Nov 3, 2019
State of Stake #8
21st October — 2nd November
‘Indeed, well-designed PoS systems keep the value within the system. PoW leaks it out to the miners and the power companies.’ — Emin Gün Sirer, Prof Cornell, co-director IC3, CEO AVA Labs
Market overview
Current Value in Staking by Asset
- 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
- The Rise of Staking: From Theory to Building Large Infrastructure. — read an article by Binance Research.
- Staking is the process of holding funds to support the operations of a blockchain network through a reward-driven process. Staking has been one of the unique differentiating features offered in crypto-industry.
- Mimicking passive-income strategies in traditional finance, staking allows users to earn rewards directly on-chain for holding a given currency.
- Staking is available on many chains in many forms, but the precise mechanism depends on the staking project’s token design and consensus mechanism.
- However, staking yields cannot be considered in a vacuum — instead, they must be benchmarked against other chains based on potential risks and obligations like:
- Different chains payout rewards with various restrictions and payout timings.
- Participants must address the technical risk of failure as well as their exposure risk to the underlying coin when deciding to stake long-term on a chain.
- Participating in different networks requires different resources and sometimes additional labor to collect rewards.
- With staking, existing players in the crypto-ecosystem and blockchain projects have aligned incentives continued symbiotic growth. As more infrastructure players support staking, the entire ecosystem will be able to mature.
- With Ethereum’s impending switch to Proof of Stake (PoS), staking is expected to take a most substantial portion of the market’s attention.
- You wonder how Nominated Proof of Stake (NPoS) works in Polkadot, Kusama, or Edgeware? Watch this video to get a better understanding of how NPoS works and why you should nominate multiple validators.
- Cofounder of Coda Protocol Evan Shapiro on Coda, the Current PoS Landscape and Osaka Devcon Takeways — O1 labs is the creator of the Coda Protocol that uses recursive zk-SNARK technology to enable a succinct blockchain. Prior to Coda, Evan was a software engineer at Mozilla. He holds a B.S. and M.S. in Computer Science from Carnegie Mellon University. In the conversation, they discuss the recent developments on the Coda blockchain, the testnet development and the teams’ takeaways from Devcon.
- There’s Now a DAO for Deciding Which Blockchains to Stake On
Decentralized finance (DeFi) meets decentralized governance. That’s the idea behind StakerDAO, a new decentralized autonomous organization (DAO) for investing in existing proof-of-stake (PoS) blockchains. Introduced by Tezos Capital CEO Jonas Lamis, the new DAO will allow participants to vote on where to best earn rewards as validators in a given network.
“StakerDAO is a new platform for governing financial assets,” said Lamis. “We want it to be secure, decentralized and compliant.”
- ”We are a way for t/cosmos to know itself & this stardust just wants to feel finally at home, at peace & in love w/ ourselves…& that peace w/ the laws of the universe” — VIRGO manifesto, by Jae Kwon. Watch the video.
- Staking Facilities tweeted: The fact that running PoS validators is increasingly seen as a commoditized service speaks volumes:
- PoS lowers the bar to entry significantly
2. A more accessible & competitive playing field spurs innovation within the validator ecosystem
- FACT #1: Loom is a platform for scaling all kinds of high-performance dapps. Misconception: Loom is a platform for scaling games and social apps.
- FACT #2: Loom Network’s mainnet is now called Basechain. Misconception: Loom Network’s mainnet is called PlasmaChain.
- FACT #3: Developers don’t have to run their own blockchain; they can deploy directly to Basechain. Misconception: In order to deploy dapps, developers must use the Loom SDK to spin up their own individual DappChains.
- FACT #4: Loom is a multichain interoperability platform. Misconception: Loom is a sidechain to Ethereum.
- FACT #5: LOOM is a token that rewards stakers and validators for securing the network. Misconception: The only value of the LOOM token is the need to hold 1 LOOM in order to transfer assets between chains.
- #18 Kava: Cross-Chain Collateralized Debt Positions with Brian Kerr — Currently in the blockchain ecosystem most decentralized finance applications are built on Ethereum. Kava is seeking to bring crypto-backed borrowing in the form of Collateralized Debt Positions (CDPs) to the Cosmos ecosystem. The Kava blockchain is a Maker-style platform built using the Cosmos SDK that enables users to borrow a dollar-pegged stablecoin (USDX) by locking up collateral from different blockchains (BTC, ATOM, XRP) in the system. In this episode, Brian interviews Brian Kerr, CEO of Kava Labs to learn about the history of the project, the core functionalities of the platform, as well as differentiation from Maker, other applications for the Kava platform, and Kava’s Binance Launchpad IEO plans.
- #19 yTokens: DeFi Innovation in Crypto with Paradigm’s Dan Robinson — In this episode Brendan and Meher interview Dan Robinson, Researcher at Paradigm, who has worked on various cutting-edge topics in the crypto space. They start out exploring Dan’s background and the various projects he has worked on before starting at Paradigm and how his extensive collaborations with different topics and actors have led to his most recent position. The episode then dives into the ideas that he has brought forth, specifically Yield Tokens (yTokens). yTokens are a novel way to lend or borrow any type of asset that is using a design inspired by zero-coupon bonds from the traditional finance world. The yToken design is an interesting building block that allows for the creation various financial instruments, e.g. interest rate swaps. Dan, Brendan, and Meher discuss how yTokens fit into the DeFi stack, risks of the design, as well as thoughts around price oracles for and liquidity of such instruments.
- An Overview of Kava’s Token Design — Kava is the 10th project featured on Binance Launchpad. This post by Felix Lutsch gives an overview of Kava’s design. The KAVA token is designed to serve three purposes in the Kava ecosystem:
- Security: The blockchain is secured by KAVA in the form of collateral staked with validators.
- Stability: KAVA will be minted should the USDX stablecoin lose its peg to bring the system back to stability.
- Governance: Parameters related to the blockchain and CDP system are governed by KAVA holders.
KAVA holders are rewarded directly for taking on these responsibilities by absorbing KAVA issuance and transaction fees in a variety of tokens (when staking), as well as indirectly through the burning of stability fees paid by CDP users on the blockchain.
Learn more about KAVA stablecoin stability, platform governance, and network security and staking rewards in the full article.
- Comparing current Masternode coins — including hidden gems — BavarianRandomGuy compares several interesting masternode coins with solid characteristics, use-cases, active development and a good to a high return of investment.
Latest Staking Update
Istanbul marks the next step in Ethereum’s transition to a scalable, Proof-of-Stake (PoS) network. Each Ethereum development milestone is a monumental hurdle because there is no precedent for this type of work. Ethereum core devs are paving a new path. Therefore, a precise launch date is a compelling sign development is heading in the right direction.
EIP-1884 is slightly controversial: The proposal increases the costs of retrieving on-chain data for applications, an unwelcoming addition for developers. However, an increase in fees enhances miner income, thus incentivizing greater miner participation. Until the transition to PoS is complete, Ethereum needs to keep miners engaged in maintaining its current level of network security.
- Announcing The Great Celo Stake Off — a competition that will run on top of Baklava, Celo’s incentivized testnet. Subject to the Stake Off Terms and Conditions, the top 50 teams on the leaderboard will have the opportunity to receive substantial servings of Celo Gold at Mainnet launch.
- Announcing the Polkadot Ecosystem Fund
The fund is a Polychain-operated investment vehicle jointly capitalized by Web3 Foundation and Polychain. The two organizations aim together to expand Polkadot’s ecosystem by making strategic deployments into investment targets at all stages of growth. “Even before launch, robust funding channels are becoming available for development teams building within the Polkadot ecosystem,” said Dr. Gavin Wood, the founder, and president of Web3 Foundation.
“The Polkadot Ecosystem Fund offers an important outlet for teams at all stages to get the support they need,” he said.
“A key part of this framework is the Kusama Council, a body of individuals (technically individual accounts), which act as a collective to help steer the evolution of Kusama and to determine how its resources are deployed. So far all functionality of Kusama except the ability to present oneself as a staker has been disabled. As of this upgrade, the Council elections module has been enabled, essentially meaning that it’s now possible to both submit one’s candidacy and be elected to the Kusama Council. The venerable Polkadot JS will shortly be updated to facilitate the process of submission for becoming a Kusama councilor.
If all goes well in the meantime, we expect to make the final move to Kusama PoS next week, beginning with 50 validator slots and increasing to 100 and beyond as we become increasingly confident over the stability of the networking and consensus. Once upgraded to PoS, the Sudo “training wheels” (letting Web3 Foundation step in and rescue the network if needed) will be removed and Kusama’s decentralized governance will be in full force. The Kusama token will be freely transferrable between accounts.”
- Staking rewards released the brand new website!
- New Logo and Branding
- Revised Data Models and Formulas
- Interactive Reward Calculator
- Many charts with rich staking data
- Staking Provider Profiles
..and many more
- Ethermint, the POS implementation of the ethereum Virtual Machine built on top of Tendermint Core, has now a tutorial for deployment! Get started now with a tutorial built by ChainSafeth.
- Forbole’s Monthly Update Oct 2019 — Commission raised.
- Staking on Cosmos Hub — they have completed the six months PayWhatYouWant campaign and started to raise commission rate.
- Desmos development
- Staking-as-a-Service — Currently, Forbole is the validator on: Cosmos Hub, Iris Hub, Terra Money (Luna), IOV, Kusama, Kava, Aion Network, LikeCoin, Lino, Regen Network, Oasis Labs, e-money, Cyberd, Solana, Polkadot, Near Protocol
- The Babylon upgrade officially activated on 18 October, marking the second time a protocol amendment has been approved and implemented via the Tezos governance mechanism. Tezos is the first major blockchain to successfully implement two protocol upgrades automatically.
- Check out tezos calculator on stake.fish website. These calculations take into account the current staking ratio, issuance, prices, and other assumptions. You can compare bullish and bearish price scenarios as well.
- Announcing: Chorus One + Regen Network
At the core of this partnership, they are working with Chrous One to offset their carbon footprint. Chorus One is all-too-conscious of the environmental impact that cryptonetworks has on the planet. As they often reference, the empirical analysis shows that the Bitcoin network’s range of yearly carbon emissions currently lies between those of nation-states Bolivia and Portugal. In July 2019, Chorus One calculated an infrastructure carbon footprint of 72.69 tons — but through Regen Network, they expect to offset 200 tons of CO2. Secondly, Chrous One has partnered with RND INC, the company building Regen Network, to provide dedicated validation service as a lead validator.
- SLASHING AS A MEANS TO DECENTRALIZE
A Cosmos Hub proposal by Sunny Aggarwal to adjust slashing penalties to more severely punish correlated faults in a Proof-of-Stake network. This mechanism would increase the slashed amount if a higher degree of the voting power got slashed within a certain time frame. The design’s goal is to incentivize secure and diverse validator setups.
A similar approach is taken in ETH2.0, where an increase in the percentage of stake going offline or equivocation will result in lower rewards/higher punishments (see also this explanation of the inactivity leak).
Check out the forum post for an interesting discussion around the impact this proposal might have.
A case study dealing with the downsides of linking staking for network security and governance decision power in a PoS network (as done on the Cosmos Hub). Gavin Birch takes a look at how seeking governance influence as a prime motivator is challenging other validator business models.
One suggestion is to separate delegation for network security and governance, e.g. enabling holders to delegate their governance voting weight to any other account. Such a distinction might allow parties seeking political power to gain influence without requiring them to run validation infrastructure. There’s room for a lot of experimentation in this space and it remains to be seen which model will work best to foster a secure network and an engaged community.
3. VALIDATOR BUSINESS MODELS — Chris is organizing a validator business model roundtable discussion. A growing thesis within the staking community is that running validators is a commoditized service. To differentiate themselves, validators also need to offer higher value services. The roundtable will discuss key questions related to this thesis, among a balanced group of larger and smaller validators.
4. ETHEREUM KILLERS — Placeholder’s Chris Burnsike put out an excellent piece with his thoughts on the valuation of many of the upcoming smart contract platforms competing for Ethereum’s throne. The post goes into the various reasons why Chris expects there to be extreme downward price pressure for these token projects focusing on the current disparity between supply and demand for trustless computation.
5. NEAR STAKE WARS — The team at NEAR released their “Star Wars”-themed incentivized testnet plans. NEAR plans to announce the Stake Wars start date during this week’s San Francisco Blockchain Week. Stake Wars appears to deviate a bit from existing incentivized testnet models, as the focus is on rewarding bug reporting, tool building and bench-marking, rather than simply running validators and executing pre-determined tasks.
6. CELO FACTS — Two staking-related AMAs with Celo team members took place recently: the Chorus One team had Marek on Telegram and found out more about Celo’s mobile-first approach, the staking and fee model, stablecoin design, etc. (read the transcript here). Staking Hub released a summary of their AMA covering the Celo platform in detail.
7. BINANCE PoS STAKING — Binance announcing support for staking for some of their launchpad projects, e.g. Harmony ($ONE), which is interesting because this will be their first addition of Proof-of-Stake tokens with slashing.
8. OASIS MAINNET — Oasis just announced their roadmap to mainnet. This includes tentative dates for a public testnet, a staking competition, and a bug bounty. Sign up here to run a node at the time of the public testnet.
