BNB Chain: Staking Guide

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Figment

June 27, 2022

The BNB Chain is an EVM compatible chain that uses the Proof of Staked Authority consensus mechanism (PoSA) posed as a solution to bring programmability and interoperability to the Binance Chain. PoSA can be seen as a hybrid between Proof of Stake and Proof of Authority mechanism. Read more about PoSA here.

The BNB Chain relies on a network of 21 validators, via the PoSA system ensuring that the most bonded validator candidates of staking, become active validators and produce blocks.

In order to guarantee security, stability, and chain finality, BNB Chain uses double-sign detection and other slashing mechanisms similar to that found in other chains, but with a high degree of penalty, based on the small size of the validator set. In essence, BNB Chain combines EVM-compatibility and the fast transaction times of the PoSA to deliver a favorable interoperability solution. Ready to start staking BNB? Let’s go!

IMPORTANT NOTE: 

The BNB merge in February 2022 encompassed the fusion of Binance chain and Binance Smart Chain (BSC) to form the BNB Chain. The infrastructure consists of two separate chains, The BNB Beacon Chain (Previously Binance chain) and The BNB Smart Chain (previously known as Binance Smart Chain or BSC). The Beacon chain is used to carry out staking, governance etc. whereas the Smart Chain is used as an EVM compatible chain to build and interact with dApps. If you want to read more about the topic check out the Tokenomics article.  It is important to keep in mind that only BEP2 (Binance Chain)  tokens can be staked. If the user is holding BEP20 tokens in the BSC wallet, the conversion will be done automatically by the wallet and no extra steps are required on the users end. However, if the BEP20 tokens are held in a non-BSC wallet, the conversion will have to be done manually. The BNB Tokenomnics article goes over the key differences a bit more in depth, check it out here

Ready to Stake? Here’s what you need to know:

Key Staking Considerations:

  • Rewards are distributed every day at 00:00 UTC. (Rewards of day N will be distributed on N +1 day)
  • Unbonding period: 7 days
  • Figment has an 10% commission fee
  • The minimum amount of BNB that can be delegated is 1 BNB
  • Staked funds are at risk when the validator Double signs, inavailability/downtime or the self bond falls below minimum
  • Double sign penalty: Validator node proposes two different blocks at the same block height. Consequence: 10,000 BNB slashed from Validators self bond.
  • Downtime penalty: Missing 50 blocks or more within 24 hours. Consequence: 50 BNB slashed from Validators self bond
  • Self bond penalty: Self Bond falls below minimum 10K BNB

All above mentioned penalties come with punishments for the Validator. The validators are “Jailed” for a certain period of time if any of the violations occur. While the Validator is in Jail, no rewards are earned by the Validator. It is important to note that only Validators are affected by slashing. Delegators do not lose their stake and slashing is not shared

In order to stake BNB, you will need to download and fund the Binance Chain Wallet browser extension. This wallet is non-custodial, and requires the user to keep track of their own mnemonic phrase, and password. To learn more about custody and best practices, check out our “What is Custody?” video.

When you are ready to begin staking, head over to the Figment validator dashboard.

Once you are on the Figment validator dashboard, you will need to connect your Binance Chain Wallet extension. Click “Connect Walltet” in the top right corner.

Proceed with connecting your Binance Chain Wallet.

Confirm the request in the wallet by pressing “Connect” which will connect your wallet to the staking interface.

When you are ready to begin staking BNB, click “Delegate” in the top left corner, and enter the amount of BNB you wish to delegate.

Once you click “Delegate” and confirm the transaction, congratulations! You are now successfully staking BNB.

Rewards

Delegator rewards are derived from transaction fees from transactions that occur on the network. These fees include spot trading, buying/selling cryptocurrencies, withdrawal fees etc. You can see a full chart over here. Staking rewards are distributed to delegators every day at 00:00 UTC. It is important to keep in mind that you will start receiving rewards the second day after delegating. You can go on the Staking Rewards website to identify the approximate rewards that can be earned in a year!

Unstaking

You can unstake your tokens at any given time. The unbonding period is set at 7 days for which no rewards will be earned. The tokens will automatically be deposited into your wallet once the unbonding period ends.

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