LUKSO Landing: Part 2 of a 3 Article Series
In Part 1 of this article series, we shared an update on the progress made during 2022 and our key milestones.
Today we are happy to celebrate the Lunar New Year by sharing an overview of the network start process that will lead us to LUKSO’s Mainnet and new beginnings. Fittingly this is the year of the rabbit 🐇, which symbolizes new births, longevity, and prosperity!
Note that this article is slightly more technical than usual and is directed to those who wish to be validators on LUKSO’s Mainnet.
LUKSO Mainnet Starting Process Explained
LUKSO is a network based on Ethereum’s Proof of Stake technology. Unlike Ethereum, LUKSO will start as a Proof of Stake Blockchain with an Initial Genesis Validator Set that anyone can join.
Becoming a Genesis Validator
As a LUKSO validator, you will run a node with a consensus and execution client.
LUKSO is NOT delegated proof of stake, where the staking participants hand that responsibility to a centralized third party. It is YOUR responsibility to run the network when you become a validator. Staking pools will follow later, which will offer the ability to stake without running the technical infrastructure yourself.
To begin this process, we will deploy a Genesis Validator Deposit Smart Contract on Ethereum (the date will be announced in the next article).
The Genesis Validator Deposit Smart Contract will allow you to deposit LYXe to become a Genesis Validator, which is a validator key that is present in the genesis state of the LUKSO Mainnet.
You will need 32 LYXe for each validator key. Meaning if you want to run 100 validators, you need to generate 100 validator keys and deposit 3,200 LYXe in the Genesis Validator Deposit Smart Contract.
We will release the Official Deposit Website that will guide you through the process of generating your validator keys offline and depositing the stake in the Genesis Validator Deposit Smart Contract in the coming weeks.
⚠️ Be aware that there might be scammers and phishing attacks, so ALWAYS ensure you only access domains hosted under [***].lukso.network ⚠️
Starting the Network
After the Genesis Validator Deposit Smart Contract has launched, the window for accepting Genesis Validators will be open for around 3 weeks (or longer if required). Please note that a minimum of 4,096 genesis validator keys must be deposited before we can freeze the Genesis Validator Deposit Smart Contract; at this point, participants will be able to generate the genesis.ssz and genesis.json files themselves using the official deposit website. These files are the network’s starting point and determine the network’s initial state.
The deposit website is a dApp, which means it does not have a backend server doing any work. All execution happens in your browser locally, including generating the genesis files. The website only reads from the Genesis Validator Deposit Smart Contract and generates the initial network state containing all Genesis Validator keys into a single genesis.ssz file.
The second file, called genesis.json contains the initial state of the execution chain, as well as the initial balances that make up the initial total supply of the LUKSO Blockchain.
The network start time will be defined in the genesis files you generated. Which will likely be around 1 week after we freeze the Genesis Validator Deposit Smart Contract. You will need to start your nodes at least one day before the network start time and wait for the network to start to happen.
Once the genesis time is reached, your nodes will automatically create and receive blocks! This will be the time to celebrate! 🎊
LUKSO’s Mainnet will launch in a fully decentralized way. Meaning you, the community, will run most, if not all of the validators!
The responsibility is entirely with the Genesis Validators to start the network and make the right choices. Therefore even the initial total supply will be a decision made by the Genesis Validators (keep in mind anyone can become a Genesis Validator, as long as they have LYXe).
In the official deposit website dApp we will offer three choices for the initial total token supply: 35M, 42M or 100M.
Each amount is suggested for different reasons, explained below. Should the community feel that another distribution is preferable, Genesis Validators are able to edit the genesis.json file and make any edits they wish. Though keep in mind that for a stable network to form, most of the Genesis Validators should have the same genesis.ssz and genesis.json.
To make preferences of all Genesis Validators more transparent, the Genesis Validator Deposit Smart Contract will allow each Genesis Validator to give an indicative vote. This vote is only indicative, as the final decision is made when you generate the genesis files and run your nodes!
The LUKSO Team proposes an initial total supply of 42,000,000 LYX. However, we will support any of the choices provided, as well as any reasonable community choices.
Should the community choose to change the receiving addresses or their relative distribution in a way that will hinder the ability of the LUKSO Team to support the LUKSO Blockchain in the long term, the LUKSO Team will reserve the right to distance itself from the network that will form as a result, and propose another network start.
Initial Token Supply Options
Our team has taken the issue around the token supply very seriously and invested a significant amount of time analyzing different options. Our key metrics we have taken into account are decentralization, distribution, treasury, subsidization, runway, and community support. We came to a consensus that 42,000,000 LYX is the most reasonable amount (and is potentially the answer to the universe and everything 🤖 ).
Option I: Minimum Acceptable Supply
The minimum supply proposed is 35,000,000. This value places us in a decentralized distribution from the get-go, but it would limit the LUKSO Team’s resources for things such as grants and gas subsidization.
Option II: LUKSO Team’s Choice
After long deliberations within the team, market analysis, and looking into cost estimation and safety margins — keeping in mind the ability to subsidize early users on LUKSO for an extended period of time, the decision was made to propose 42M LYX as the initial LYX supply. This is the preferred initial token supply suggested by the LUKSO Team, which would provide enough funds to support the ecosystem for a long time, subsidize early users, issue grants, and support development. A plan is in place to reduce this amount through a burning smart contract over time, should the network’s success and stability develop as expected.
Option III: Initial Supply
This was the initial LYX supply proposed in 2019. At that time, the market size, conditions, and expected timeline of launching the LUKSO Mainnet looked different. Therefore we are proposing to reduce this amount.
As described above, Genesis Validators can choose any of these options via the official deposit website, as well as to agree to other values within the community.
The first month after LUKSO’s Mainnet launch is the month of Discovery. During this period, everyone can make sure the network runs stable and we can test the LYXe migration. It is the time when genesis validators run the network, but we will not see much activity.
After this month is over, we will start the LYXe migration and release the Universal Profile tools and browser extension.
Discovery Month also allows exchanges to prepare the migration to LYX within their systems.
Once the community has LYX, they can become validators using the same official deposit website dApp, much in the same way as Genesis Validators did, with the difference being that they use LYX on LUKSO, not LYXe on Ethereum.
L14 Universal Profile and NFT Migration
The migration tool for Universal Profiles that own NFTs on L14 is planned to launch within 3 months post Mainnet launch.
Staking Economics and Withdrawals
LUKSO’s network follows the Ethereum parameter choices for staking amount (32 LYX), rewards, and slashing conditions for the staking economics. Staking rewards depend on the number of validators; therefore, the earlier you begin staking, the higher the reward.
Depending on the validator count, the staking rewards can range between ~3% and ~20% per year. Please note that these are estimations and depend greatly on the network and validator conditions.
LUKSO will propose adopting Ethereum’s Capella upgrade, enabling withdrawals. The current estimated timeline would be one month after Ethereum’s Capella fork.
The New Testnet
We will soon start a new Testnet, which will have (almost) the same parameters as the LUKSO Mainnet. This Testnet will run alongside Mainnet and function as a tool to test applications for developers and potential Mainnet forks before they happen on the LUKSO Mainnet.
This Testnet will have a limited number of validators, therefore the Testnet Deposit Smart Contract can be paused to prevent arbitrary numbers of validators. It will be unpaused based on the need for new validators. The goal is to ensure the longevity of the Testnet, as here, the native token has no value, and therefore, the incentive to run the Testnet is lower, making it less stable.
What about the L16 Testnet?
The new Testnet will supersede the L16 test network. We will stop running L16 nodes some time after the start of the new Testnet.
If you are actively using L16 and want to continue to do so, feel free to run the network as a validator, but we encourage you to use the new Testnet. L16 Test-LYX will be provided to the community if needed.
In the next article, we will share the details about the Genesis Validator Smart Contract start, which officially will kick off the process of starting LUKSO’s Mainnet! 🪄💥
We welcome you all to join our Discord to explore our development channels and community. We look forward to building the future together.