I just reviewed the details of ZAMA staking, and there are interesting aspects worth understanding.

Essentially, the protocol implemented a DPoS system where you delegate your ZAMA tokens to validator operators. Currently, there are 18 active operators on the network: 13 KMS nodes and 5 Fully Homomorphic Encryption co-processors. The annual inflation rate is set at 5%, generating a steady flow of rewards.

What I find well thought out is how they distribute these rewards. 60% goes to the KMS operators and 40% to the FHE co-processors. But here’s the interesting part: the reward calculation uses the square root of the total staked amount, not a linear distribution. This means that if you delegate to a small validator, you get a better return than if everyone points to the same large operator. It’s a pretty smart mechanism to prevent centralization.

Practically speaking, validators can charge a maximum fee of 20% before distributing the remaining to delegators. And if you ever want to withdraw your tokens, you need to wait 7 days. However, if you use liquid staking, you can move or sell those tokens immediately without waiting for the unlock period.

Basically, it’s a setup that encourages small participants to distribute their stake among smaller operators. Quite different from other protocols where everything flows toward the larger validators.