4,139.41 |
| Revenue from commission (FLIP) | 248.36 | 745.09 | 1,241.82 | 2,483.65 |
| Net Operator Revenue (FLIP) | 662.31 | 1,986.92 | 3,311.53 | 6,623.06 |
| Net Operator Revenue ($) | $463.61 | $1,390.84 | $2,318.07 | $4,636.14 |
| Validator RPC (Self Hosted) | $1,700.00 | $1,700.00 | $1,700.00 | $1,700.00 |
| Validator cost | $50.00 | $150.00 | $250.00 | $500.00 |
| Total Cost | $1,750.00 | $1,850.00 | $1,950.00 | $2,200.00 |
| Minimum Token Cost (FLIP) | 20,000.00 | 60,000.00 | 100,000.00 | 200,000.00 |
| Minimum Token Cost ($) | $14,000.00 | $42,000.00 | $70,000.00 | $140,000.00 |
| Revenue Yield Monthly | 3.31% | 3.31% | 3.31% | 3.31% |
| Revenue Yield Yearly | 39.74% | 39.74% | 39.74% | 39.74% |
| Net Yield Monthly | -9.19% | -1.09% | 0.53% | 1.74% |
| Net Yield Yearly | -110.26% | -13.12% | 6.31% | 20.88% |