All the data in a confidential contract is end-to-end encrypted. To ensure the availability of the contract states, Gatekeepers are responsible for the key management and must always be online.
Gatekeepers manage the contract keys and produce new block candidates. High availability is required.
The node operator has to run a Gatekeeper on a trusted-computing enabled device with high availability and high bandwidth. At each block, Gatekeepers maintain the key rotation, prepare to receive user transactions and produce a new parachain block candidate. This process involves re-encryption, verification, acceptance and publication of candidate blocks.
Nominating is one of the main ways to participate in Phala Network to obtain rewards. Every Gatekeeper candidate has to be nominated to become a Gatekeeper. Nominators add their stake to the Gatekeepers they endorse, and share the Gatekeepers’ block rewards.

The existence of this role facilitates those who cannot run nodes 24 hours a day, and at the same time decentralize the power on the blockchain. When a Gatekeeper is rewarded or punished, the nominator will also be rewarded or punished proportionally.
Inspired by Polkadot, Phala adopts the NPoS inflation model to issue PHA tokens as the incentives for Gatekeeper and nominators. Phala’s inflation rate is not fixed, but through a sophisticated algorithm design, the amount of the staked token is reasonably guided to achieve a balance between the staking security and the token liquidity.

NPoS consensus algorithm:
NPoS (Nominated Proof of Stake) is a consensus algorithm designed by Polkadot. Validators run nodes to participate in the production and finalization of blocks. Nominators can stake their tokens to obtain the right to nominate the trusted validators.

PHA inflation:
Phala expects an annual inflation rate of 5%. With a 40% staking rate, the APR is 12.5%.