Zama Implements Smart Staking: How to Calculate Square Root in Reward Distribution

Zama, a decentralized privacy project, recently revealed details of its innovative staking system based on Delegated Proof of Stake (DPoS). How to calculate the square root emerges as a central element in this protocol, shaping the mechanism that encourages balanced power distribution among network participants. According to reports by BlockBeats, the protocol uses a sophisticated mathematical formula to ensure that smaller validators receive higher returns, promoting true decentralization.

The Zama network currently operates with 18 active validators, organized into two main categories: 13 nodes specialized in Key Management Service (KMS) and 5 homomorphic encryption coprocessors (FHE). This dual design reflects the need for different technical functions to maintain privacy infrastructure. Participants can delegate their ZAMA tokens to any of these operators, transferring responsibilities without transferring custody of their assets.

Distribution Algorithm: Rewards by Square Root

The reward mechanism is fueled by token issuance, set at 5% of the total annual ZAMA supply. This is where how to calculate the square root becomes crucial: the allocation of rewards is inversely proportional to the validator’s size. Specifically, 60% of the rewards go to KMS operators and their delegates, while 40% are distributed among FHE coprocessor operators. The square root formula ensures that the smaller the validator’s staked amount, the higher the yield offered to its delegates.

This mathematical model creates a strong incentive against centralization: delegating to smaller operators becomes more profitable than concentrating power in large validators. The system automatically protects against the emergence of “super-validators” that could compromise decentralization. Additionally, each operator deducts a maximum allowed commission of 20% before distributing the remaining rewards proportionally to delegates.

Flexibility and Unlocking: The Advantage of Liquid Staking

The protocol offers flexibility that sets it apart from traditional systems. Although token unlocking requires a 7-day unbonding period, delegates can transfer or trade their liquid staking certificates at any time, without waiting for this period. This feature allows participants to be simultaneously exposed to staking returns while maintaining liquidity.

Zama’s staking implementation demonstrates technical sophistication by combining cryptographic security with efficient economic incentives. The ZAMA token, currently trading at $0.02 with a positive variation of 0.92% in the last 24 hours, reflects the growing interest in decentralized privacy protocols. With 2.2 billion tokens in circulation out of an 11 billion total supply, the network holds significant expansion potential as adoption advances.