Delegating your FLR or SGB is a simple, yet effective way of earning more tokens as rewards while simultaneously contributing to the Flare and Songbird blockchains by supporting the delivery of decentralized data to the network.
Delegation is the process in which a user assigns their vote power (which equals their total holdings of WFLR/WSGB) to an FTSO Data provider to increase the data provider’s voting influence. Delegating to data providers in this way allows you to earn a share of the network rewards they receive for providing accurate data.
While you can choose to not delegate and simply let your tokens sit on an exchange or in your wallet, you would be missing out on two opportunities:
- Earning additional rewards.
- Strengthening the ecosystem (and in-turn further increasing your rewards) by supporting the best data providers.
When you delegate your FLR and SGB, you retain the ability to participate in governance voting and to receive FlareDrops.
Who or what are data providers?
Data providers are independent entities that retrieve data from external sources, such as the internet, other blockchains, and centralized and decentralized exchanges. They then process the data and supply it to the Flare Time Series Oracle (FTSO) system, which makes it available as data feeds for builders on the network.
There are currently approximately 40 data feeds available on Flare and Songbird for a wide variety of cryptocurrency price pairs. In the future, data feeds for other time series can be added such as stock prices or even temperature.
The FTSO system calculates a weighted median value for each of the data feeds, with each data provider’s submitted information weighted according to its vote power, the amount of weight their vote has. This weight is equal to how many wrapped FLR or SGB they hold themselves, plus the number of tokens delegated to them by community members.
To prevent any one or small group of data providers from having too much power, causing centralization, a vote-power cap limits the influence of individual data providers to 2.5% of the total vote power on both Flare and Songbird.
What affects potential rewards?
To receive rewards, data providers must provide accurate information. Data points that are too far from the median, aka outliers, are removed. The middle 50% of data points are rewarded at a higher rate and the next 25% at a lower rate. This system ensures providers earn enough rewards to support their infrastructure costs to ensure the system can maintain decentralization.
Rewards are accumulated in reward epochs, which last 3.5 days, and can be claimed after the epoch finishes.
The amount of rewards that you receive when you delegate to a data provider depends on multiple factors:
- The percentage of vote power you delegated.
- The initial vote power of the data providers to which you delegated your vote power.
- The performance of those data providers.
- The fee charged by those data providers.
- Whether the total vote power of one or both of those data providers exceeded the vote power cap (2.5% of the total vote power on both Flare and Songbird).
Delegating your tokens
Before you delegate to a data provider, you’ll need to wrap your tokens. Wrapped FLR tokens are called WFLR and wrapped SGB tokens are called WSGB. You will need to move your tokens off exchange into a self-custody wallet to do this. Each wallet can delegate to a maximum of 2 data providers on each network.
You can both wrap and delegate your tokens using the Flare Portal, a supported wallet like Bifrost, or another third-party dapp.
To select the data providers you want to delegate your tokens to, there are several third party analytics sites, for example flaremetrics.io, which show important information like uptime and reward rate. Choose the providers that you prefer (make sure you are on the FTSO tab at the top of the page and scroll down to FTSO Providers). Then follow the steps to Delegate Your Vote Power.
Claiming your share of the rewards
FTSO rewards are not automatically transferred to their recipients. Instead, the rewards accumulate in a smart contract and must be claimed once the reward epoch is finished.
How often should you claim? On the one hand, you can allow rewards from multiple reward epochs to accrue and claim them simultaneously when you use the Portal. However, be aware that rewards expire after 90 days and are burned. If you do this you will also miss out on potential compounding rewards. So keep your eye on the calendar and make sure you don’t miss any claims.
Here are some tips to get the most out of your delegation:
- Claim as soon as possible, as it enables you to redelegate the received amount for compounding rewards.
- Set up automatic claiming to avoid the risk of forgetting to claim.
- To keep rewards separate for tax purposes or other reasons, set up a Personal Delegation Account (PDA).
To claim your rewards, see Managing Rewards. Make sure to wrap your reward after claiming to compound your rewards.