History of PoS, Terra staking, Validator Profitability and more
|Aug 16||Public post|
HISTORY OF PROOF-OF-STAKE
From its inception in 2012 to today’s countless implementations, Proof-of-Stake has had a rich history. Economic agreements implicitly inherent in Proof-of-Stake designs have been around since the early days of humanity. Felix recently published a post detailing key events covering both research and development in the space. Check out the accompanying Chorus One Podcast episode if you prefer to listen or check out this tweet thread for a summary.
An initiative to increase staking rewards on Terra, stablecoin and payments network, went live last week. 21.7mn Luna tokens will be distributed in the first year to achieve a staking yield of around 10% at the current staking ratio to subsidize the staking ecosystem while the network is growing in terms of transaction volume (up to 100mn Luna have been committed in the medium term to keep Terra staking competitive). Learn more about this effort called “Project Santa” here.
In addition, Do Kwon, Co-Founder of Terra, joined the Chorus One Telegram for an AMA and shared a lot of insights into how they have been growing (Chai mobile payment app has >360k registered users), their technology and the relation to regulatory and the Cosmos ecosystem, as well as what is in store in the future. If you’re interested, you can find a cleaned up transcript of the AMA here.
VALIDATOR PROFITABILITY AND ICF DELEGATIONS
Jack from KysenPool published this Cosmos Validator business model analysis. He models potential reward scenarios and lays them out against various cost models. His current analysis estimates profitability for only the top 10 Cosmos Validators. The general takeaway is that validators need to diversify across networks in order to spread cost and risk.
To help keep Validators in the game, the Interchain Foundation made their most recent round of delegations. This round’s intention was to delegate “ATOMs to validators making significant contributions to the larger Cosmos community.” The Foundation used a 16 point scoring model to determine delegation amounts awarded to the 46 applicants.
HARMONY EPoS & PANGEA
Harmony published the details and rationale of their PoS algorithm that is designed to encourage a large number of nodes validating the network. Chris published his analysis of Harmony’s original staking and incentive design here. The new design is based on a function that aims to shift stake to validators with lower stakes by adjusting rewards based on validator backings. The post also features a nice overview of current validator selection algorithms in PoS. Furthermore, Harmony launched their incentivized testnet competition titled Pangea to stress test the network in 3 stages: launch, race, and attack.
STAKING REWARD TRACKING
It is currently quite painful to track earnings from staking tokens, especially across blockchains. Some validators try to differentiate by offering compliance solutions to their delegators. At Chorus One, we are currently developing a public tool that will help to track investment portfolios and access opportunities (we teased it for the first time in our Cosmos fee reduction post). The MVP we will be releasing by the end of this quarter will start with staking on Cosmos and in the future expand to other staking blockchains and DeFi areas.
The Staking Facilities team recently launched Cosmos support on their reward dashboard. There, stakers can see what they earned from staking on Tezos and Cosmos taking into consideration dollar valuations at both current and historical prices, a useful feature for accounting purposes.
ETH2.0 DESIGN RATIONALE - An amazing wiki that covers all the design decision for Ethereum’s move to a sharded Proof-of-Stake system.
BERLIN BLOCKCHAIN WEEK
One of the largest technology-focused crypto gatherings will take place in Berlin next week. There are lots of events centered around the main conferences Web3 Summit, Dappcon, and the ETHBerlin hackathon.
If you are coming to Web3 Summit, make sure to visit the hackerspace on Monday at 2pm, where Felix will co-host the Staking Summit - a get-together in the form of two panels with representatives from Bison Trails, Chorus One, SKALE, Solana, Staking Facilities, and others. We will discuss the validation ecosystem from both the protocol and node operator perspective.
Having a hard time keeping up with everything happening in the staking world?Keeping up with the latest staking network critical updates is harder than ever. For example, Althea’s testnet hardfork happens Monday and Solana’s third Tour de Sol dry run (join this Discord channel for the update) happens Tuesday. To receive the latest critical updates like these daily, follow the Staking Defenders daily updates.
Staking Economy is written by Felix Lutsch from Chorus One with assistance from Chris Remus, operator of the Chainflow validators. Opinions expressed are our own and do not necessarily reflect the opinions of Chorus One. All content is for informational purposes only and not intended as investment advice.