krest’s economic model is now live. Dive into the deets here and learn how to make krest more decentralized and robust while earning $KREST by becoming a collator or delegator. With the update, there will be 16 active collators, each of which could be backed up by 25 delegators, allowing up to 400 people to become an active part of krest.
Why is it important?
Block production on krest and peaq relies on collators and delegators working together to ensure that transactions are propagated to the relay chain in a fast, reliable, and censorship-resistant manner.
What does this mean for the community?
Buying and selling $KREST is just scratching the surface. Becoming a collator or delegator will help keep the network democratic and decentralized while also opening the door to more rewards.
It’s no secret that $KREST has become a token revered by peaqonauts all over the globe. Airdrops are coming, and the $KREST token is now listed on its first public exchange. It’s a huge milestone, no doubt, but it’s only the tip of the iceberg.
The krest network is your peaq into the future. It’s the testing ground for DePINs and dApps launching on peaq.
Oh, and in case you didn’t know – holders of $KREST will be airdropped $PEAQ when the peaq network goes live next year.
What is a collator?
The main role of a collator is to group transactions and create blocks, pass them on to the Relay Chain validators, and keep the state of the network up-to-date. Collators can be compared to miners in networks that use Proof of Work. They retain all of the necessary information needed to author new blocks and execute transactions, but unlike miners, collators don’t influence network safety — that responsibility rests with Relay Chain validators. However, they’re essential for maintaining network activity and ensuring that it remains decentralized and censorship-resistant. In the new krest economic model, the block production process will rely on 16 active collators.
Additionally, collators can use OnFinality to set up a node with just a few clicks to save time and avoid a complicated node setup process.
What is a delegator?
Delegators play a crucial role in block production by making sure only honest, reliable collators stay in the active pool. Compared to collators, delegator requirements are much lower, which allows the wider community to participate in creating new blocks. Delegators simply need more than a minimal amount of tokens for staking and select the collator to delegate to, but their presence is vital. Delegators back up trustworthy collators, increasing a collator’s chance to be selected for block production. Each collator can be backed up by up to 25 delegators.
Learn more about becoming a delegator here.
Rewards formula breakdown
The tokenomics surrounding krest and peaq are designed in a way to incentivize different network participants. Collators and delegators play an important role in the network as they not only maintain the state by running a full node but also propose blocks, which are later validated and finalized by the Relay Chain validators.
Collators and delegators receive 30% of the total rewards, which include inflation rewards based on the minting of new blocks and transaction fees from the network activity.
The active pool includes 16 collators, who will propose new blocks in a round-robin manner. Any new block is proposed by a single collator. The active collator set renews every round — every 1,200 blocks, or about every 4 hours. The mechanism determining who gets to join the active pool is based on the total stake of each collator and that of the delegators backing it. A collator can have up to 25 delegators behind it.
Total rewards are split between collators and delegators using these formulas:
Collator Reward: (TotalRewards*CollatorStake*CollatorCoefficient)/(CollatorStake*CollatorCoefficient + DelegatorStake)
(TotalRewards*DelegatorStake)/(CollatorStake*CollatorCoefficient + DelegatorStake)
In this model, delegators are incentivized to stake on collators with smaller total stake, as blocks are paying similar rewards. This means that the delegator’s portion of rewards will be lower when delegating to a collator with a higher total stake, thus helping to spread stakes more evenly.
CollatorCoefficient is a parameter which allows krest to fairly compensate collators for their work of running and maintaining hardware nodes, while also compensating delegators based on the staked amount. Currently, CollatorCoefficient is 8.
For example, collator Bob staked 1000 $KREST and received delegations from Alice (100 $KREST) and Ross (200 $KREST) and total block rewards are 20 $KREST, then the rewards will be distributed in the following way:
Bob: 20*1000*8/(1000*8+100+200) = 20*8000/8300 = 19.28 $KREST
Alice: 20*100/(1000*8+100+200) = 2000/8300 = 0.24 $KREST
Ross: 20*200/(1000*8+100+200) = 4000/8300 = 0.48 $KREST
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