ICON is a delegated proof-of-stake (DPoS) network, which means a majority of stakeholders delegate their share of the network – in this case, ICX – to registered validators that produce blocks and participate in governance. ICON’s DPoS consensus lets non-technical stakeholders benefit from staking without having to set up a node or join a staking pool.
On ICON, ICX holders can stake and delegate ICX to validators – entities that have registered to participate in governing the ICON blockchain. This DPoS implementation offers the best of both worlds – stakers can passively earn rewards, while technical individuals that are actually interested in setting up infrastructure and governing ICON can do so.
The ICON blockchain is governed by validators. To become a validator, a team or individual must go through an on-chain registration process which includes paying a 2,000 ICX registration fee. Following registration, a validator can start receiving delegation in the form of staked ICX.
Main Validator vs. Sub Validator
ICON validators fall into two categories – Main Validator and Sub Validator.
- A Main Validator is a validator that is ranked between 1 and 25.
- A Sub Validator is a validator that is ranked between 26 and 100.
The main difference between Main Validators and Sub Validators is the ability to participate in network proposal votes. The ICON network has a variety of network proposal formats including text proposals, malicious SCORE proposals, validator disqualification proposals, etc. Over time, network proposals are made to improve the network or respond to events. For example, the “Revision 14” proposal was conducted to activate IISS 3.1, an updated economic model for ICON. At this time, only Main Validators participate in network proposal votes, which require a 67% threshold to pass.
How validators Are Incentivized
Maintaining a successful validator isn’t free, and has a number of fixed costs – the most obvious of which is node infrastructure. ICON is a decentralized blockchain that strives for 365/24/7 uptime, which means validator nodes must always be online to produce blocks. Furthermore, ICON has fairly heavy storage requirements. Thus, running a validator node on quality cloud infrastructure is a $1,000-$1,500/month commitment. With these costs in mind, let’s discuss how validators are incentivized to participate in block production and governance.
validators receive a daily reward in exchange for providing and maintaining block production infrastructure. Without validators, there is no ICON blockchain, so having an incentive structure in place to reward validators is logically and economically sound.
On ICON, a validator’s reward is derived from its “bonded delegation”. To ensure validators have sufficient “skin in the game”, ICON enforces a 5% bond requirement. This means if a validator has 10,000,000 ICX in delegation, it must put up 500,000 ICX as a bond in order to maximize rewards. The presence of a bond requirement also means that a team with 100,000 ICX in delegation and a full 5% bond will earn more than a team with 1,000,000 ICX in delegation and a 0% bond. Lastly, a validator’s bonded ICX can be “slashed” if it fails to provide consistently stable block production infrastructure or engages in malicious activity.
Responsibilities of validators
ICON validators are widely regarded as leaders in the community, and have a variety of on-chain and off-chain responsibilities.
On-Chain Responsibilities
The most obvious on-chain responsibility of validators is to produce blocks. Main Validators are expected to operate and maintain resilient node infrastructure with the goal of maximum uptime. Beyond engaging in routine server maintenance, operating an ICON node also requires keeping up with updates for the core node software. Thus, it’s important for validators to stay in the loop regarding current network conditions and upcoming network upgrades.
Participating in network proposal votes is another on-chain responsibility for validators. Network proposals occur for a variety of reasons from activating major network upgrades to freezing malicious smart contracts. Network proposals are extremely important for the health, stability, and growth of the ICON network. Because of this, ICON has a “Missed Network Proposal Vote Penalty” which automatically slashes a percentage of a validator’s if it misses a vote.
Governing ICON’s Contribution Proposal System (CPS) is another on-chain, but not required, responsibility of a validator. The CPS is ICON’s decentralized grant system which funds teams looking to build on or contribute to ICON. Every month, registered validators review new proposals and progress reports for existing proposals, and vote on whether to disburse funding to applicants. While participating in CPS governance is not a requirement for all validators, it’s a great way to influence the direction of the ICON network.
Off-Chain Responsibilities
Off-chain, the main responsibility of validators is to represent the ICON network in a professional manner. Most validator teams are active on social media networks like Twitter, Reddit, and Telegram, where they engage in educational discussions about ICON. An engaged and educated validator community is crucial for the long-term success of a public blockchain project, and ICON has one of the most active communities in the industry.
Summary
Governance is one of the most important factors of a public blockchain. Without proper governance backed by economically-sound incentive mechanisms, a blockchain will not be able to sustain itself and produce blocks in a decentralized manner. ICON’s DPoS governance model is designed to incentivize validators to run high-quality block production infrastructure and actively participate in governance of the network.