Overview

Learn about the role of validators in Proof-of-Stake systems like MELD.

What are Validators?

A blockchain validator is someone who is responsible for verifying transactions on a blockchain. In proof of stake (PoS) systems like MELD, validators are given rewards as long as they stake the network’s token (gMELD) and correctly participate in the network. This mechanism helps secure the network by imposing the need to lock up value in the network in order to participate in the consensus decisions.

When a validator successfully validates transactions and adds them to the blockchain, they can earn rewards in the form of additional tokens. These rewards serve as an incentive for validators to act honestly and maintain the network's security.

Incentive Structures

1. Return of staked tokens: When a validator finishes validating the primary network, they receive back the tokens they staked. This ensures that validators have a vested interest in maintaining the network's integrity.

2. Validation rewards: Validators may also receive rewards for their role in securing the network and validating transactions. These rewards can be a percentage of the transaction fees generated on the network or additional tokens.

3. Reward percentage: The reward percentage for staking varies across different blockchain networks. It represents the annual return that validators can earn on their staked tokens. For example, a reward percentage of 8.5% means that validators can earn a return of 8.5% of their staked tokens per annualized percentage yield, or APY for short.