Quicksilver: A Champion for Decentralization

Because decentralization is one of Quicksilver’s core tenets, the protocol will not restrict validator sets. Furthermore, the team is creating features, such as Participation Rewards, to encourage a more even distribution of assets within native chains. This Participation rewards mechanism is being designed to incentivize users to delegate to decentralized, performant validators that are active in governance, and in turn, hopefully have a positive impact on the native chains’ security and censorship resistance.

Reduced Slashing Impact on End Users

Most Liquid Staking solutions socialize risk. However, when risk is socialized across a restricted validator set, a slashing event on one of these validators would have a bigger effect on the redemption rate than if the protocol did not restrict validators.

Quicksilver will socialize risk across the delegations of an onboarded chain, significantly reducing the impact of a slashing event on end users. Because a slashing event can only affect a maximum of 5% of assets for a single validator, when this is spread out across all the validators participating in the protocol, the impact is minimal on the end users.

For example, in the event of a double-sign slash (5%) on a validator with 1% of the managed supply, the redemption rate would shift by just -0.05%. If this were a downtime slashing, meaning a validator is jailed for downtime (0.1%), the rate would shift by 0.0001%, which would hardly be noticeable.

Enhanced Resilience

The more evenly spread out assets are, the more censorship resistant a chain is. Censorship resistance measures the minimum amount of validators that must be compromised in order to block transactions on a network.

If a Liquid Staking solution with a restricted validator set were to become the dominant way to stake on a chain, assets would be concentrated in the hands of 6–7 validators, decreasing the superminority — the smallest number of validators controlling 33% of the staked assets on a network — and thus significantly impacting a chain’s censorship resistance.

On the other hand, by keeping assets more evenly spread out across all the validators on a native chain, and even encouraging it through the Participation Rewards mechanism, Quicksilver will not negatively impact the native chains’ censorship resistance.

Encouraging more even asset distribution among validators would also allow the protocol to avoid having a negative impact on a native chain’s security risk. In order to halt a chain, 67% of assets must be compromised. The lower the number of validators required to halt a chain, the more at risk it is. Consequently, the more even the distribution of staked assets is, the lesser a network’s propensity to risk is.

More Actors Making Decisions

Because the Liquidity Staking Module will facilitate the transfer of staked assets into a liquid staking protocol, and therefore make the liquid staking UX frictionless, there could be more users participating in liquid staking than ever in the future. Furthermore, users who preferred to participate in DeFi as opposed to staking their assets, would now be able to do both, thus increasing potential number of liquid stakers even further.

With that being said, Quicksilver will avoid concentrating this new influx of assets, and therefore of voting powers, in the hands of a select few actors and validators. Moreover, because Quicksilver will maintain users’ voting rights, concentrating voting power would be further avoided.

The Quicksilver team has put a great deal of effort on not harming decentralization in the Cosmos by encouraging a more even distribution of assets across validators. Anchored in the Cosmos, Quicksilver’s long-term success will go in hand with the Cosmos’s long-term health and security.

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