The Importance of Validator Choice

While whitelisted validator sets are common practice in existing liquid staking solutions, Quicksilver will be moving away from this model, allowing users to delegate to any validator supported by a native chain. Liquid Staking, as brought to Cosmos by Quicksilver, will not negatively impact decentralization nor governance.

Whitelisted Validator Sets in Traditional Liquid Staking Protocols

Traditional liquid staking protocols allow users to deposit their assets into smart contracts that then delegate these tokens to validators. Historically, this has not affected chain decentralization because the ecosystems supported by traditional liquid staking solutions have large native sets of validators (In Ethereum, there are over 200,000 validators), meaning that increasing the delegation of a small subset would not disturb staked asset distribution significantly. Furthermore, on ecosystems with so many validators, having a select few partner validators provides more assurance for clients, as they have been prescreened by the protocols.

Liquid Staking on Cosmos

Replicating existing liquid staking models in Cosmos, however, could pose a threat to decentralization for a number of reasons.

First, if traditional liquid staking protocols solve the tension between securing chains through staking and landing higher yields through DeFi, they will do so using whitelisted validator sets. Translated to the Cosmos ecosystem, where the largest validator set consists of 150 validators, this means that a select few would concentrate a disproportionate amount of stake.

What tips the scale even further is that this small subset would have control over delegations’ voting power, leaving on-chain decision-making in the hands of a small amount of actors.

Quicksilver aims to avoid this by building a liquid staking solution that does not restrict access to validators.

Validator Choice on Quicksilver

Quicksilver users will be able to delegate to any validator of their choosing through delegation buckets using Interchain Accounts. This means that they will be able to participate in liquid staking without reducing decentralization. Furthermore, with features such as governance by proxy, users will be able to retain their governance rights and continue to participate in the governance processes of native chains, enabling decentralization even further.

With an incoming boom in ecosystem growth, we believe allowing staking to transition to liquid staking as seamlessly as possible is paramount to a thriving ecosystem. In order for users to both secure zones in a decentralized manner and participate in these protocols, features such as validator choice are essential.