Paradigm
Published in

Paradigm

State of Stake #6

11th September — 25th September

“An important difference between PoW and PoS is that in the former, transaction fees accrue to the hashpower of the network, with no corresponding reduction in inflation, whereas in the latter it accrues to stakers, which effectively lowers real inflation.” — Arthur Breitman, Tezos co-founder

Market overview

Source: stakingrewards.com
Source: stakingrewards.com
Source: stakingrewards.com
Source: stakingrewards.com
  • 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

  1. Atom holders largely don’t diversify across multiple validators
  2. Avg. address has 1.76 active delegations
  3. 75% of addresses only have 1 delegation
Stake distribution among the 100 active validators on the Cosmos Hub. Gini Coefficient = 0.7366. (Date: 05 Sep 19)

Exploring Stake Diversification

Now that we got an overview of stake distribution among validators, let’s take a closer look at delegations and the addresses they are coming from:

Summary statistics of the Cosmos Hub stake distribution data set. (Date: 05 Sep 19)

This data contains some interesting insights. For one, only about a quarter of addresses actually diversify their stake, but together these addresses account for about 64% of the total stake. What this means is that addresses that diversify on average hold about 5 times as many Atoms as those that don’t, providing us with insights that diversification is more popular with larger holders.

Taking a closer and counting the number of addresses given how many active delegations they have (n), we see a swiftly declining curve. While there are still 786 addresses with 2 delegations and 347 with 3; addresses with more than 5 delegations become very rare. There are a few interesting outliers that were cut off this graph. Specifically, an address maintained by B-Harvest sports 119 delegations with low Atom amounts that were carried for tracking purposes. 6 other addresses with seemingly similar patterns (<500 Atoms across 67 to 83 validators) exist.

Counting addresses based on the number of validators that they delegate to. X = Number of Delegations, Y = Amount of Addresses. (Date: 05 Sep 19)

“In conclusion the data presented clearly indicates that Atom holders largely don’t diversify across multiple validators. In addition, we also saw a preference for low fees among smaller holders.”

  • W3F’s, Peter Czaban presents “Designing Staking, Rewards, and Slashing by Example” at Dappcon

“Pretty much everything we do at the Web3 Foundation is centered around trying to make a solid foundation for building decentralized applications.”

  1. EOS is the world’s seventh-largest blockchain by market cap, with a value topping $3 billion since February 2019.
  2. However, the project has long been plagued by fears that its structure was too centralized, and now the lion’s share of entities that govern the chain are in China, prompting fears of state intervention.
  3. EOS contributors devoted to building decentralized apps (dapps) and development tools for the blockchain are losing clout — and making little or no money from contributing to the health of the ecosystem. One of them publicly disavowed the blockchain earlier this month, citing the excessive power of the largest EOS token holders.
  4. Block.One, the company that launched the code behind EOS following a $4.1 billion ICO, is the largest token holder. Critics say it could easily redefine governance on the chain but has yet to take action.
  • In Proof of Stake the transaction throughput is much higher on average due to much shorter block times. Major Proof of Stake chains offer faster, and in some cases near-instant finality, which is important for the scalability, especially in commerce context. See post.
  • POSA will be co-sponsoring three panels on fundamental proof of stake subjects with TQTezos on September 30th. Come learn from some of the most experienced and talented people working in staking.
  • The Future of Proof-of-Stake Q&A with Brian Crain. A revised transcript of the “The Future of Proof-of-Stake” discussion with Brian Crain, CEO of Chorus One in the community Telegram channel. Read it to hear Brian’s take on:
  1. his focus on the staking space
  2. how different protocols approach decentralization
  3. governance and incentives in PoS
  • Tezos’ Liquid Proof of Stake (LPoS) mainnet has been running fine for a year. Happy baking!
  • Read Everrstake ultimate staking guide for beginners covering the basics of staking, security, blockchain types, and more.
  • Look at Coda Staking Hub AMA Questions — Monday Sep 23, 2019, 9am PT (SF, USA) / 12pm ET (Toronto) / 6pm CEST (Berlin). Hosted by O(1) Labs and Figment Networks.
  • InfStones’ CEO Jonathan Shi at the staking economy panel with Hash Quark

CEO Leo Li, Chief Economist of WXblockchain Dr. Chuanwei Zou, and Staking Rewards Founder Berlin Crypto at the 5th Global Blockchain Summit 2019 in Shanghai. See post.

  • The unintended consequences of PoW consensus mechanisms are contributing to climate change. Global Climate Strike urges the blockchain & cryptocurrency communities to take a stand and adopt less energy-intensive consensus mechanisms (PoS). Check the website.
  • Chorus One Podcast — 14 AVA: Scaling Consensus to Build a Financial Operating System with Kevin Sekniqi. Listen here. AND 13 Edgeware: Experimentations on Token Distribution and Blockchain Governance with Dillon Chen, which is available via the link. They discuss:
  1. The Edgeware chain and the relation to Polkadot
  2. Commonwealth governance framework
  3. Lockdrop and Straightedge
  • A poll at Decentralized Staking Defenders Twitter page:

Latest Staking Update

The Cosmos community has voted to upgrade the Hub with the improvements and features that the SDK development team has been hard at work on. The version on the live network now, v0.34, represents a network in which both the Cosmos SDK, a framework for app developers to build blockchain-based applications, and Gaia, the codebase of the Cosmos Hub blockchain, are enmeshed in an intricate system of tightly-coupled dependencies in the same repository.

  • Crypto.com Chain Announces Early-Access Validator Partners HuobiGlobal, OKExl, Staked.us, Allnodes, Stakecube, ChainflowPOS and MyCointainer.com. Following the successful launch of Thaler, the Crypto.com Chain Public Testnet, these partners will host Council Nodes on the Chain Testnet, and later on the Chain Mainnet. Council Nodes perform critical validation and settlement functions on the Crypto.com Chain. Full details via the link.
  • #25: Diversification

ETH2.0 CLIENT INTEROPERABILITY- Incredible progress on Ethereum PoS with 7 (!) different clients communicating with each other on a beacon chain testnet set up during an event attended by various implementation teams.

SPARKPOOL INTERVIEW — An insightful interview with Sparkpool CEO Xin Xu covering the 2nd largest Ethereum mining pools’ views and approach to the space, going into differences between mining in PoW and validating in PoS, Sparkpool’s approach to staking, as well as the landscape in China.

LOOM BASECHAIN — A post laying out the plans for Loom going forward and covering details of the planned Basechain upgrade. This upgrade will increase the number of validators to 50, introduce slashing and a 5% minimum fee, as well as bring new incentives to stake, e.g. referral rewards and airdrops for stakers.

FLOW — Dapper Labs, the creators of CryptoKitties, announced Flow, “…a fast, secure, and developer-friendly blockchain built to support the next generation of games, apps, and the digital assets that will power them.” They also raised $11mn in funding to support Flow’s development. Investors include top-tier VCs, as well as media companies.

Flow is PoS blockchain that aims to scale without sharding. It will be interesting to see how Flow evolves, as Dapper Labs does have a history of shipping well received crypto products with a broader user base than most projects.

CASPERLABS SERIES A- CasperLabs, the company building the first blockchain platform utilizing the Casper CBC PoS algorithm raised $14.5mn in a Series A to speed up development.

CARDANO PUBLIC TESTNET — A post announcing the launch of a public Cardano testnet with staking and delegation later this year that will also feature real ADA incentives for participants.

NUCYPHER STAKING TESTNET — Chris learned at ETHBoston that NuCypher launched their first testnet with staking on Ethereum’s Goerli network. They also posted a request for feedback on a potential incentivized testnet.

  • End of this week Nomadic Labs will reset the tezos Alphanet with Babylon2.0.1 (PsBabyM1). This way bakers, smart contract & ecosystem developers can test the features with the fixes. Should Babylon2.0.1 not be adopted, the Alphanet will be aligned back.
  • Parathreads — a new on-ramp to Polkadot. A new way to interact with the Polkadot ecosystem that allows decentralized applications to pay for throughput as it occurs as an alternative to having to lease parachain slots for an extended duration. Parathreads aim to serve as a cheaper option for applications looking to integrate with Polkadot that only require a low number of state updates. Learn more.
  1. Parachains run an “always on” model
  2. Parathreads work on a “pay per block” basis — collect transactions and submit a block only once in a while.

This is not financial advice.

Subscribe to detailed companies’ updates by Paradigm!

Medium. Twitter. Telegram. Reddit.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store