Validator Handbook

A comprehensive operational guide for UltraDAG validators covering key management, rewards, slashing prevention, and performance optimization.

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Requirements

Requirement	Minimum
Stake	2,000 UDAG
CPU	1 core
RAM	256 MB
Disk	1 GB (with default 1000-round pruning)
Network	Stable internet, low latency to peers
Uptime	99%+ recommended

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Key Management

Private Key Sources

The validator identity is loaded in priority order:

1. --pkey flag: hex-encoded 64-character Ed25519 secret key on the command line
2. validator.key file: plain text file in the data directory containing the hex key
3. Auto-generated: a new keypair is generated if neither source is available

Key File

# Generate a key offline and save it
echo "YOUR_64_CHAR_HEX_SECRET_KEY" > /etc/ultradag/validator.key
chmod 600 /etc/ultradag/validator.key
chown ultradag:ultradag /etc/ultradag/validator.key

Key Security Best Practices

• Generate keys on an air-gapped machine
• Never transmit private keys over the network
• Store backups in encrypted cold storage
• Use file permissions to restrict access (chmod 600)
• Never commit keys to version control
• Consider hardware wallet storage for mainnet

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Staking Lifecycle

The staking lifecycle progresses through the following states: starting from Unstaked, a validator stakes at least 2,000 UDAG to become Staked. At the next epoch boundary, if ranked in the top 100 by effective stake (own + delegated) they become Active (otherwise Passive). Active validators run the validator loop and earn rewards each round. Equivocation causes slashing (50% burned). Both Active and Passive validators can submit Unstake to enter the Unstaking state, which completes after a 2,016-round cooldown back to Unstaked.

Step-by-Step

1. Fund your address: acquire at least 2,000 UDAG
2. Stake: submit a Stake transaction
3. Wait for epoch boundary: active set recalculated every 210,000 rounds (~12 days at 5s/round)
4. Produce vertices: your node produces one vertex per round
5. Earn rewards: proportional to your effective stake
6. Unstake (optional): submit Unstake, wait 2,016 rounds for cooldown

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Reward Calculation

Active Validator

Each round, the protocol distributes the block reward:

$$ \text{your_reward} = \text{round_reward} \times (1 - \text{council_pct}) \times \frac{\text{your_effective_stake}}{\sum \text{all_effective_stakes}} $$

Example at default settings (1 UDAG/round, 10% council, 5 equal validators):

Component	Value
Round reward	1.0 UDAG
Council share (10%)	0.1 UDAG
Validator pool	0.9 UDAG
Your share (1/5)	0.18 UDAG
Per day (~17,280 rounds)	~3,110 UDAG

Passive Staker

If ranked outside the top 100 active set, you earn 50% of the active rate:

$$ \text{passive_reward} = \text{active_equivalent} \times 0.50 $$

This is the OBSERVER_REWARD_PERCENT constant — raised from 20% to 50% to give small validators a meaningful reward while they accumulate enough stake (or delegations) to enter the active set.

Commission from Delegations

As a validator with delegations, you earn commission on delegated rewards:

Component	Formula
Your own share	reward * (own_stake / effective_stake)
Delegation pool	reward * (delegated / effective_stake)
Your commission	delegation_pool * (commission_pct / 100)
Total	own share + commission

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Commission Management

Set your commission rate (default 10%):

curl -X POST http://localhost:10333/set-commission \
  -H "Content-Type: application/json" \
  -d '{"secret_key": "YOUR_KEY", "commission_percent": 15}'

Commission strategy considerations:

• Low commission (0-5%): attracts more delegators, increases effective stake
• Medium commission (5-15%): balanced revenue and delegation attraction
• High commission (15-50%): maximizes per-delegation revenue but may deter delegators
• 100% commission: takes all delegation rewards (delegators earn nothing)

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Slashing Prevention

What Causes Slashing

The only slashing condition is equivocation: producing two different vertices for the same round.

How to Prevent It

1. Never run duplicate nodes: one key = one active node, always
2. Clean restarts: ensure the old process is fully stopped before starting a new one
3. Monitor process health: use systemd or similar to prevent double-starts
4. Avoid clock issues: ensure NTP is configured and stable

Slashing Impact

Aspect	Impact
Stake burn	50% of your staked amount (governable 10-100%)
Delegation cascade	All delegators also lose 50%
Active set	Removed if stake falls below 2,000 UDAG (minimum)
Supply effect	Slashed amount is burned (deflationary)
Detection	Automatic, deterministic, no appeals

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Performance Optimization

Network

• Use a VPS with low-latency connectivity to other validators
• Ensure P2P port (default 9333) is directly accessible (no NAT)
• Consider geographic proximity to existing validators

Storage

• Default pruning (1000 rounds) keeps disk usage bounded
• Use SSD for the data directory (redb benefits from fast random I/O)
• Monitor disk usage: du -sh ~/.ultradag/node/

Monitoring

• Set up Prometheus + Grafana for real-time metrics
• Alert on finality lag > 5 rounds
• Alert on peer count dropping below 2
• Monitor memory usage (should stay under 512 MB)

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Governance Participation

As a validator, you may also serve as a council member (no stake requirement). Council participation involves:

• Voting on proposals: review and vote on parameter changes
• Creating proposals: submit improvements for network governance
• Monitoring: watch for parameter change proposals that affect validator economics

See Governance for full details.

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Operational Checklist

Daily

• Verify node is producing vertices (curl /status)
• Check finality lag is <= 3 (curl /health/detailed)
• Review logs for warnings or errors

Weekly

• Check disk usage
• Verify backup integrity
• Review delegator activity
• Check for software updates

Per Epoch (~12 days)

• Verify you remained in the active set
• Review reward accumulation
• Assess commission rate competitiveness
• Check governance proposals requiring votes

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Next Steps

• Monitoring — Prometheus and Grafana setup
• Staking & Delegation — full tokenomics details
• CLI Reference — all configuration flags