Validators are network members who, aside from launching a whole node, also look through transactions in the network’s mempool and include them in blocks that they sign.
To satisfy Terra’s requirements in reliability, scope and security, validators usually use configurated architectures that can withstand many forms of attacks on specific networks.
Validators play a key role in the Terra consensus, which is based off of Tendermint BFT. To get more information on Tendermint, please view their official documentation.
In the Terra consensus, Luna holders aren’t staking their tokens directly, but are instead delegating it to a validator. This allows regular Luna holders who don’t want to set up a validator node to take part in staking and receive rewards for it.
The influence of a validator is determined by the volume of Luna delegated to it (including self-delegated coins). Only the 115 best validators with an influence form a validation circle, they’re called delegates. Delegates play a crucial role in this ecosystem, because it’s them who determine which validators get a place in this circle by delegating their Luna as a way to vote.
Launching a validator is a big responsibility, that’s why only the top 115 are allowed to sign blocks (with the biggest stakes). Therefore, they must guarantee security and longevity, and with that comes a risk of the validator’s stake being penalized, which will harm the validator’s stake along with their delegates’, as well as their reputation.
Most common penalty reasons:
- double signature: the validator signed two different blocks with one chain identificator
- downtime: the validator was down for longer than allowed
- the oracle missed too many votes
Other validators are always looking for incorrectly functioning validator nodes and can provide evidence for discrepancies. After discrepencies have been detected, the incorrectly functioning node will receive a penalty and part of the stake will be temporarily banned to protect delegates’ money and fix the issues.
Luna staking can be convenient for delegates. But as it was mentioned prior, the delegates should not view staking as a passive source of income — they must be observative and be confident that the validator architecture won’t receive any penalties.
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