How does XAI staking work?
To fully grasp how XAI staking works, it’s essential to understand the various tokens and moving parts that make up the XAI staking ecosystem.
XAI (Native Token)
XAI is the native gas token for the XAI Layer 3 gaming blockchain, which is built on Arbitrum. It is fully transferable and tradable on multiple centralized and decentralized exchanges. However, due to the blockchain’s gas subsidy contract, which makes gas fees extremely cheap, the utility of XAI as a gas token is minimal.
In addition to its current role, more utilities for XAI will be announced by the XAI Foundation in the future, expanding its potential use within the ecosystem.
Currently, we treat XAI as a full growth investment until a revenue-sharing model between the XAI ecosystem and its games goes live. At that point, the games would share their revenue by purchasing XAI from the open market (this model is still under discussion).
esXAI (Staking Token)
esXAI is a non-transferable, non-tradeable token that plays a central role in the XAI staking ecosystem. It is required to participate in staking and is also the token used to reward sentry nodes and stakers.
Key mechanics of XAI and esXAI:
Converting XAI to esXAI: XAI can be instantly burnt and redeemed for esXAI at a 1:1 ratio.
Redeeming esXAI for XAI: Converting esXAI back to XAI involves waiting periods with different rates, depending on the redemption option:
180 days: 1 esXAI converts to 1 XAI.
90 days: 1 esXAI converts to 0.625 XAI (0.1875 XAI is burned, and 0.1875 XAI goes to the XAI Foundation).
15 days: 1 esXAI converts to 0.25 XAI (0.375 XAI is burned, and 0.375 XAI goes to the XAI Foundation).
It requires the redemption and burning of esXAI to bring new XAI into circulation in the open market.
Sentry Nodes
Sentry Nodes in the XAI ecosystem function similarly to miners in traditional blockchain networks. However, instead of mining blocks, Sentry Nodes "mine" esXAI by acting as observation nodes also know as checker nodes. Their primary role is to monitor the XAI rollup protocol for any discrepancies or incorrect block proposals.
If a Sentry Node detects an invalid block, it raises an alarm, allowing other nodes or network participants to intervene and correct the issue. The main purpose of these nodes is to address the verifier’s dilemma, ensuring the network remains secure and free from fraudulent activity.
Novadash hosts over 7,600 Sentry Nodes that "mine" esXAI.
Where does the yield come from?
The yield in the XAI ecosystem is generated through blockchain emissions, which follow a well-defined set of rules. These emissions are distributed to nodes that compete in a unique process to earn rewards. More details on how this competition works will be explained in the following section.
Max. Supply: 2,500,000,000 (incl. XAI and esXAI)
May 2024 - Sept. 2025
~ 856,164 esXAI
23.32%
Sept. 2025 - May 2027
~ 428,082 esXAI
16.67%
May 2027 - Jan 2029
~ 214,041 esXAI
7.14%
Jan 2029 - Oct 2030
~ 107,020 esXAI
3.38%
Sentry Nodes Rewards
Every hour, a challenge occurs where Pools (which host Sentry Nodes) compete to win a share of the emissions, called Assertion Rewards. The size of the hourly reward pot is determined based on the total daily emissions, giving Pools a clear target to compete for.
How do Pools compete?
The XAI reward system uses a probabilistic approach. The likelihood of winning an assertion reward depends on the tier level of the Pool where your Sentry Nodes are hosted, and the uptime of the pool. The higher the tier, the greater the number of chances the Pool has each month to win an assertion and claim rewards.
Diamond
8,000,000 esXAI
1,000
50.4x
Platinum
4,000,000 esXAI
1,000
21.6x
Gold
2,000,000 esXAI
1,000
14.4x
Silver
30,000 esXAI
1,000
10.8x
Bronze
0 esXAI
1,000
7.2x
The current assertion reward is 38 esXAI (as of September 16, 2024). This number can vary from hour to hour due to Pools going offline or changing tiers.
Click here to check the current assertion reward
Simple Pool Reward Math
Let's begin with a simple math example to illustrate the foundation of the staking reward calculation.
Pool Name: Nova 1
Tier Level: Diamond (50.4x / Month)
Nr. of Sentry Nodes Hosted: 1,000
Current Assertion Reward: 38 esXAI
Math:
Assertion rewards can fluctuate, meaning the total esXAI generated by a Pool each month can be either higher or lower.
Pool Breakdowns
Each pool has a different breakdown for distributing the total esXAI generated among the three stakeholders:
Pool Operator: Manages the pool’s infrastructure, updates the nodes, and covers all gas fees.
Node Key Staker: Stakes their Sentry Node Key(s) in the pool.
esXAI Staker: Stakes esXAI to generate yield and helps maintain the minimum pool staking requirements for various tiers.
Example:
Pool Name: Nova 1
Tier Level: Diamond (50.4x / Month)
Nr. of Sentry Nodes Hosted: 1,000
Total esXAI staked in the pool: 9,500,000 esXAI
Current Assertion Reward: 38 esXAI
Breakdown:
10% Pool Operator = 191,550 esXAI / Month
25% Node Key Stakers = 478,875 esXAI / Month
65% esXAI Stakers = 1,245,075 esXAI / Month
For Node Key Stakers
By staking my Node Key(s) in the Nova 1 pool, I can expect to earn approximately 487 esXAI per month for each staked Node Key.
For esXAI Stakers
Example: If I contribute 20,000 esXAI out of a total of 9,500,000 esXAI in the pool, my share represents a specific percentage of the pool’s total.
How to get the most out of esXAI staking
Here are some general guidelines to help you maximize your returns from the XAI staking system:
For Key Stakers
High Tier Pools
High % allocation to Node Key Holders
For stXAI Stakers
High Tier Pools
High % allocation to stXAI Stakers
The total number of esXAI staked in a pool should be as close as possible to the “esXAI Staking Requirement.” The more esXAI staked in the pool, the more your share may be diluted.
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