Liquid Staking on Aleo Network

In this article, I’ll provide a step-by-step guide on how to securely liquid-stake Aleo. Aleo is a layer 1 blockchain that uses zero knowledge proofs to power private applications.

The crucial tasks in the aleo network are the

Provers

The provers in the aleo network create the cryptographic proof of transaction without revealing the meta data associated with the transaction.

2. Validators

To secure the Aleo consensus, the validators form consensus on new blocks and block history. The validators need to stake Aleo native token to become actve. The minimum stake to become a validator in the Aleo network is 10,000,000 Aleo credits. Validators can also receive stake from other token holders in the form of delegations.

3. Delegators

There are the person or institutions who would love to participate in keeping the protocol secure, however, they do not wish to run your own validator or could not meet up with the high credit requirement to become a validator. They can opt to become a delegator by delegating their Aleo credit to another validator. Delegating is non-custodial, meaning you retain full control of your funds. As a delegator you earn some Aleo staking rewards. There are two types of delegation in Aleo

Liquid staking and Ntive staking; Native staking locks tokens directly in a blockchain network, making them temporarily inaccessible, while liquid staking allows users to stake tokens while receiving tradable "liquid" tokens that represent their staked assets, maintaining flexibility and liquidity.

3a. Liquid Staking

To start staking for the first time as a first-time staker, you must stake at least 10 Aleo. However, if you are staking again to add to your stake (returning staker), you can stake a minimum of 1 Aleo. In liquid staking, the liquid stake provider (pondo) takes some percentage of reward for providing the staking services. Staking rewards are earned every block and are directly added to your staking balance, compounding your rewards.

3b. Native Staking

To stake natively on the Aleo network as a delegator, you need a minimum of 10000 Aleo. Also, Staking rewards are earned every block and are directly added to your staking balance, compounding your rewards. With native stking, you will need to choose the validator to stake with.

We will be taking about Liquid Staking on the Aleo networking using the the staking.xyz UI interface.

How to stake - Liquid Staking

Setting up Puzzle wallet

• Install Puzzle wallet’s browser extension from https://chromewebstore.google.com/detail/puzzle-aleo-wallet/fdchdcpieegfofnofhgdombfckhbcokj. Please note that Puzzle wallet is supported on Chrome or Brave browsers.

• Select whether you would like to create a new wallet or import an existing wallet.

• Set a password to use to unlock your wallet.

• After creating your wallet, please visit the Seed phrase section under Settings and write down your 12 word seed phrase. Safeguard this phrase as it will be the only way to regain access to your wallet if you ever lose access.

Step-by-step guide to staking on Staking.xyz:

2) Visit Staking.xyz to start managing your staking. Connect your wallet. At the moment the Puzzle wallet, Avail wallet and the Leo wallet are available options to use. Also, ensure you have your Aleo in this wallet.

2) Select Validator and Amount. First, Navigate to the liquid staking and input the amount of ALEO you want to stake. Next, you click stake to stake the quantity of Aleo you want. From the validator list choose a validator of your choice, and click on the select validator button.

You get a pop out, that require that you sign with your wallet. Click on the proceed in the wallet key

Your wallet would require you accept the transaction. Accept and si

Wait for the transaction to complete

Liquid staking done. You can click wiew activity to show your transaction detail and rewards.

You get a pAleo token equivalent to the quantity of Aleo you staked.

you need to wait for 1 hour before transferring your ALEO.

Begin unstaking using Staking.xyz

• Visit the Unstake tab and connect your wallet.
• The unstaking takes an approximately 3 days to complete
• Input the amount you want to unstake. Check out the details of your unstaking transaction. If everything looks good, proceed by clicking on the “Unstake” button and signing the transaction.

• Once unstaking is complete, you will need to withdraw your unstaked Aleo Credits. After withdrawing, you can begin transferring your Aleo Credits.

Important considerations for staking:

• Delegators:
• Need a minimum of 10,000 Aleo Credits to start earning rewards.
• Rewards are earned after 1–2 blocks and compound automatically.
• Validators:
• Must have at least 10,000,000 Aleo Credits staked to be active.
• Cannot exit the active set if they have any active delegators.

Staking rewards and protocols:

• Rewards:
• Protocol issues 5% of the starting total supply as staking rewards.
• Coinbase rewards are distributed to Aleo stakers, with a third going to include solutions provided by Aleo provers.
• ARC Proposals:
• ARC-0037: Allows separate worker and withdrawal addresses.

ARC-0038: Validators can collect commissions from delegators.

ARC-0041: Enables validators to activate without directly owning 10 million Aleo Credits.

Staking on Aleo involves careful consideration and due diligence. Always research validators and understand the staking mechanics before committing your ALEO. Stay updated with the latest developments as Aleo moves closer to its mainnet launch.

By following this guide, you can effectively participate in the staking process on Staking.xyz, contributing to the network’s security and earning rewards in the process.