Zama Reveals Staking System with Square Root Distribution

In early February, Zama shared details of its innovative network staking mechanism. According to information released and confirmed by BlockBeats, the protocol implements a Delegated Proof of Stake (DPoS) model that allows users to delegate their ZAMA tokens to qualified network operators. This system combines economic incentives with a unique distribution structure based on specific mathematical calculations.

DPoS Network Architecture

The Zama protocol currently has 18 active operators on the network, divided into two specialized segments: 13 nodes dedicated to the Key Management Service (KMS) and 5 homomorphic encryption coprocessors (FHE). This diversification ensures redundancy and reliability in infrastructure operation. The ZAMA token has a total supply of 11 billion, with 2.2 billion currently in circulation.

Reward and Incentive Structure

The reward mechanism is fueled by a controlled inflation system, with a fixed annual rate of 5% on the total ZAMA supply. This new token generation is strategically distributed: 60% of the rewards go to KMS operators and their delegates, while 40% benefit coprocessor operators and their delegates. Each operator retains a commission before passing earnings to delegates, limited to a maximum of 20%, with the remainder divided proportionally among all who delegated their tokens.

Square Root: The Engine of Decentralization

The most innovative aspect of Zama’s design is the use of the square root in calculating rewards. Instead of distributing prizes solely proportional to the volume of staked tokens, the network applies a square root factor to the total delegated by each operator. This mathematical approach has an important practical effect: operators with smaller delegated token amounts generate higher percentage returns for their delegates. Thus, delegating to smaller operators becomes more profitable than concentrating capital in dominant operators. This mechanism actively encourages the decentralized distribution of validation power, preventing the network from being controlled by a few large operators.

Token unlocking requires a 7-day unbonding period after the request, providing security to the network. However, users retain flexibility to transfer or trade their liquid staking certificates during this period without needing to wait for full unlock.