Security bonds

A reserve that allows validators with subpar APY to join and stay in JPDP

Introduction

If your validator’s APY is below the requirement, you can deposit SOL as a security bond to cover the shortfall. The bond will be used to pay rewards to your delegators while your validator underperforms. This enables onboarding to the JPool Delegation Program (JPDP) despite the APY gap and, for validators already in JPDP, allows continued participation while recovering performance.

How it works

At the end of each epoch, JPool compares your validator’s APY with the APY of the validator in 10th place in the Top-10 list (validators ranked by APY over the last 10 epochs) and deducts the SOL equivalent of the difference from your bond balance, if your APY is lower. The deducted amount equals this shortfall. For example, if in the previous epoch the APY at Rank 10 was 8.6% and your APY was 8.0%, the gap is 0.6%. The bond covers this 0.6% shortfall for that epoch. Drawdowns occur only in epochs when your validator has JPool stake.

All calculations and settlements occur at the end of each epoch. When your APY meets the requirement again, bond usage stops starting from the next epoch. If there isn’t enough SOL in the bond balance to cover a previous epoch’s shortfall, the validator’s stake is cut proportionately. If the balance is zero, the stake is slashed in full, the validator becomes ineligible and is excluded from JPDP.

Size the bond so that several weak epochs can be covered without interruption. Review APY Shortfall and Drawdown after each settlement and top up before the balance becomes critical. There are no alerts for bond events, so periodic checks of the Security Bond page are recommended.

How to use bonds

Deposit bond

Step 1. Navigate to Validators.

Step 2. Choose a validator.

Step 3. Press Details.

Step 4. Navigate to JPDP → Security Bond.

Step 5a. Press Create Account and Top Up Bond if you use bonds for the first time.

When a bond is deposited for the first time, you must deposit at least 1 SOL. After that, the bond balance can be topped up with any amount of SOL.

Step 5b. Press Top Up if the account already exists.

Step 6. Enter the amount of SOL you want to deposit as a bond.

Step 7. Press Top Up.

A confirmation pop-up will appear and your bond balance will increase accordingly.

Withdraw bond

Only an owner of a validator's identity account can withdraw SOL from the bond balance.

Step 1. Navigate to Validators.

Step 2. Choose a validator.

Step 3. Press Details.

Step 4. Navigate to JPDP → Security Bond.

Step 5. Press Withdraw.

Step 6. Enter the amount of SOL you want to withdraw from the bond balance.

Step 7. Press Withdraw.

A confirmation pop-up will appear and SOL will be transferred from the bond balance to your wallet.