#33: Liquid Staking

Liquid staking working group kickoff, PoS networks final testnet stages, Trust-Less 2020 staking conference, slashing and economic waste in PoS.

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

Welcome back to the first Staking Economy issue of 2020. We’ll be back to the regular twice monthly schedule going forward.

Liquid Staking Working Group
Last week, the Liquid Staking Working Group led by Chorus One kicked off. This group is an Interchain Foundation funded research effort to explore staking implementations that would allow for the trading and re-usage of staked assets in decentralized finance applications. The first call (find the recording here) was joined by more than 30 individuals representing around 20 different organizations working on or interested in these types of staking derivatives.

To learn more about this effort, check out the official Github and join the dedicated Telegram channel to discuss. Our next call will take place on Jan 29 at 4pm UTC, you can find the invite here. In this call, we will discuss the table of contents for the research report and then start getting into the presentations of specific implementations that working group members are designing.

Proof-of-Stake is Less Wasteful
Long-term Bitcoin supporter Eric Wall wrote a blog post analyzing the economics of Proof-of-Work versus Proof-of-Stake. He also came on the Chorus One Podcast to discuss how he came around to the conclusion that Proof-of-Stake might prove to be the less economically wasteful alternative.

Gearing Up For Launch
Multiple PoS networks launched their incentivized testnets in the beginning of January:

  • Celo’s Great Stake Off is in full swing following a short break when a contract ran out of gas. Participants are preparing for upcoming audit challenges. Leaderboard here.

  • Oasis’s The Quest began and a first upgrade happened on Jan 23. Validator list here.

  • NuCypher’s Come and Stake It started this past Monday. First tasks for nodes can be found here.

Additionally, Coda announced their genesis testnet compensation program. In total, the Coda team will give out about 6.67% of the initial token supply to up to 1,000 testnet participants. This is the proportionally largest portion given out to early supporters that we are aware of. It will be interesting to see how this will impact stake distribution in the network.

Finally, Livepeer, one of the first decentralized applications that utilizes a staking mechanism went live with their Streamflow upgrade. As an active Transcoder since 2018, Chris is particularly excited about this upgrade introducing the split of Orchestrator and Transcoder roles to the network. The active Orchestrator set was expanded from around 20 to 100. Perhaps most importantly, the upgrade sets the stage for real video traffic to be transcoded at scale on the network. To date, the amount of traffic being transcoded has been nearly non-existent. The Streamflow upgrade hopes to change this.

Overall, it seems like 2020 will be the year of many network launches. Stake.fish’s JK posted a great overview of expected launches and incentivized testnets going into expectations and challenges ahead.

Trust-less 2020 Conference
The Dystopia Labs team is organizing a virtual conference focused around staking and validation taking place 1st and 2nd February 2020. The agenda is filled with topics relevant to staking and features many prominent voices from the industry. Felix will moderate a panel on the future of Staking-as-a-Service on Feb 1, 11pm PST. Claim your free tickets here and make sure to tune in from home or join one of the watchparties next week!

Can Proof-of-Stake Without Slashing Work?
A thread about slashing insurance in PoS protocols led to AVA Labs co-founder questioning whether slashing is needed at all:

AVA is one of the few networks (together with Ouroboros-based chains such as Cardano and Coda) that does not employ any slashing mechanism. It remains to be seen how these protocols will fare in a value-bearing, permissionless setting.

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.