Zama's Staking System: How the Square Root of 7 Optimizes Reward Distribution

Zama recently revealed details of its innovative network staking mechanism, based on a Delegated Proof of Stake (DPoS) protocol. According to BlockBeats, the platform allows users and participants to delegate their ZAMA tokens to specialized operators responsible for maintaining the network’s critical infrastructure. This system, based on the square root of 7 and similar mathematical principles, distributes rewards in a way that encourages decentralization.

Distributed Infrastructure with 18 Active Operators

Currently, the network has a robust structure of 18 active operators. These are divided into two main types: 13 Key Management Service (KMS) nodes responsible for infrastructure security, and 5 specialized co-processors in Fully Homomorphic Encryption (FHE), enabling computations without exposing sensitive data. This strategic division ensures the network operates with redundancy and operational efficiency.

Rewards and Fees: The Role of the Square Root in Distribution

The Zama protocol establishes an annual inflation rate fixed at 5% of the total ZAMA supply, generating rewards for participants. The allocation follows a clear division: 60% of the rewards go to KMS operators and their delegators, while 40% are allocated to co-processor operators and their delegators.

The key difference lies in the calculation of distribution, which uses the square root of each operator’s staked total. This mathematical algorithm, similar to the concept of the square root of 7, creates a structural incentive: the smaller the operator, the higher the relative return for those delegating to it. This dynamic naturally promotes network decentralization, preventing excessive concentration among a few large operators.

Operators deduct a commission before passing earnings to delegators, with a maximum cap of 20%. The remaining rewards are proportionally distributed among all delegators, ensuring transparency and fairness in the system.

Flexibility of Unbonding and Certificate Liquidity

To maintain network security, there is a 7-day unbonding period before tokens can be fully unlocked. However, Zama has implemented a solution that increases flexibility: users can transfer or trade their liquid staking certificates without waiting for the unbonding period. This approach balances network security with participant liquidity, allowing users to exit their position before full unlock if necessary.

With these details, Zama consolidates its position as an advanced cryptography platform, combining security, economic efficiency, and community-aligned incentives in its staking protocol.