Vending machine is a Cardano token distribution system developed and operated by SEAL pool. It provides a service for delegates of participating pools allowing them to withdraw various native tokens or ADA rewards easily distributed by pool operators or token creators both on regular basis each epoch, or through one time air-drops.
Many pools want to offer various incentives to their delegates in form of giving them additional tokens, either ADA or other native tokens. Especially small pools that struggle to remain competitive due to 340ADA min costs. Min cost is a hard constraint defined by Cardano protocol and can't be set lower at this moment. Some smaller pools may however want to instead give part of this cost back to their delegates to remain competitive to large pools. However such distribution is not trivial due to network fee costs. Sending them in form of transaction to everyone each epoch would be too costly and inefficient. Vending Machine solves this problem.
Each participating pool can offer various tokens, including ADA, to its delegates based on various criteria (time, stake size, etc.). Vending machine observes the delegates and pool performance each epoch. Based on this data tokens are accumulated to each delegate account inside of vending machine, based on their staking address. When the amount of tokens is reasonably high, each delegate can withdraw them using this vending machine.
There is a small service fee (0.2₳ + 0.01₳ for each unique token that is part of single request) deducted from withdrawal deposit, that helps us cover the Vending Machine development and operational costs. Final TX cost depends on rewards. If the pool is distributing ADA and the delegate accumulated more than min UTXO size + min TX fee (~1.4ADA) then the withdrawal cost is only the service fee + TX fees (~0.36 ₳). In case there isn't enough ADA accumulated, but there are some tokens available that delegate wants to withdraw, they still have the option to do it, but they need to cover the TX fees by sending UTXO deposit to vending machine. Tokens and most of ADA will be returned back to them.
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Cardano decentralization is negatively affected by operators that run more than one pool, despite such behaviour is considered malicious by very designers of staking mechanism. This service is promoting decentralization by providing its service only to operators committed to never run more than a single pool.
VM is very careful with the deposits, and sometimes it happens that withdrawal can't be executed. For example deposit has wrong size (is smaller than necessary), or user accidentally sends the deposit to custom withdrawal address, without actually making a custom withdrawal, so VM doesn't know which tokens they wanted. In these cases your ADA deposit is added in form of never-expiring reward to your staking address and can be withdrawn back during next (valid) request.
Otherwise, if you don't see your deposit in your reward account, or you requested withdrawal and nothing happened in hours, please contact us in the telegram chat, we will have a look!
Your ADA won't be lost, in case you send more than requested TX fee deposit, system will automatically send you back all extra ADA as part of your reward. So you will get back exactly same amount you sent minus transaction fees. In case you send less than requested deposit of 2ADA, system will consider it a mistake on your side, and again send you ADA back, but this time only ADA, because TX including native assets is expensive and this wouldn't cover it. If you send less than 1ADA + tx fees, system will not send anything back to you, but it will add this amount to your reward bonus, so you will get it back during next withdrawal.
Yes, your rewards do accumulate, but some rewards may have an expiry set, meaning that they will expire if you don't withdraw them until the expiry time. You can see details in rewards breakdown.
Operators who distribute tokens using Vending Machine have two options for token delivery. One is to reserve token for each target they deliver to. That instantly deducts the token amount from their balance and reserves the token for whoever is the target. Usually these rewards have expiry set and if not withdrawn until this expiry is reached, tokens are returned back to operator who sent them. This delivery method provides 100% guarantee for targets that their tokens are going to be possible to withdraw, but require operator to provide large token deposit and unnecessarily blocks lots of tokens in case many targets in target group do not want to withdraw.
Another delivery method is overcommit. With overcommit operators only create a "promise of reward" and tokens are not blocked and are deducted from operator balance only when they are withdrawn. The system only display tokens as available for withdrawal if operator who provides them actually owns them, that means if someone created a false promise to deliver tokens that they can't fullfil, you wouldn't even see it in reward breakdown. Only downside of this method is that in case operator runs out of tokens, the delivery for this particular reward is temporarily not available until they add more tokens into the vending system.