Quicksilver’s April 2023 Town Hall Recap
The following article is a recap of the April 2023 Town Hall for Quicksilver Zone with Quicksilver co-founders Joe Bowman and Vish Modali. Comments have been edited for length. Event took place on Wednesday, April 12, 2023.
Chain Onboards
Q: Osmosis onboarded onto Quicksilver for liquid staking in March. Can you tell us how it went?
Joe: The Osmosis onboarding has had great momentum with already 107,000 OSMO staked via the protocol in less than two weeks. These are good results for the early days of a chain onboarding. There were some back-end challenges we faced in testing, which the team worked through, and the chain onboarding went flawlessly.
The pool for qOSMO:OSMO was just set up today. Setting up pools on Osmosis is the first use case for a qAsset, which allows a user to swap to enter or exit a position, and earn extra rewards when they provide liquidity. We’re going to add many more use cases for each qAsset, and see pools as the first step of many. The pool will be incentivized with QCK. Look forward to the news about incentives in the next few days.
Q: Regen was also onboarded onto Quicksilver for liquid staking in March. How did that launch go?
Joe: Regen’s onboarding was successful, although it has been a little slower and steadier in terms of stake growth than Osmosis. The Regen team has been a great support in the onboarding process in terms of activating their community and encouraging liquid staking and qREGEN usage. Quicksilver is their first liquid staking provider.
The qREGEN pool is on Osmosis. We’ve incentivized it with QCK.
Q: What chains are next on the roadmap for onboarding?
Joe: The first chain we’re looking at is Juno, which should be a few weeks away. Juno’s relatively similar on the back end to chains we’ve already onboarded. The other two chains the team is working on are Evmos and Injective; those chains require more back-end work, so I can’t share timelines on those yet. You can expect them to be coming, though.
QCK Token Launch
Q: Inflation is new on the Quicksilver chain. Walk us through inflation & how it supports the overall strategy of the protocol.
Joe: Inflation is distributed into four main buckets. They each serve a different purpose in supporting the chain and incentivizing community participation.
Bucket 1 is staking rewards. These are given out to users who secure the network by delegating tokens to a validator. Quicksilver has a similar model to other proof-of-stake chains in Cosmos in this way. You would stake your QCK tokens using Keplr wallet or any other wallet like Leap.
Currently, Quicksilver’s staking APR is quite high — about 78% — but overall inflation is only 25% in year 1. At the end of this year, the 25% inflation will be reduced by another 25%. This inflation number is comparable to established Cosmos chains and will be sustainable for project growth. The inflation rate is controlled by governance, meaning the community can vote to change it.
Bucket 2 is the incentives pool. This is a catch-all pool for incentives to encourage protocol usage, including airdrops and incentives on qAsset pools. The incentives pool is controlled by governance. At Genesis, over 100M tokens were allocated to this pool.
The first airdrops and incentives that you’ve seen now, like the Stargaze airdrop and the qSTARS incentives, were not from the incentives pool, since that’s governance controlled. These first incentives were sent by the Foundation. It’s possible that one day in the future there will be a proposal to repay the Foundation for these incentives. However, if that proposal doesn’t pass, the Foundation would abide by it and foot the cost of those incentives.
Bucket 3 is the community pool. This is a pool similar to what other Cosmos chains have for their communities and is controlled by governance. Anyone can propose spending for the community pool for a project that they think will contribute to the ecosystem.
Bucket 4 is participation rewards. This is a new feature on Quicksilver that is different from other liquid staking providers. With participation rewards, users who stake to performant and decentralized validators will receive a bonus APY paid in QCK. The participation rewards score is calculated using on-chain data, such as a validator’s governance participation percentage and cumulative voting power.
The purpose of participation rewards is to incentivize people to stake to smaller validators who are active in the ecosystem and to encourage people to be more mindful about which validators they’re staking to. Now, they have a reason to investigate their potential validators when they research the factors that went into that validator’s participation rewards score. This participation rewards score will become a core part of the validator allocation process on Quicksilver protocol.
Q: Is participation rewards a live feature? Or is it coming soon?
Joe: The participation rewards feature is included with our claims module, which will be in the next big release of Quicksilver. Pending any mid-term releases to solve production issues, participation rewards should be in the next major release.
Q: The QCK token was listed on Osmosis DEX last month. How did the launch go? Why did the team choose to list it as a QCK:OSMO pair?
Vish: The QCK token launch went really well. Our major goal during the initial launch period was to ensure there was enough QCK token in the market to allow smaller traders to get access to QCK without slippage, and we achieved that goal.
The QCK:OSMO pair was chosen for a few reasons. One reason was that the OSMO token has deep liquidity on the Osmosis DEX since it’s the native token. When a user swaps USDC:QCK or ATOM:QCK, they’ll be routed through the corresponding OSMO pool pairs, like OSMO:USDC or OSMO:ATOM. The OSMO-paired pools are quite deep and will provide better rates and less slippage than if a user had to route through smaller pools or the swap had to do more hops.
Another reason we chose OSMO is that it’s easily accessible and most users are familiar with the token since Osmosis DEX is the largest in Cosmos. They wouldn’t need to do any IBC transactions to deposit tokens in order to buy QCK on Osmosis, for example. Overall, the QCK:OSMO pair is accessible and friendly for all traders, including smaller traders.
Stargaze Airdrop Highlights
Q: Quicksilver recently airdropped over 220,000 QCK tokens to the Stargaze community. Who was eligible & how did the airdrop work?
Joe: There were two main groups who received the Stargaze airdrop.
The first group was Stargaze stakers. There were 3 different snapshots that determined eligibility, and the last snapshot was in December 2022. A user’s stake was averaged across all 3 snapshots. This means that a user who staked in May 2022, during the first snapshot, but unstaked for the June and December snapshots, received about 1/3 as much allocation as someone who had been staked for all 3 snapshots. This was done to reward long-term stakers, who staked to secure the chain, rather than those who just staked to earn airdrop eligibility. The minimum average stake for a staker to be eligible for the airdrop was 333 STARS, about $10 USD at the date of the last snapshot. There was a whale cap as well.
The second group who received the Stargaze airdrop was STARS depositors on the Quicksilver protocol. This was done to reward the early users of the protocol. The snapshot for this group was taken just before the airdrop went out at the end of March, and the minimum was quite low, only about 100 STARS, or $2 USD. This meant that most depositors who used the protocol were eligible to receive the airdrop.
Q: Can you walk us through how the airdrop allocations worked?
Joe: Quicksilver looked at how users staked, not just how much they staked, in calculating airdrop multipliers. There was an aggregate of on-chain data looked at to evaluate which validators the user chose when staking. Factors like the validator’s voting participation, slashing rate, and uptime were calculated, and used in the multiplier calculations.
We want to inspire users to be intentional in how they stake and cause them to think about the validators they choose. It’s a behavior that Quicksilver wants to encourage in the ecosystem and encourage in the community. It will help decentralization and sovereignty in users as they become more intentional about the validators they choose. Future airdrops will also consider these factors.
Q: What might be different for the upcoming airdrops?
Vish: While the core philosophy of the airdrops will remain the same, supporting decentralization and a fair distribution of QCK in the ecosystem, there will be major updates to the user experience for future airdrops.
We’re working on a sleek new front end that will allow users to see the total airdrop that they’d be eligible for, and the tasks they need to complete in order to unlock the airdrop. The total claimable amounts are likely to be larger, too. This method will leave claims open for longer to give people time to complete their tasks and claim their full amount. It will offer a much more transparent view to the user about how much they are entitled to and exactly what they need to do to receive that amount. It’s going to be quite cool.
To prepare for this, make sure to watch for the announcements that the new front-end display is open, so you can start completing the tasks and claiming the airdrop.
Joe: There are two other factors for future airdrops. One is that the total quantity of QCK tokens for the other airdrops will be different. ATOM, for example, is likely to be much larger, since we’re looking at the market cap of the token to set the total airdrop amount, and ATOM’s market cap exceeds that of Stargaze.
The other factor has to do with claims. The front-end display for claims will be open for a particular airdrop for a long period of time. As the days pass, the total claimable amount per user will decrease. This means that performing the tasks and claiming earlier will entitle you to your full allocation, but if you wait, then you’ll receive less. Any unclaimed tokens at the end of the airdrop will be clawed back and send to the Incentives Pool for the benefit of the community.
Other Development Updates: Claims Module
Q: One of the big development areas the Quicksilver team is working on is the Claims Module. Can you walk us through what the claims module is and how it is unique in Cosmos?
Joe: The claims module is new code we’re building, and to our knowledge, no other protocol in Cosmos has something like it. It works by tracking qAsset ownership across chains, solving the issue that most IBC chains face of being unable to verify whether a user has assets on another IBC chain that pertain to their address. The “claim” itself is a cryptographic proof that a user owns X number of qAssets, regardless of where on the IBC they are, at a given point in time.
The biggest benefit of the claims module is that even if a user’s qAssets are on another chain or locked in a protocol not on the Quicksilver chain, the user can claim their participation rewards, and have their delegation intent respected, on behalf of their underlying assets.
One of the other beneficial parts of the claims module is that it will use AuthZ, which will enable the user to authorize automatic claiming of participation rewards. This will make the user experience much more seamless. They will be able to have their qAssets anywhere in DeFi and still have automatic rewards claiming on Quicksilver.
We’re taking a thorough approach to testing this module. Some portions of the module’s code have been adapted from other places in Cosmos and we can utilize those results to inform our testing strategy. Other portions of the module are totally new, or we’re combining existing modules in new ways. It’s a complex module and requires attention to detail, so the team is extremely focused.
Business Development Updates
Q: The team has had fantastic updates in business development and partnerships recently. Would you walk us through them?
Vish: We’ve had several great partnerships come to fruition in the last few weeks. One of them is the ATOM Accelerator, a Cosmos Hub entity that focuses on innovation for the Hub. They’ve committed to staking over 10% of their total ATOM stake on Quicksilver. It’s a great win for us and for liquid staking adoption.
Another partnership we have is with Keplr wallet. They’ve added us to their dashboard as the liquid staking provider listed for each onboarded chain. If you go to http://wallet.keplr.app/, and view one of our onboarded chains, like Cosmos Hub or Stargaze, you’ll see a tab that says “liquid staking” which redirects to our protocol. This should be great for stake acquisition for us.
TFM Bridge added Quicksilver for qAsset and QCK transfers, too. They have a comprehensive interface that lets you easily transfer all your qAssets at once to different chains. Right now, the most useful chain is Osmosis, but as we onboard to other chains like Umee, it will be handy to have this bridge available.
We’re also keeping tabs on community discussions about the LSM. One discussion is open on Regen Network and another one is on the Cosmos Hub. Our team is taking a big part in them. We anticipate that the LSM will increase liquid staking adoption, and we’re ready to support the LSM when it’s live.
Finally, Shade Protocol is going live today. Shade focuses on liquid staking tokens. We’re working on getting a pool set up there in the very near future, likely within a couple of weeks. Stay tuned for this news.
Audience Questions
Q1: If I want to make my own front-end in order to stake tokens, do I just have to send to the same account an amount of token with always the same memo each time I want to stake? Is this method sustainable or do I have to refresh the memo or the account I send my tokens to sometimes? is there any other way to achieve it?
Joe: Yes, you’re correct — the deposit flow is a MsgSend to the deposit account. The memo is a base64 encoded byte-string with 21 bytes per validator chosen.
bytes[0] = an integer between 0 and 200 (0% -> 100% in 0.5% increments) bytes[1..21] = validator address bytes
If you require your front end to always delegate to your validator, a constant address string would work.
Q2: Given that stAtom, StkAtom, rAtom and qAtom are all derivatives of the same underlying asset, would it be possible to create something that would allow for 1–1 swaps in a similar manner to Curve?
Vish: For sure, this is possible. The reason it hasn’t happened yet is likely that many of the liquid staking providers are relatively new and a pool like this would work better for protocols that have been around longer, where users are swapping between their tokens. On the other hand, the LSM’s launch could mean that we don’t actually need a pool like this. It has the possibility to make it seamless for a user to switch between liquid staking providers without having to unbond their assets first.
Q3: Connecting the transactions from “Stake” to receiving qAssets on Quicksilver with the corresponding exchange rate is relatively hard. This makes bookkeeping for tax purposes not fun. Is there anything planned/ongoing that would simplify this for 2023 taxes? (e.g.: working with mintscan/stake tax, integrating a “wallet history” into quicksilver app…)
Joe: This is something that we’re working on for this year. We need to work with the individual block scanner providers to make it happen. It definitely will make taxes easier to have this set up.
Q4: When you stake with Quicksilver, you can choose your validator. People could also choose inactive validators. How will that impact the price of qAssets?
Joe: Right now, this is not an issue, as stakes are allocated evenly amongst all the active validators. Even though the inactive validators are appearing in the list, they’re not receiving the stake.
Once signaling intent is live, it will be possible to allocate to an inactive validator. If a huge amount of tokens go to inactive validators, this could mean that the redemption rate of a qAsset decreases versus what it could be otherwise. It wouldn’t impact ‘price’, per se.
At the same time, staking to inactive validators isn’t all bad, because inactive validators need to get more stake in order to become active. Users will be permitted to stake to validators who are inactive as it could help the set become more decentralized, and give new validators a chance. At the same time, the user wouldn’t earn participation rewards until that validator becomes active, since participation rewards factor in validator performance. We’re interested in making sure that the user is intentional in their choice and is aware that they’re staking to an inactive validator.
Q5: What is the plan for the future of QCK tokens?
Vish: Top of mind, what we’re thinking for QCK tokens is to expand their availability throughout the Cosmos ecosystem, the same way we’re focusing on qAsset use cases. QCK tokens could be used as collateral on a protocol like Umee, for example. At the same time, it’s our top priority to expand use cases for qAssets first and foremost. qAssets are the biggest lever for growth for Quicksilver. We’re focusing much more on qAsset usage than on QCK token usage in the near term, while keeping our options open to expand QCK usage.
Q6: Does Quicksilver technology only rely on liquid staking? How will Quicksilver build a long-term and sustainable business around liquid staking? Does Quicksilver plan to expand into a DeFi platform, trading platform, NFT launchpad, etc.?
Vish: The short answer is, No, Quicksilver’s technology doesn’t only rely on liquid staking. However, there’s a lot of landscape to still be developed and innovated for liquid staking. Our claims module will make it possible to evolve many concepts like on-chain insurance scores that nobody has done before, and make liquid staking an even more robust experience.
We’ve talked about how we plan to enable Cosmwasm. This would mean that community developers and projects could build on Quicksilver. Croncat’s expressed interest in setting up an outpost, for example. At the same time, we’re focusing on liquid staking first, so we don’t become just another generic smart contracting platform. It’s important to build out what we set out to build and expand our offerings to create a compelling long-term value proposition for Quicksilver liquid staking.
Q7: When is the next foundation delegation program for validators?
Joe: The foundation delegation program applications will reopen in May. The applications were opened and reviewed prior to Quicksilver’s launch, and the initial allocations were distributed at launch. The program will be renewed every six months moving forward.
One of the big deciding factors for foundation delegations is community participation. The more active a validator is, the better their chances will be of receiving a foundation delegation. This means that making infographics, translating our announcements and Medium articles, and growing our community are all appreciated and will factor into the foundation’s decision about delegations.
Additionally, geographic and vendor decentralization, historical governance participation, and slashing history will all factor into which applicant validators receive delegations.
Closing
Q: We’re at our time limit for today. Are there any final thoughts you’d like to share with the community?
Joe: I’d like to say that we’re grateful to all of you for being here, and for listening today. Quicksilver is what it is because of our community.
Vish: I agree. Thank you all for coming, and a huge thank you to our community all over the world. We’re glad to be here.
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Quicksilver is the interchain liquid staking protocol for the Cosmos ecosystem and beyond.
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