#39: Governance Gating

Permissioned smart contracts on Cosmos, Polkadot and other mainnet launches, Blockdaemon raise, Google Cloud as an enterprise validator.

This newsletter is supported by Chorus One, an operator of validating nodes and staking services on Proof-of-Stake networks.


Permissioned Smart Contracts for the Cosmos Hub
The decentralized funding pool of the Cosmos Hub successfully allocated 25,000 ATOM (~$67k at the time of writing) to develop capabilities for governance-gated smart contracts to the CosmWasm team. The proposed design will allow Cosmos governance to manage the complete lifecycle of CosmWasm smart contracts, including which contracts are deployed, code upgrades, as well as freezing of undesired contracts.

This permissioned approach could help position the Hub as the center of the internet of blockchains by allowing it to more quickly establish IBC connections to other chains and by providing other useful utilities, including e.g. renting security from the Hub’s validator set to other networks in the ecosystem, while at the same time limiting usage to desired use cases to maintain capacity for essential operations and to avoid putting the Hub and its users at risk with unaudited contracts.

Cosmos on Coinbase Custody
Another big step for institutional adoption of staking with Coinbase Custody integrating Cosmos into their platform. Coinbase is covering losses their customers in case of a slashing event:

“If Coinbase Custody fails to meet certain network standards and slashing occurs, Coinbase Custody will cover this risk and clients will not be impacted by any potential slashing event.”

On-Chain Governance in Celo
Formalized governance is an important piece for any decentralized protocol. Many newly launching Proof-of-Stake networks and also DeFi protocols plan to or do use on-chain protocols to make decisions about code upgrades and parameter changes. The recently launched Celo mainnet steps into the footsteps of networks like Cosmos and Tezos with a custom governance process consisting of multiple steps. This post on the Chorus One blog goes into the details of how proposals like those that were implemented to activate transfers and staking rewards pass through the process.

Blockdaemon Node-as-a-Service $5.5m Raise
Blockdaemon raised $5.5m as funding for their node management platform and marketplace that helps users deploy, scale, and monitor blockchain nodes and validators. After Bison Trails and Alchemy, Blockdaemon is another prominent node infrastructure company raising significant amounts of money in the past year.

Google Cloud to Become Validator for Blockchain Video Delivery Network Theta
Google Cloud is entering the blockchain node provider industry and will join the video delivery network Theta as the fifth of 31 external enterprise validator nodes on the network with staked tokens provided by Theta Labs. Users of the Google Cloud platform will also be able to spin up so-called Guardian nodes for the Theta network from the GCP marketplace.

Network Updates

  • Polkadot PoA Mainnet: The highly anticipated Polkadot network launched the first phase of their mainnet rollout. In this phase, all nodes are operated by the Web3 Foundation. In the coming weeks, external validators will be able to register their nodes and then staking will be activated to upgrade to a permissionless Proof-of-Stake network.

  • NEAR Stake Wars II: NEAR’s incentivized testnet went into the second round, in total up to 1 million NEAR tokens will be given out to participating entities. In addition, the team published template design for stake delegation through smart contracts. NEAR allows validators to customize their delegation contracts, allowing for differentiation, e.g. with respect to fee structures, but also through integrations with other open finance protocols.

  • Harmony Open Staking: Open Staking on the Harmony Network went live with a marketing blitz characteristic of the project. It launched with 1000 nodes competing for 320 slots across 4 shards. Shortly after talk started surfacing about smaller validators getting pushed out by rising staking requirements, with the current bid at nearly 6 million ONEs (currently $210,000). Last year Chris shared some early thoughts and concerns on Harmony’s staking economics here.

  • Cosmos Game of Zones Phase IThe GoZ team announced the GoZ Phase 1A and 1B winners. Phase 1A’s goal was to demonstrate liveness. It was characterized by an unreliable Hub that halted and had to be restarted after an emergency patch was released. Through it all 4 teams were crowned as Phase 1A winners. Phase 1B, which focused on lite client and trust period experimentation, particularly related to efficiency in the form of gas optimizations, awarded a single team as the winner.

  • Keep tBTC Shutdown and Relaunch: Keep Network’s tBTC bridge to Ethereum executed a safety shutdown shortly after launch due to an issue in the redemption flow. The protocol will be relaunched with a release candidate strategy that will gradually increase limits of how much Bitcoin can be transferred onto the bridge.

  • Matic Mainnet Roadmap and Delegation Explainer: Layer-2 scaling network Matic is preparing for the gradual launch of their mainnet and released a detailed roadmap. In addition, the team has released a tutorial of how to interact with staking to prepare $MATIC holders planning to delegate their tokens.

  • More Mainnets: A few other networks with staking mechanisms launched: CentrifugeBand Protocol, and Ren.


Follow Staking Economy on Twitter or subscribe to the newsletter to make sure you don’t miss an issue.

Staking Economy is written by Felix Lutsch from Chorus One with assistance from Chris Remus, operator of the Chainflow validators. Join us in the Staking Economy Telegram to discuss staking. 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.

#38: Interoperability Incoming

Cosmos Game of Zones, ZCash pegzone, IBC for Substrate chains, Eth2 Consensys Staking Study plus Free TON, Keep, and NEAR launches and more!

This newsletter is supported by Chorus One, an operator of validating nodes and staking services on Proof-of-Stake networks.

Game of Zones

The first phase of Cosmos’ “Game of Zones” competition that is testing the interoperability protocol IBC is live. The three stages of the event will trial liveness, throughput and security of the IBC protocol and relayer implementations with a price pool of 100,000 ATOM to be given out to the over 100 participating entities. There are a variety of awesome visualizers and dashboards to explore the state of the internet of blockchains here.

Screenshot from the Map of Zones explorer by Ztake and Bitquasar. The spectrum from red to green shows whether zones mainly sent or received transactions. Sizes signify total transactions (during the first phase the goal is to maintain a connection to the Hub while sending as little transactions as possible).

Cross-Chain Privacy

Meanwhile, two other exciting announcements related to IBC took place during the past two weeks. The ZCash Foundation published the design and announced the intention to launch an IBC-enabled pegzone to bring privacy to the Cosmos ecosystem through ZCash’s shielded transactions. The first phase of the project sees the pegzone bridging ZEC tokens to Cosmos blockchains and the second phase aims to bring shielded cross-chain transfers to the ecosystem.

Furthermore, the Chorus One team published details about their design for the first phase of a bridge project that seeks to allow Substrate (Polkadot) and Cosmos blockchains to interoperate. The first part of this project, a Substrate client for the Cosmos SDK, is funded through a Web3 Foundation grant.

Eth2.0 Consensys Staking Study and Testnet Progress

Consensys released a 39 page Ethereum 2.0 Staking Ecosystem report. The Eth 2.0 timeline currently calls for the Beacon Chain to launch in Q3 2020. A minimum of 16,384 validators staking and 524,388 ETH must be reached to launch.

The report finds that of the respondents, 32.8% plan to run their own validator and 33.1% plan to use a third party staking provider. Expected returns range between 5%-9% and a fair third party fee between 4-10%.

Those that plan to use a third party staking provider, “exhibit the relatively highest ratio of storage of ETH on an exchange.” Combined with Coinbase and Binance being the top 2 recognized third party staking providers in the survey, it seems that exchanges already have a lead when it comes to Eth 2.0 staking market share.

Separately, Eth 2 testing continues, with continued successful deployments being reported on Raspberry Pi’s (not recommended for mainnet deployment...yet?) and the Topaz testnet supporting over 26K active validators.

Network Updates

  • Free TON: A collective of validators and developers launched a community fork of the TON protocol to bring the technology to the world after Telegram was forbidden to launch the network. The Free TON network has no investors and plans to distribute all tokens to users, developers, and validators. Find out more on Coindesk and on the official website.

  • Keep Network: Keep launched their network and staking is live with tBTC expected to come to the Ethereum mainnet on May 11 supported by over 40 industry partners.

  • NEAR: NEAR raised another $21.6m in a round led by A16Z and launched the first phase of what is going to be their mainnet operating under PoA consensus with NEAR Foundation nodes. Check it out on the NEAR block explorer.

  • Polkadot: Stages of Polkadot’s upcoming launch, as presented by Dr. Gavin Wood during a Ready Layer One session without giving an itinerary in terms of timeline.

    Phase 1: PoA candidate chain limited to basic operations operated by the Web3 Foundation. DOT tokens can be claimed and staking intention signaled.			
    Phase 2: Switch from PoA to PoS initiated by the Web3 Foundation.				Phase 3: Final upgrade to activate the governance protocol and to remove the sudo module (making the network completely permissionless).

Liquid Staking Research

As staking is becoming increasingly mainstream, big questions surrounding the role of custodial exchanges and the potential of staking derivatives need to be addressed. The Chorus One team received a grant by the Interchain Foundation to research designs and implications of on-chain tokenization of staking assets in depth. We published the first draft of this research last week and welcome feedback and comments on this Google Doc. Felix also presented the results from the draft on the last Liquid Staking Working Group call. After a few weeks of incorporating feedback, the report will be officially published by the end of the month.

Virtual Conferences

Two virtual conferences with various highly interesting presentations and panels took place over the course of the past two weeks. Dystopia Labs organized the DeFi Discussions event, which focused on various parts of the decentralized finance stack. Recorded sessions are available here.

Another 3-day conference titled Ready Layer One focused on core blockchain infrastructure co-organized by various large ecosystem communities like NEAR, Cosmos, Polkadot, and others had speakers from almost all major decentralized networks including Vitalik Buterin. Recordings will be made available in the next couple of weeks.


Follow Staking Economy on Twitter or subscribe to the newsletter to make sure you don’t miss an issue.

Staking Economy is written by Felix Lutsch from Chorus One with assistance from Chris Remus, operator of the Chainflow validators. Join us in the Staking Economy Telegram to discuss staking. 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.

#37: Proof of Staked Authority

Binance smart chain whitepaper, NEAR roadmap and economics, Celo mainnet and auction, and more!

This newsletter is supported by Chorus One, an operator of validating nodes and staking services on Proof-of-Stake networks.

Binance Smart Chain to Feature Staking
Binance released a whitepaper describing a smart contract platform design that would use BNB as a staking token. This blockchain will be separate from the current Binance Chain (BC), which will continue operating fully focused on its exchange capabilities. Binance Smart Chain (BSC) will be fully EVM-compatible and support existing tooling, which further consolidates that Binance is developing into something larger than a venue to exchange cryptoassets.

The whitepaper describes a “Proof of Staked Authority” scheme, in which 21 validators will be elected to produce blocks every 24 hours based on their stake-backing in BNB tokens. The two chains will be interoperable and BNB holders will be able to delegate their tokens on BC with reward and slashing mechanisms, similar to what is implemented on Cosmos. Since there is no inflation on BNB tokens, only gas fees paid in BNB will be paid out to validators and their delegators. It will be interesting to see if the chain will be able to sustain itself purely on transaction fees - so far there is no information on what kind of applications to expect.

NEAR Economics for Stakers and Roadmap
Sharded layer-1 project NEAR published their roadmap leading to mainnet. The staged launch will start with a PoA network operated by the NEAR Foundation and slowly opening to external validators with a restricted version between June and August before finally launching the community-governed mainnet potentially around Q3 this year.

In addition, Co-Founder Illia released an in-depth explainer of NEAR economics using examples to illustrate what stakers and developers on the network can expect. Together with their economics whitepaper NEAR’s design is well defined and documented, which will hopefully serve as an inspiration to other protocols going forward.

Celo Mainnet Release Candidate and Auction
Celo’s mainnet release candidate launched this week on Earth Day, April 22. Check the live network with currently 65 validating nodes out at https://stats.celo.org.

Celo will host a live dutch auction on CoinList May 7, similar to Solana’s a few weeks back. If you’re interested to participate or to learn more about, visit the official CoinList page that contains all the details.

Quick Updates

  • Keep Stakedrop: The Keep team announced a stakedrop of KEEP tokens to ETH holders participating in the mechanism that borrows from Edgeware’s lockdrop. Signers for Keep’s tBTC bridge will be required to hold both KEEP and ETH. The event will start Jun 8.

  • Token Terminal: A new website focused on providing interesting fundamental financial information on DeFi protocols and staking tokens. The team also releases a lot of basic explainers of protocols on their Twitter and Medium. Worth a follow!

  • Experimenting with Ads: Prime staking data website Staking Rewards is trying out a cool new ad model by selling NFTs on OpenSea in exchange for advertising slots on the website.

  • Staking as the New Saving: 1confirmation’s Nick Tomaino on what needs to happen to make non-custodial staking a success, a sentiment that resonates and shows that there still is a lot of work to be done in the space.


Follow Staking Economy on Twitter or subscribe to the newsletter to make sure you don’t miss an issue.

Staking Economy is written by Felix Lutsch from Chorus One with assistance from Chris Remus, operator of the Chainflow validators. Join us in the Staking Economy Telegram to discuss staking. 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.

#36: Zoning Out

Solana Mainnet Beta, Cosmos Game of Zones, Ethereum staking UX study, and more.

This newsletter is supported by Chorus One, an operator of validating nodes and staking services on Proof-of-Stake networks.

SOLANA MAINNET BETA & BINANCE
Solana launched their Mainnet Beta network in conjunction with a small token auction facilitated through CoinList. This is an evolution of what was the Soft Launch Period (SLP) network and is currently an “idling mainnet”.

Solana has taken a very incremental approach in launching their network. The SLP network started as a closed network of selected validators. It was then opened to a larger group. It’s this larger group that’s now supporting the Mainnet Beta network. You can check it out on the new Staking Facilities explorer Solana Beach.

Furthermore, Solana’s token SOL got listed on Binance and their research team posted a comprehensive overview of the project.

GAME OF ZONES
The Cosmos ecosystem is making great strides towards realizing the interchain vision. Details about “Game of Zones”, the successor of the mother of all incentivized testnets “Game of Stakes”, were recently announced. Registration for the 3-week long event that aims to stress test the interoperability protocol IBC will end Apr 25 and the competition will begin May 1. Find more information here.

COSMOS STAKING DATA
Felix took a look at network data and visualized how token and staking supply, reward and issuance rate, as well as other metrics like active accounts developed on the Cosmos Hub since launch more than a year ago. Find the post on the Chorus One blog.

ETHEREUM STAKING USER STUDY & ROADMAP
Aqeel Mohammad published the results of his comprehensive ETH 2.0 Staking and Validator UX study. A couple survey results stood out in contrast to the way validators view staking network operations in today’s major staking networks. For example, the majority of respondents said they’d stake using their personal computer. It was also interesting to see that the second most important consideration when choosing a staking/validator client was usability, edging out stability, as #2 behind security.

Ethereum appears close to phase 0 of the transition to Proof of Stake. A recent update by Prysmatic Labs mentions a multi-client testnet that will launch this month, with a mainnet rollout of the beacon chain to follow potentially this summer. Vitalik also shared his comprehensive take on a roadmap covering the different core protocol initiatives in the Ethereum ecosystem.

Other Network Updates

Ready Layer One
A cross-chain collaborative virtual conference on May 4–6 with participants from Cosmos, NEAR, Polkadot, Protocol Labs, and Tezos ecosystems.

Centrifuge
A soft-launch of the Substrate-based Centrifuge chain took place last week. We also had CEO Lukas Vogelsang on the Chorus One Podcast to explain Centrifuge’s vision of an open supply chain financing platform.

Tezos
A new upgrade ( Protocol 007) bringing meta transactions, programmable staking, and privacy features through Sapling circuit integration (used in Zcash) to Tezos is slated for summer 2020.

NEAR
NEAR continues to be the project with some of the best educational content. Make sure to check out the reverse whiteboard session in which Alex Skidanov is interviewed by Justin Drake from the Ethereum Foundation comparing the NEAR design to Eth2.0.

Celo
The Celo Foundation gave out $700k in grants to 13 startups, with plans to spend up to $15.7m on community funding in 2020.

Coda
Testnet 3.2 (“Bugspray”) will launch with 200 participants on April 20.


SMALLER VALIDATORS, BIGGER VOICE
Chris published this post explaining why he feels smaller validators are essential to decentralized staking ecosystems. He also encourages smaller validators to make their voices heard and suggests a few ways they can do that.


Follow Staking Economy on Twitter or subscribe to the newsletter to make sure you don’t miss an issue.

Staking Economy is written by Felix Lutsch from Chorus One with assistance from Chris Remus, operator of the Chainflow validators. Join us in the Staking Economy Telegram to discuss staking. 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.

#35: A BFT Birthday

Anthem staking platform release, staking as a cryptoeconomic primitive, Edgeware slashing, hedged staking and updates on Solana, Celo, Cosmos IBC, and Tezos.

Dear readers, 

It has been a few weeks since the last issue, we apologize and will be back again to the usual schedule. We hope everyone stays safe and healthy during this pandemic. Our outlook on the bright future of the staking economy remains unchanged.

A Birthday Present for the Cosmos Hub
One year ago on the 13th of March, the Cosmos Hub produced its first block, marking the world’s first decentralized launch of a permissionless BFT network.

More than 5 million blocks later, stakers on the Cosmos Hub are now finally able to easily access the complete history of their staking portfolio in a single interface. Chorus One just launched the beta of Anthem, a multi-network staking platform, which focuses on providing accurate historical data on portfolio developments and staking rewards. With tax season around the corner, Anthem provides you with an easy way to export a CSV file including information on daily earnings from staking. You can try it out yourself with any Cosmos address at: https://anthem.chorus.one/ or check out the announcment post.

In other Cosmos-related news, the first demo and testnet for the Inter-Blockchain Communication (IBC) protocol are now available! The Internet of Blockchains may be coming sooner than most expect.

Staking Beyond Consensus
An op-ed by Union Market’s Shayne Coplan on the state and the future of the staking economy. Shayne describes staking and its function as a cryptographic primitive seeking to reduce transaction costs in marketplaces in the digital economy. It’s a very spot-on take that describes how staking mechanisms should be thought of beyond determining consensus participants.

Edgeware - A Slashing Case Study 
A slashing incident happened shortly after the Edgeware mainnet launch and now serves as a case study on remediating slashing events. Staking Facilities suffered the slashing penalty after a relatively short downtime due to a mixture of an unforeseen bug and high downtime penalties on Edgeware. The team has been working with the Edgeware community on how to deal with the situation since. The approach they have taken is to reimburse losses from their own funds first and issuing a proposal to Edgeware on-chain governance to recover lost funds from the treasury.

Read the writeup of what happened and check out the recovery proposal here. We also had an interesting discussion on the Staking Economy Telegram about this incident and the implications for validators, who are usually running beta software and may suffer from such slashing penalties for minor mistakes, or things that are completely outside of their control. Overall, the consensus was that slashing should be deployed carefully, potentially increasing penalties once the protocol’s software has matured significantly.

Hedged Terra Staking
Korean payments network Terra introduces an idea for another innovative financial product seeking to protect the principal used for staking from price volatility of the network’s native staking token Luna. Anchor’s design aims to allow users to receive staking rewards by pledging collateral denominated in stable tokens. This product is one of the first structured products that become possible when staking and decentralized finance intersect. 

If you are interested in this topic, make sure to join the next Liquid Staking Working Group call Wed 25, 5pm CET to hear Terra’s CTO Do Kwon present Anchor and Unslashed CEO Marouane Hajji present their slashing insurance model.

Network Updates

Solana Gearing Up for Launch
A lot of activity on Solana’s incentivized testnet and the upcoming mainnet launch. A token auction hosted on CoinList will be taking place Mar 24. A quick recap of what has been happening in the last couple of weeks.


Tezos Carthage and Lawsuit Settlement
The third governance-induced protocol upgrade passed all voting periods and was activated March 5. Meanwhile, the Tezos Foundation agreed to pay $25m in settle claims from an ongoing lawsuit claiming the 2017 ICO violated US securities laws. 

Celo Incentivized Testnet Summary and Alliance Formation
Celo’s Great Stake Off successfully concluded and saw participation of more than 100 entities, check out the details here! In addition, the Celo Alliance, a collective of organizations seeking to support and utilize Celo’s platform to bring financial tools to millions of users with a mobile phone, was announced.


Follow Staking Economy on Twitter or subscribe to the newsletter to make sure you don’t miss an issue.

Staking Economy is written by Felix Lutsch with contributions from Chris Remus, operator of the Chainflow validators. Join us in the Staking Economy Telegram to discuss staking. 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.

Loading more posts…