Staking secures the network by aligning the economic incentives of Node Operators and Stakers to the correct operation of the chain through rewards and penalties denominated in POLYX. It’s an important aspect of the Nominated Proof-of-Stake consensus mechanism, which defines which blocks get written to the chain as well as the roles, rules, and incentives of Polymesh.
With Polymesh Staking, Node Operators and Stakers work together: Stakers back Node Operators of their choice with POLYX, and both are either rewarded or fined based on the Operator’s performance running their node (i.e. keeping their node online; writing blocks to the chain per the rules of Polymesh). Stakers can be any POLYX holder whose identity has been verified through a customer due diligence process.
Staked POLYX may be simultaneously used to signal support in Polymesh Governance.
Block rewards and fines are the carrot and stick vital to Polymesh’s Nominated Proof-of-Stake consensus mechanism, and therefore, proper chain operation. For each block created, the Node Operator who created it is rewarded in POLYX along with their Stakers. Failure to meet the performance standards of the chain, however, could lead to Operators being fined in POLYX; in future, stakers may also be fined pending Governing Council approval. Rewards and fines are calculated and enacted per era (every 24 hours).