Minimize your risks and maximize network security choosing the right validators
Radix is currently based on a DPoS (Delegated Proof of Stake) consensus algorithm where 100 validators contribute to the network functionality and well-being. This will change in 2023~ when Xi'an will be released and, by switching to sharding, the 100 validators limitation will be removed. Until then, to ensure a safe and decentralized network, some education is needed regarding delegating your stake.
It's recommended to delegate your stake to at least 5 different validators (not owned by the same identity) with less than 1% of the total network stake. The suggested number of different validators obviously varies in regards to how many XRD you're staking: if you're staking just a few XRD (hundreds or some thousands), few validators might be enough. But if your balance is higher (thousands or even millions) you might want to consider increasing the number of total validators you stake to.
It's not uncommon for (smart) whales to use more than 50 validators.
It is also important to consider factors other than just fees and total delegated stake for the health of the network: for example, geographical and provider decentralization are critical for an always-online network, resilient to any kind of disaster or censorship. Most nodes use big providers like AWS, Google Cloud, Azure, etc., so help those that don't, for the benefit of the everyone!
Minimize your risk
Increasing the number of validators you stake to also helps minimize your risk of losing rewards: let's say for example that you staked all your XRD in just two validators, 50/50. If just one of them goes offline for some reason, you're missing half the rewards for that period.
You may also be inclined to delegate all your stake to nodes that have 0% fee to maximize your rewards, but keep this in mind:
The APY for a node with 1% fee and the APY for a node with 3% fee is very close: 11.68% vs 11.44%.
Uptime is more important than 0% fees!
So, as a recap:
Things to consider to choose a validator node
- Total delegated stake
- Infrastructure (hardware, backup node, backup connection, etc..)
- Owner reachability and community presence
- Owner delegation
- Geographical location
- DO your own research on the node runner
- DO delegate to at least 5 different validators with less than 1% of total network stake
- DO prefer validators to the bottom of the list
- DO contact the node runner if you have any questions or doubts
- DO NOT blindly stake to the top validators
- DO NOT put all your eggs in a basket by delegating to just one node
- DO NOT stake your whole balance. You need 0.6 XRD to request an unstake to ONE node.