Blockchain & Cryptocurrency Glossary

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Commission Rate

1 min read
Pronunciation
[kuh-mish-uhn rayt]
Analogy
Commission Rate is like a financial advisor’s management fee taken as a percentage of your investment returns.
Definition
The percentage fee that a validator or staking pool operator deducts from staking rewards before distributing the remainder to delegators.
Key Points Intro
Commission Rate affects net yield through:
Key Points

Operator fee: Portion of rewards kept by validator.

Delegator impact: Reduces delegator’s effective APY.

Adjustable: Set by validator and can change with notice.

Competitive dynamic: Lower rates attract more stake.

Example
A validator sets a 10% commission rate: if they earn 10 TOKEN in rewards, they keep 1 TOKEN and distribute 9 TOKEN to delegators.
Technical Deep Dive
Commission is specified in the validator’s descriptor on-chain. During reward distribution, the staking module calculates total rewards, deducts commission via a proportional share calculation, and credits net rewards to delegator accounts. Commission changes require a governance update or on-chain transaction with a delay.
Security Warning
Sudden commission hikes can disadvantage delegators; monitor validator announcements.
Caveat
High commission rates may discourage delegation, reducing validator security weight.
Related Terms
Validator Fee
Staking Rewards
Staking Pool

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