Project Spotlight — Stader Labs
In our newest issue of Terra’s Project Spotlight, we’re pleased to introduce a project that TFL has supported directly with investment, residing in a complicated, but exciting sphere at the intersection of consensus validation, yields, airdrops, and governance — staking.
Please meet Stader Labs, a project designed to make staking simpler, safer, and more profitable for you, the community delegator.
Welcome to Terra’s Project Spotlight.
Tackling an Industry-Wide Problem
Proof-of-Stake (PoS) consensus for public blockchains has exploded in popularity within crypto, becoming the dominant form of consensus validation for networks across the industry. Led by protocols in the Cosmos ecosystem, Solana, Polkadot, and soon, Ethereum, PoS offers a distinct opportunity for holders of networks’ native crypto tokens to contribute to consensus validation, earning yield in the process.
However, navigating the morass of procedures for spinning up your own node or delegating stake to validators is fragmented across chains, making the task burdensome for users. Typically, users are faced with the challenge of selecting validators with a solid uptime, proven track record of consistency and community engagement, low delegation fees, and unique feature offerings, such as airdrops, bonding bLUNA on Anchor.
The various delegation processes are often esoteric.
Usually, it’s so complex that delegators stake in only one chain, or choose a single validator rather than many. This leads to a lack of yield maximization for the delegators and subpar decentralization for the network, as it concentrates the voting power into the hands of a select number of leading validators. This also presents a problem for the mid to long-tail validators as their visibility is limited due to the difficult and effort-intensive assessment methodology required by the delegators.
On Terra, staking LUNA offers high yields, governance participation, and the opportunity to receive airdrops from the blossoming suite of projects building DeFi applications in the ecosystem. As a result, Terra’s staked supply is high compared to many PoS chains in the industry, but familiarity with smaller validators still remains low — leading to concentrated voting power among Terra validators.
Staking needs to be simpler. Delegators need one-click access to spread their assets across a curated list of validators, continuously monitoring validators’ statuses and maximizing yields from vault strategies as add-on features handled on their behalf.
Enter Stader.
Staking Made Easy
Stader is a bespoke staking platform designed to offer convenient, safe, and yield-maximized staking delegation for users by deploying curated vaults of validators within a specific network’s validator ecosystem.
Stader was started by Sid Doddipalli and Amit Gajjala, who, between them, have two decades of experience in top start-ups across technology, strategy, and scaling businesses. Sid has deep expertise in building and managing mining pool optimizers, while Amit has held multiple top management positions with several start-ups. They have assembled a team of 5 rockstar developers, product engineers, and designers from the top universities and companies (Microsoft, PayPal, and Comcast) across the globe.
“Our vision is One Billion Delegators,” says Amit. “Our team emphasizes the need to simplify the staking process so that Staking-as-a-Service (SaaS) becomes a principal feature of PoS networks and a vehicle for onboarding more users to the crypto market.”
Stader strives for that goal by alleviating the burden of delegating LUNA to Terra’s validator set using single-click access to curated validator vaults that are risk-adjusted for the delegator’s needs. Beyond that, Stader wants to create multiple structured products on top of staking, aggregating all types of staking products — becoming the default distribution layer for staking across retail and business user segments for various blockchains.
In the short term, deploying curated vault strategies for network validators provides an elegant solution to many of the current obstacles of prospective delegators. Users simply connect their Terra Station wallet to Stader, select from a list of curated validator sets, and redeem their rewards. Stader performs all of the end-to-end staking management, offering delegators a one-stop shop for safely and conveniently maximizing yield and contributing to the further decentralization of staking for Terra.
More granularly, Stader has deeply assessed the major problems faced by the 3 primary stakeholders of PoS ecosystems:
- Delegators
- Networks
- Validators.
A summary of their assessments are below:
Delegators:
- Limited awareness regarding staking, associated best practices, and risks.
- Intensive time and effort to discover and identify the right staking opportunity.
- Manual tracking and management of staked assets, rewards, and airdrops.
PoS networks:
- High centralization of stake among top validators, potentially leading to network security issues and compromising network attractiveness to institutions and new users.
- Networks struggle to decentralize the stake using their current staking infrastructure.
Validators:
- Limited visibility for the mid to long-tail of validators.
- Difficult and effort-intensive assessment methodology for validator performance equates to lower delegations for the mid to long-tail set of validators.
Rather than casually spinning up a SaaS service across blockchains, Stader’s unique approach to the iterated problems above augments the value for all 3 PoS ecosystem stakeholders in distinct ways.
First, Stader is creating validator indices of different kinds (e.g., lowest commission vaults, blue-chip validators, highest APY, etc.) and offering convenient staking opportunities for delegators via one-click functionality. Rewards management is concurrently automated by utilizing multiple Yearn-style vaults to implement yield strategies on top of rewards.
With multiple validator indices, Stader can help networks’ decentralization prerogative, as delegators can stake with multiple validators conveniently.
Beyond that, Stader wants to create multiple structured products on top of staking, aggregate all types of staking products — becoming the default distribution layer for staking across retail and business user segments for various blockchains.
This will pave the way for hundreds of millions of end-users to actively stake with Stader, which ties perfectly into Terra’s vision. In fact, this is what led Stader to begin their journey on Terra.
“We began with Terra because of the ecosystem’s focus on staking, bringing mainstream users to the blockchain, and were impressed by the speed of development happening on Terra,” says Sid. “The Terra team has been accommodating and supportive in our initial product development, and we believe Terra will be one of the largest crypto ecosystems with millions of mainstream users entering crypto via the Terra blockchain.”
In the mid to long run, Stader will create multiple decentralized strategies that incentivize implementations helping to decentralize networks further, such as creating an index of more than 25 nodes with robust performance metrics that delegators can stake with, while networks subsidize the gas fees and offer higher rewards for that explicit set.
Additionally, Stader can create strategies that provide better visibility into the mid to long tail of node operators on the Stader platform, which, in the long run, would build strategies to increase the liquidity of long-tail nodes. Applied to Terra, this could mean creating an index of upcoming “star” nodes, such as major projects like Orion that promise augmented token airdrops to users for delegating stake to their validator node.
Should such a model become commonplace, a situation where a torrent of ecosystem projects hosting their own nodes with more evenly distributed stake delegation could arise — vastly increasing the diversity of views expressed for on-chain governance votes.
In terms of business model, Stader’s platform will accrue value in two ways:
- Commission on staking rewards and yield strategies.
- Transaction fees on the additional DeFi products built on top of liquid staking tokens.
Stader is also exploring slashing insurance as an add-on service and revenue stream.
Looking to a Brighter Staking Future
Stader’s long-term vision over the next 3 to 5 years also holds some intriguing prospects. Projecting developments in an industry that moves at lightspeed is difficult. Still, clarity around current narrative threads enables Stader to introduce potential services, features, and prototypes that would accentuate those developments should they actualize.
For example, in an inter-chain DeFi world, staking should become a fundamental layer across L1s, L2s, and Web3 applications. Subsequently, PoS networks will constitute the lion’s share of the crypto economy’s value, capturing value from the ecosystem of protocols and applications built on top of it — the idea of “Fat Protocols” with staking as the underlying yield centerpiece.
Structured financial products derived from the underlying staking assets pose a unique opportunity to build out creative services with Stader, including:
- Yearn-style strategies on staking rewards.
- Time/risk-based products.
- Multiple liquid staking solutions.
- Derivatives on staked assets.
Where yield exists, innovation and capital inflows typically follow. As the underlying layer capturing value from the application layer, staked asset product design induces a potentially lucrative domain of creative financial innovation where composability and plush cash flows are characteristic properties.
Additionally, embedding staking and associated products into mainstream fintech applications can become one of the most risk-averse pathways to put blue-chip PoS assets to productive uses. Staking can become the bond market equivalent of TradFi, deriving distinct advantages from its crucible of rapid financial prototyping.
“As staking solutions explode in variety and complexity, there will emerge a major gap in the market ripe for opportunity — a platform that helps users and institutions discover and identify the best staking opportunity that suits their needs and risk profiles,” continues Amit. “We believe the gap will be bridged by a smart-contract based, non-custodial platform, and Stader is building that aggregation layer across multiple blockchain networks.”
Currently, Stader’s alpha version is live on the Terra testnet, and multiple community members have been actively testing and giving feedback to improve the current iteration. The current version enables you to stake tokens across curated validator vaults. Each vault contains multiple validators carefully selected and monitored continuously by Stader to minimize risk and maximize returns for delegators.
Check out their alpha version at https://alpha.staderlabs.com.
Stader’s launch version will implement the alpha feedback by the community and launch their beta version on Mainnet towards the end of July, contingent on the launch of the Terra Columbus-5 mainnet. Initially, there will be capital limits as the contracts are currently unaudited. The Stader contracts are currently in the queue for auditing via Terraform Capital’s partner firms.
Finally, the Stader token (SD) will power two major services on the Stader platform:
- Ecosystem Incentivization
- Governance
Incentives are defined for 3 primary groups within the Terra ecosystem as follows:
- Validators can stake their SD tokens in slashing insurance pools to get a share of protocol revenue. Additionally, they can stake SD tokens to get access to higher delegations.
- Delegators have access to yield farming on liquidity pools and cross-chain pools. Additionally, they can stake their SD tokens in slashing insurance pools and get a share of protocol revenue.
- Third-parties interested in creating custom validator pools and strategies can stake SD tokens and get a share of protocol revenue.
Stader aims to be present across the central 7–10 PoS blockchains by Q1 2022. Their team is prioritizing the launch on Terra and moving to build on the other blockchains once live.
Stader’s current roadmap for the rest of 2021 includes:
- July 21 — Mainnet launch on Terra.
- Sep 21 — Mainnet launch on Solana.
- Nov 21 — Staking derivatives launch on Terra & Solana.
- Dec 21 — Launch across Cosmos, Polkadot, Near, etc.
- Jan 22 — Start of Stader’s B2B journey.
We’re thrilled to support Stader’s development on top of Terra and welcome them to the thriving Terra ecosystem as a critical project to maximize staking yield and make staking simpler, safer, and more decentralized across Terra’s validator set.
Staking gets easier from here.
For more information about Stader, make sure to check out their website and socials below!
Website — https://staderlabs.com/
Telegram — https://t.me/staderlabs
Medium — https://blog.staderlabs.com/
Discord — http://discord.gg/xJURAhSmav
Twitter — https://twitter.com/staderlabs
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Application form to build on Terra:
Terraform Capital application form:
Terra community pool + Agora research forum:
Mirror community pool + community forum:
https://forum.mirror.finance/latest?order=activity
Anchor community pool + community forum:
