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Overview of Staking on Core

Staking is a fundamental component of Core's Satoshi Plus consensus mechanism. It allows both CORE token holders and Bitcoin holders to participate in securing the network and earn rewards. Unlike traditional Proof of Stake systems, Core's unique architecture enables two distinct staking mechanisms: CORE token delegation and Bitcoin timelocking, which together with Bitcoin miner participation form the basis of validator selection and network security.

How Staking Works on the Core Blockchain​

Core's staking system combines multiple participation methods that contribute to validator election through a hybrid scoring mechanism. Each validator receives a hybrid score based on three factors: Bitcoin miner support (DPoW), delegated CORE tokens (DPoS), and timelocked Bitcoin.

CORE Token Staking​

CORE token holders can delegate their tokens to validators without transferring ownership:

  1. Token holders select a validator to delegate to
  2. Upon delegation, tokens remain in the holder's custody but are locked for staking
  3. Validators receive the delegated stake, which strengthen their position in validator election
  4. Rewards earned by validators are shared with delegators proportionally to their stake

Bitcoin Staking​

Bitcoin holders can participate in Core's Satoshi Plus consensus through Bitcoin's native timelocking mechanism:

  1. Bitcoin holders use the CLTV function to timelock their Bitcoin for a specified period
  2. During timelock creation, they include metadata specifying their chosen validator and reward address
  3. The timelocked Bitcoin amount contributes to the selected validator's hybrid score for election
  4. As the validator produces blocks, the Bitcoin holder receives CORE rewards proportional to their timelocked amount
  5. When the timelock period ends, the Bitcoin becomes spendable again, the validator loses that delegated support, and the Bitcoin holder no longer collects CORE rewards

Validator Election​

The validator set is determined through an election process using the hybrid score:

  1. Every round, all validators receive a hybrid score based on delegated CORE tokens, timelocked Bitcoin, and Bitcoin miner support
  2. The top 27 validators with the highest hybrid scores are elected to the active validator set
  3. Elected validators produce blocks and validate transactions on the Core blockchain
  4. Rewards accumulated during each round are distributed at the end of the round
  5. The next round's validator set is determined based on updated hybrid scores

Staking Economics​

Reward Sources:

  • Block Rewards: New CORE tokens are minted according to a fixed 81-year schedule with a 3.61% annual reduction rate
  • Transaction Fees: A portion of fees from transactions on the Core blockchain contributes to the consensus reward pool

Importance of Staking​

Staking plays several critical roles in the Core ecosystem:

  • Security: By requiring validators to have significant support (in terms of delegated CORE, timelocked Bitcoin, and miner support), the network promotes validators with aligned incentives with the broader ecosystem
  • Decentralization: The three-pronged approach to validator election mitigates centralization vectors
  • Economic Sustainability: The staking mechanism distributes rewards to various participants, incentivizing symbiotic participation
  • Bitcoin Utility Enhancement: By enabling Bitcoin holders to participate in consensus while maintaining custody, Core extends Bitcoin's utility beyond simple value storage

Staking Dynamics and Strategies​

Participants in the Core network can adopt various staking strategies to maximize their returns and influence on the network:

  • Validator Performance: Delegating to high-performing validators is crucial, as rewards are not accrued by delegators to inactive or malicious validators.
  • Risk Management: Diversifying the delegation across multiple validators can help mitigate risks associated with the potential failure of a single validator.

Conclusion​

Core's staking architecture represents a significant innovation in consensus design by bridging Bitcoin and modern staking mechanisms. By enabling both CORE and Bitcoin holders to participate in consensus, Core creates a robust, multi-layered security model that aligns incentives across different participant groups.