Node Staking

In order to be allocated work on the Sylo Network, Seeker Nodes must have Sylo Tokens (SYLO) staked against them on-chain. These tokens are still owned by the person who staked them, but are locked in a smart contract for a period of time.

Staking is important because it ensures that the owners of nodes have a financial stake in the overall network. Staking ensures that node owners’ incentives align with the network as a whole - taking actions that add value to the network adds value to their stake, and taking actions that harm the network reduces the value of their stake.

Stakers can initiate the withdrawal of their stake at any time, but the stake is “locked in” for a period of time before it is withdrawn, to ensure that speculators cannot take short-term control of the network’s services in order to manipulate them for profit, such as a short selling attack.

Staking against a node does three things:

1. It increases the amount of traffic that the node receives from the network, increasing that node’s income.

2. It entitles the owner of the stake to a portion of the payout from each winning ticket that the node redeems.

3. It links the staked Sylo Tokens to the behavior of the node: If a node provides bad service, some of its stake is redistributed to the stakers in other nodes that provide high quality service. This keeps the network healthy and useful to peers, by giving node operators additional incentive to invest in performance and reliability.