# Delegation Strategy

Amulet's delegation strategy is aligned with the Solana Foundation's goals for network growth and redistributing node-stakes for better network security. Additional considerations have also been added to Amulet's delegation strategy to protect investor interest.

## Key Considerations

**Validator APY**

The key factors determining validator APY are commission and number of validated blocks. The lower the commission rate and the higher the validated block, the higher the staking reward.

**Active stake**

Active stake represents the current portion of a validator's stake that has voting power. The higher the dynamic stake ratio to the total validators stake, the more likely a validator might be able to cause the network to halt (33% of total stake)

**Data center concentration**

Data center concentration represents the validators' geographical concentration. The higher the concentration, the higher the chances of the network being affected by an outage at a data center.

**Skip rate**

Skip rate refers to how often a validator misses the leader slot to verify transactions. This affects the number of blocks produced / the staking rewards generated by the validator.

**Credit Position**

The current credit position compares the current validator's epoch credits (uptime) with the total uptime of all validators. The higher a validator's uptime, the higher the validator's chances for generating more staking rewards.

**Incentive**

Solana has a delegation program to decrease validator concentration with incentives from the Solana Foundation for validators to meet certain performance and decentralization criteria. Validators under the Solana Foundation are assumed to have met said criteria.

## Strategy Details <a href="#strategy-details" id="strategy-details"></a>

Amulet scores each validator using statistical analysis. The score is calculated as the average performance based on statistical data from the previous three (3) epochs. The formula is as follows:

$$
Score = Avg(Credit \times (Rewards + Performance - Centralisation + Incentivised))
$$

Where:

* $$Credit$$ = Validator uptime during network participation for current epoch. Validators earn credits by voting. Higher credits means higher validator uptime.
* $$Rewards$$ = Percentage of total rewards after commissions distributed to voting accounts.
* $$Performance$$ = Normalized performance ranking score based on validators' credits which can be calculated as:

$$
Performance
i
​
\=max((Z(Credit
i
​
)×(1−Commission)))−1,0)
$$

In other words, validators with low participation rates will be penalized.

* $$Centralisation$$ = Normalized centralization score based on [data center centralization](https://www.validators.app/data-centers?locale=en\&network=mainnet) (denoted as $$Concentration$$) and [validator stake centralization](https://solanabeach.io/validators). Normalized penalties for data center centralization and validator stake can be calculated as:

$$
Penalty
datacenter
​
\=Multiplier×Concentration
$$

$$
Penalty
stake
​
\=Multiplier×Z(Stake)
$$

* $$Incentivised$$ = Bonus score for Solana registered validators

The overall score will determine the weight assigned to each qualified validator for stake delegation.


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