When adding a new Alliance coin, a
TakeRate can be defined. The
TakeRate is a tax that redistributes a portion of staked Alliance coin to all stakers on-chain. The
TakeRate is defined as a decimal percentage per unit of time. The interval by which this rate is claimed is determined by the module parameter
TakeRateClaimInterval. When executed, the
TakeRate amount is deducted from an Alliance asset’s staking pool and deposited into the reward pool, to be distributed to validators and delegators. For example, if the
TakeRate is set to 1% and the
TakeRateClaimInterval is set to 1 minute, the take rate would be applied to the asset's staking pool, deducting 1% of the pool every minute.
For more information on
TakeRate deductions, visit the State transitions page.
When paired with a Liquid Staking Derivative (LST), the yield rate of the LST can be redistributed to all stakers. If the yield rate of the LST is equal to the annualized amount deducted by the
TakeRate, the native chain inflation of the LST is essentially shifted to the chain the LST is an Alliance asset on. For an example of how the take rate can be used with LSTs, visit the How Alliance works section.
The following is an in-depth look at reward distribution. For general information on rewards, visit the How Alliance works page.
Rewards for staking come from three sources:
- Native inflation: inflation rewards minted by a chain with the x/mint module enabled.
- Transaction fees: gas fees or tax fees that are distributed to validators and delegators.
- TakeRate fees: the annualized redistribution of staked Alliance assets.
These rewards are distributed to stakers using the Cosmos-native x/distribution module. First, rewards are sent to the
fee_collector module account. During the next begin-block event, all rewards are distributed to validators proportional to their reward power. Delegators can then claim their rewards from validators. For more information on reward calculations, visit the State transitions page.