#52: Consolidation or Centralization
💰Economics
The Defiant published an editorial Chris wrote called “Rich Getting Richer in PoS Chains”. The post started as an idea to discuss how he feels stake isn’t decentralized at the moment. It turned into a summary of many of his thoughts and observations over the past 3.5 years on the problems and trend of stake centralization.
The post was not necessarily meant as a critique of proof of stake, but rather the intention was to warn of the direction that proof of stake chains are heading.
🌐 Ecosystem
Liquid Staking on Terra and Anchor Launch
Lido is expanding to the multichain world via the liquid staking token Bonded LUNA (bLuna) on the Terra blockchain, which was launched alongside Anchor Protocol. bLuna is a liquid staking token pegged 1:1 with LUNA that is staked with whitelisted validators. On Anchor, a savings protocol on the Terra blockchain, borrowers are able to use bLuna as collateral for a UST (Terra USD stablecoin) denominated loan, whilst borrowers deposit UST and receive interest (in UST) on their deposit. The unique design of Anchor transfers staking rewards from the borrower’s collateralized bLuna to the depositor, boosting their yield. This is the first time in cryptocurrency history that staking rewards have been taken from a liquid staking derivative and transferred to another party. There has been clear demand for the LUNA liquid staking derivative as 8,445,477 bLUNA ($144,872,700 USD) were minted within 24 hours after launch.
Validator M&A
Chorus One acquired Cryptium Labs validators on the Tezos, NEAR, Polkadot, and Kusama blockchains after the Cryptium Labs team decided to depart from the staking provider industry to focus on protocol development. This first of its kind deal between independent staking providers allows over $125 million in assets that are staking with Cryptium on these networks to continue to earn staking rewards.
Blockchain Regulation in the EU
Together with the European Blockchain Association (EBA), Staking Facilities co-hosted a panel discussion about the ‘Regulation & Taxation of Digital Assets’ on March 2nd. The panel was composed of three legal and tax law experts, namely Werner Hoffmann (CEO & Co-Founder of Pekuna), Florian Wimmer (CEO & Co-Founder of Blockpit) as well as Dr. Markus Kaulartz (lawyer at CMS Hasche Sigle). During the 90 min event the experts answered questions about staking, DeFi as well as the general regulatory situation in which stakeholders of the digital assets space find themselves in. You can read about the main takeaways in this blog post.
The event was an initiative by the EBAs’ Proof-of-Stake Working Group, which has the clear goal of actively approaching and educating EU regulators so that they can draft proper and forward-looking regulation. In a recent interview, Julius Schmidt, chairman of the working group, addressed some of the issues the industry is currently facing and suggested possible solutions.
⛓️ Network Updates
Decentralizing Binance Smart Chain
In recent weeks, we have seen DeFi gain traction outside of Ethereum. Most notably, volumes and TVL in DeFi protocols on Terra and Binance Smart Chain have skyrocketed. PancakeSwap, an AMM on Binance’s EVM chain (BSC) for a moment eclipsed Uniswap in terms of volume, now seemingly settling in close to the competitor on Ethereum with $800m daily volume.
In the wake of this adoption, Binance Smart Chain is making a push to decentralize and a blog post was released covering the staking model and how validator and BNB holders can engage. BSC is maintained and governed by 21 validators that are determined based on their BNB stake backing. Validator candidates are required to put up at least 10,000 BNB as collateral themselves. Learn more here.
Mina Release Candidate Launch
The Mina project was decentrally launched by over 130 validators and is now running in beta mode. Mina is using zk-SNARK technology to create a lightweight blockchain that allows participants to quickly verify they are on the correct network. Mina’s design allows privacy preserving and truly trustless blockchain applications. Observe the release candidate network here and join the Illuminate Genesis event to hear more about the Mina protocol and to learn about the mainnet launch.
Casper Labs Token Sale
From March 23rd through March 28th, Casper Labs is selling CSPR, the native token of the Casper Network, via a Coinlist public token sale. Casper is a Proof-of-Stake smart contract platform based upon the original Casper CBC specifications you might remember as ‘Casper the Friendly Ghost’ introduced by Ethereum in 2018. Casper is set for mass adoption by combining developer & user friendliness (support of WebAssembly, upgradeable smart contracts, stabilized gas fees), with flexible permissions so that enterprises have the option to choose between private and public applications.
Compound Gateway
After announcing the plans to launch a native, interoperable Compound blockchain earlier this year, the Compound team released details about Gateway, Substrate chain that the cross-chain interest rate protocol will run on. Learn more here.
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Staking Economy is written by Felix Lutsch from Chorus One with contributions by Chris Remus (Chainflow), and Robert Dörzbach (Staking Facilities). Join us in the Staking Economy Telegram to discuss staking.
Opinions expressed are our own and do not necessarily reflect the opinions of our companies. All content is for informational purposes only and not intended as investment advice.
Looking to break into the staking industry? Chorus One is hiring for multiple roles on the operations and engineering side.
