Part 2: Introduction to Fusion’s Unique Approach to Staking
This is the 2nd section of a 4 part guide that will culminate in you staking on the Fusion Foundation’s Main Network. Part 2 explores Fusion’s unique approach to staking, purchasing ‘tickets’ and competing in the ticket ‘lottery’.
Link to the other sections of the How to Set Up A Fusion Node Guide:
- Part 1 — Introduction to Consensus Algorithms
- Part 3 — How to set up a VPS on AWS
- Part 4A — SSH into your VPS and connect your node to the Fusion Blockchain on Mac and Linux
- Part 4B — SSH into your VPS and connect your node to the Fusion Blockchain on Windows
Introduction to Fusion’s Unique Approach to Staking and Staking Q&A
The Fusion Foundation has custom built from scratch a unique staking model to achieve consensus on its MainNet. Thankfully, having an in-depth understanding of how Fusion’s staking infrastructure works is not mandatory to participate. The vast majority of the staking process happens behind the scenes, once you understand the key principles, staking on Fusion is as easy as ‘set it and forget it’.
The Fusion wallet interface and setup up guides makes it incredibly easy to earn FSN rewards from staking. But first let’s explore two key concepts, ‘tickets’ and ‘lottery’.
On MainNet, rather than staking directly with your FSN tokens, stakers purchase ‘tickets’ with their FSN tokens.
The cost of one staking ticket is 5000 FSN tokens time-locked from now until 30 days into the future (0, 30 days).
Learn more about time-lock here.
Purchased tickets then compete in a ‘lottery’, the winning ticket in the lottery is chosen to pack and validate the next block on the network and the owner of the ticket earns a reward if successful. Tickets remain in the lottery until they are picked. This means that if your ticket is not picked for the first block it automatically enters the lottery to compete to validate the following block 15 seconds later (and so on) until it is picked.
- If a ticket is not picked within 30 days, your 5,000 FSN (0, 30 days) is returned to your wallet and you will need to purchase a new ticket to participate.
- If your ticket is picked to validate a block and your node is online, then the 5,000 FSN (remaining portion, 30 days) is returned to your wallet immediately with an additional reward of 2.5 FSN tokens as a reward.
- If your ticket is picked to validate a block and your node is offline, then your ticket will be removed from the pool and not returned to your wallet. Importantly, you don’t lose your complete Fusion tokens, only the capacity to stake with them for the remaining portion of their time-lock.
Staking, Tickets and Lottery FAQs
Q. Can a user purchase more than one ticket?
A. A staker can buy as many tickets as he wants, the only limitation is the ability to purchase only one additional ticket per block.
Q. Does having more tickets increase your chance of being selected to validate the next block?
A. Yes, a person who has 2 tickets competing in the lottery has more chance (almost exactly double the chance, there is a small adjustment based on the age of the ticket) than a person who has 1 ticket competing in the lottery.
Q. How can you have more than 1 ticket competing in the lottery if you can only buy 1 additional ticket per block?
A. A user buys one ticket in ‘Block 1’ and is not selected, then this user buys an additional ticket in ‘Block 2’ and so he will have two tickets competing in the lottery in ‘Block 2’ (and so on).
Q. Does staking guarantee rewards? What happens if none of my tickets are selected?
A. Technically there is no ‘guarantees” in earning rewards from staking. It’s a matter of probability. You can use the Fusion Staking Estimator to get an estimation of your staking rewards. It is also important to note that the term ‘guarantee’ is misleading. Take this, for example: if you throw a coin 10,000 times, it’s statistically probable that you will land 50% of time on tails and 50% on heads. But you could actually land 100% on heads and never land on tails, this is just very unlikely to happen. So, even that there’s no guarantee that you will land on tails at least once, the probability of you never landing on it is so low, that we can ignore it.
Q. How much can I expect to earn from staking?
Q. Is it true the longer a ticket sits in the lottery pool the greater its chance of being picked compared with a new ticket that enters the lottery pool?
A. This is a complex question that a user can investigate in-depth in the public Fusion GitHub repository. Simplistically, a ticket’s probability of being picked is impacted by the length of time it has been sitting in the lottery pool. For example, a ticket that has been in the pool for 10 days has a slightly greater chance of being picked compared to a ticket that has been in the lottery pool for 9 days, that has a slightly better chance of being picked than a ticket that has been sitting in the lottery pool since the previous block 15 seconds ago. This impact is small, and the algorithm used to determine the probability of a ticket being picked is complicated, you can deconstruct the process on GitHub.
Q. Do stakers have to buy each ticket manually?
A. No, Fusion has developed an Auto-Buy Ticket script and user interface that will enable users to set parameters for automatically repurchasing tickets.
Q. How does the “Auto Buy” Ticket process work?
A. A user accesses the Auto-buy Ticket from https://tickets.fusionnetwork.io/and sets the parameters based on his preferences. The user has the option to auto-buy tickets that will either win the lottery or expire after 30 days.
Q. Is there an alert for when my ticket is selected?
A. At this stage there is no built-in alert for when a ticket is selected in the lottery.
Now that you know all the concepts and rules related to staking on the Fusion network, you are ready to begin setting up your node! let’s move on to Part 3 of the ‘How to set up a Fusion Node guide’ to set up a VPS on AWS.
For more assistance or additional information, please join us in the Fusion Developer Telegram Channel! Many community members and staking gurus will help you with any and all of your node setup troubles.