State of Stake #5
“The world is starving for yield.”
— Honorable co-founder of Paradigm Fund
- Staking Yearly Yield is the annualized yield for staking at current supply levels, as calculated by stakingrewards.com.
- Real Staking Yield is the annual yield expected from staking, after accounting for the network’s inflation. Real Yield is calculated as the nominal staking yield adjusted for the inflation rate.
- Token Staking is the number of tokens currently staking on the network, as reported by stakingrewards.com.
- Network % Staking is the % of current circulating supply that is currently staking, using data provided by stakingrewards.com.
- 5 Years Yield is counted like compound interest.
Think & Stake
- Some key insights from Berlin Blockchain Week by Staking Economy #24: Quo Vadis
- The role of a validator goes beyond simply operating infrastructure (tooling, community building, governance, sales and support,…).
- Price competition among staking providers is threatening to increase centralization.
- The coming wave of PoS networks brings about a new situation for node operators, who now have to decide where to focus their attention.
- To run a successful validation business, a strategy to differentiate from other providers and a sound portfolio management approach are essential.
- Operating available and secure validators will continue to become easier due to better tooling and services like those offered by Bison Trails or Certus One’s SignOS.
- Still, there is a lack of transparency w.r.t the security of validator setups. Ways to make it easier for token holders to evaluate validators need to be figured out (benchmarks, audits, risk scoring,…).
- Current PoS designs largely fail to take into account players with incentives external to the protocol that offer staking services at a loss to gain power, branding, or clients for other revenue streams. Ideas like correlated slashing might help mitigate the impact of such strategies.
- Financialization of Proof-of-Stake is coming and will help to create a more efficient market. As an example: slashing insurance policies could help to determine validator security by pricing risk, staking derivatives could provide improvements to the UX of staking and potentially increase stake diversification, etc. At the same time, such instruments may alter validator behavior and introduce new risk factors in PoS systems.
- Check out the topic thread “If a huge portion (e.g. 80–90%) of your PoS project’s tokens are staked to validate (i.e. only a small portion is available for trading), then your token’s price is likely easily manipulable, which weakens your network’s security.” Feel free to share yout thoughts.
- Staking Hub: Solana AMA
- Earn rewards as a validator and/or replicator ie. for storing the ledger
- Replicators don’t need to stake or have fancy hardware
- Light clients! A 20gb phone may operate as a replicator
- Blazing fast — 400ms per block
- Long-term governance will be conducted under the Solana Foundation
- Tour de SOL — best way for validators to earn SOL & prep for mainnet
- ZIP proposal: Proof of stake. Check what people think of turning Zcash PoW into PoS.
- Inflation from sources like secondary token sales can eat away at staking yields by Messari.
- Metronome with its Validators and the underlying Blockchains; In green the chains on which Chainhop is currently possible. $MET can switch from $ETH to $ETC and vice versa. See post.
Latest Staking Update
- Wanchain successfully switched to Proof of Stake at block 4046000. Staking rewards will become active on the network soon after this. All 44 active validators and staking figures can be viewed at http://wanscan.org.
- KuCoin posted WAN Soft Staking Official Rules — Cash Back Investment Program for Wanchain (WAN) Holding.
- Introducing The New Lunie. Lunie is the staking and governance platform for proof-of-stake for token-based communities.
Their goal is to make the staking economy more accessible to everyone. They’ll be simplifying the on-boarding, releasing mobile apps, and sharing more guides and resources. Lunie is more than a wallet
- Enter Tezos Agora — Introducing a governance explorer and discussion forum for Tezos. This first version is extremely simple by intent, launching with a straightforward voting and proposal explorer (see the current stage below) and an integrated Discourse forum at forum.tezosagora.org. The governance explorer enables the Tezos community to keep apace with the amendment process, including proposal details, voting participation, and whether a proposal has achieved the necessary supermajority and quorum thresholds required to advance to the next stage.
Tezos Agora Version 1 (i.e. Beta): August 2019
1. Governance Explorer
a)Visualization of the Tezos amendment process, including all historic voting periods and proposal details, along with key resources
b)Initial Russian translations of Nomadic Labs articles regarding Emmy+ and Babylon 2.0
c)A simple Learn page explaining the Tezos amendment process and listing the client voting commands
2. Discourse Forum
a)Initially, Agora offers categories for discussions about the current Amendment Process, Research (inspired by Ethresear.ch), and Agora itself (for feedback and improvements)
b)Expect to see some initial posts about potential improvements to Tezos here
Some suggested new categories might include the following (please suggest others!):
- Tezos project philosophy and values
- Baking and Proof-of-Stake
- Smart contract languages (e.g. LIGO, SmartPy)
- Funding DAOs
- Building a bare-metal validator for Solana — “Solana’s guiding principle is that software shall not get in the way of hardware.” Check the article by Staking Facilities.
- Oasis DevNet passed — Check out the brand new project!
- A very detailed Validator Trust Maturity Model for cosmos, that validators can use for self-assessment. Check it right now via the link.
- Risks and Rewards when Staking Luna on the Terra Network by amazing Felix Lutsch.
This article is an overview of staking on the Terra network. It covers risks to consider and rewards to expect, as well as how to participate.
“As Terra is using a design similar to that of the Cosmos Hub, refer to our more comprehensive Cosmos Staking Primer in case you are new to staking or unclear about what is meant with some of the following terms.”
- Staking Ratio. The higher the share of the supply staking in the network, the lower the rewards given to those staking. Staked and total supply can be found here.
- Transaction Fees. The protocol charges fees of 0.1–1% (capped at 1 TerraSDR per tx) on transactions happening in the network. These fees are distributed pro-rata to stakers. Higher transaction volume results in growing staking rewards for stakers.
- Swap Fees & Oracle Voting. The protocol charges a spread between 2–10% on swaps between Terra stablecoins. Currently, every minute swap rewards are redistributed to validators that voted within 2% of the median of all price oracle votes in the previous minute. Validators consistently and faithfully participating in the price oracle are able to increase rewards for their delegators.
- Seigniorage. 5% of Luna sent to the protocol to issue Terra stablecoins is burned, indirectly rewarding Luna holders by contracting the supply.
- Block Rewards. At least 21.7mn Luna will be paid out to stakers in the first year of operation to subsidize the staking ecosystem in the growth phase of the network. In total, 100mn Luna have been committed to keep staking yields competitive in the short to medium term.
- Compounding Rewards. Rewards made while staking in Terra accumulate in a pool and need to be withdrawn. Frequently withdrawing, converting these rewards to Luna, and re-staking them will increase returns through compounding.
- Commission Rate. Each validator on the Terra network specifies a percentage that he is charging on rewards earned on delegated tokens. A higher commission rate results in lower rewards for delegators.
- Stablecoin Peg Adjustment. In case of stablecoins lose their peg downward, LUNA will be minted to stabilize the price. This mechanism dilutes Luna holders, who absorb this type of volatility.
- Equivocation Slashing. Validators double-signing a block will lose 1% percent of their total stake (validator and delegators!).
- Downtime Slashing. Validators missing 500 blocks within a window of 10,000 blocks (5%) lose 0.01% of their stake. In human terms this translates to being offline for about 50 minutes within a window of 16 hours and 40 minutes.
- Jailing. When reaching the downtime threshold, validators are jailed for at least 10 minutes. During this time they won’t participate in consensus and will need to send a message to the protocol to unjail themselves again. When jailed, no rewards are earned.
Automatic Unbonding. There are scenarios in which delegators unbond from their validators and stop earning rewards from staking as a result. In all of these cases, delegators need to manually stake their tokens again. Scenarios are:
- Validator gets tombstoned (taken out of the validator set) after double-signing.
- Validator shuts down his operation (sets self-bond below the specified minimum self-bond).
- Validator falls out of the fixed validator set of 100. If a validator’s stake falls below the 100th spot in terms of total stake, he will no longer participate in consensus.