Operator Set Strategy
Validators on Sui
The Sui network relies on Delegated Proof-of-Stake (DPoS) to determine the set of validators which participates in the network by handling read and write requests sent by clients. During each epoch (a non-overlapping approximate fixed-duration), a quorum is defined by a set of validators whose combined voting power is >2/3 of the total. Each and every validator in the quorum has an equal role in validation and execution and obtain stake rewards according to their share of delegated stake.
At the start of each epoch, validators are required to participate in a Gas Price Survey by submitting their reservation prices (minimum gas price they are willing to process transactions) and the protocol will set the epoch's Reference Gas Price (RGP) at the 2/3 percentile by stake.
Validators who reliably validate and execute transactions by honoring the RGP will receive boosted rewards, and those who don't, will get reduced rewards at the end of each epoch.
Maximizing yield with performant Validators
SUI holders can help strengthen Sui network by participating in the proof-of-stake mechanism through the delegation their SUI tokens to validators. In return, they will generate a yield when the protocol distributes stake rewards to participants.
The total amount of stake rewards is calculated as the sum of computation fees accrued throughout each epoch in addition to epoch's stake reward subsidies.
Total Stake Rewards (SUI) = (RGP * GasUnits) + StakeSubsidies
*StakeSubsidies are temporary to aid the network's early years and will eventually be removed when it reaches maturity.
APY % of SUI Staked = Total Stake Rewards (SUI) / Total SUI Staked
Smoove's Objective
Smoove's goal is simple; to maximize user's yield on staked SUI through active management.
A user's stake reward can be tabulated as per following:
User Stake Rewards = [ α( 1-δ )( 1-β ) ] μσ x Stake Rewards
α = share of total stake rewards due to stakers (both validator and delegators) δ = commission by validators β = share of stake owned by validators μ = tallying rule score, >1 for performant, <1 for non-performant σ = validator's share of total stake
To maximize yield as an expert delegator, there are a number of factors to consider:
Commission Rate, δ
Tallying Rule Score, μ
Validator's Share of Stake, σ
Smoove strives to boost returns by:
Distributing stake across multiple validators to reduce risk of slashing
Diligently monitoring validators' staking limits, competitiveness, reliability and performance
Proactively redelegating to maximize yields, APY %
Smoove must ensure that the validator set it selects and support is beneficial to the underlying protocol and pursue the key goal of progressively evolving into a maximally decentralized validator set. Smoove has customized a validator-set selection matrix, tailored to the staking environment, technical complexities, size of the validator set, and community expectations.
A robust set of validator operators is essential to ensure Sui's and Smoove's long-term success and overarching strategy that Smoove will be pursuing is a combination of these factors:
Distributedness of hardware geographical distribution
Distributedness of validator operators' jurisdiction
Diversity of infrastructure validators are operating on; reduce concentration risk on any single cloud or data centers
The decentralization of Smoove's validator operator sets is directly proportional to the risk associated with increased staked assets with Smoove. Additionally, this risk extends not only to the stakers themselves but also to the DeFi protocols integrated with Smoove. The Smoove team is highly cognizant of this fact and will actively seek to mitigate these risks.
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