Liquid Staking Delegation Algorithm
As of 02/01/2025
Last updated
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As of 02/01/2025
Last updated
Was this helpful?
Each Hatom Node Operator (HNO) is assigned a dynamic score based on their liquidity and Annual Percentage Rate (APR), which is continuously updated by an automated bot. When a delegation request is made, the algorithm identifies the HNO with the highest score that can accommodate the delegation (i.e., has sufficient liquidity). A candidate list is then generated by including validators with scores close to the initially selected HNO.
Probabilities are assigned to each HNO within the candidate list based on their service fees. For example, an HNO with a 0% service fee is 20% more likely to be selected than one with a 12% service fee. HNOs with service fees exceeding 12% are automatically disqualified from the selection process.
A weighted sampling process is then conducted, using the assigned probabilities to determine the final HNO for delegation.
This selection model fosters fair competition among HNOs, prioritizing validators with lower liquidity and higher APRs. It ensures the sustainability of the overall APY offered through liquid staking while contributing to the decentralization of the blockchain network.