The bull cycle of 2021/2022 was largely defined by decentralized application platforms that provide an alternative to Ethereum experiencing adoption and growth within their ecosystems. All these platforms have one thing in common: they need operators commonly called validators actually running the underlying infrastructure to enable the applications built on them to be usable.
Most importantly, there should be enough independent operators for such a network to be considered sufficiently (politically) decentralized, to avoid a subset of parties being able to shut down applications, censor transactions, or in other ways impede the credible neutrality of the platform.
A core belief within Chorus One is that the increasing adoption of decentralized applications will lead to further networks springing up; a directional trend that can be observed looking at the growth of application-specific chains, e.g. in Cosmos, the pioneering and leading ecosystem of this approach (via the Cosmos SDK and IBC), which is also being pursued by similar initiatives in other ecosystems (e.g. Avalanche subnets, Polygon supernets, Substrate chains on Polkadot). Notably, in recent months, some of the most used applications including decentralized derivatives trading platform dYdX confirmed and NFT juggernaut Yuga Labs hinted at plans to launch their own application-specific blockchain.
Given these forces on the network supply side, the demand and competition for professional operators are growing and protocol designers need to think about how to incentivize validators to join their ecosystems — as opposed to a “build it and they will come” mentality.
The following post aims to provide an insight into existing strategies and criteria for network foundations to foster decentralization and create a healthy validator set via stake delegation programs.
As mentioned, a key tool in the toolbox of network foundations, who generally are endowed with a decent portion of the underlying protocol’s staking token and the mandate to grow the ecosystem, is the ability to distribute the stake to independent validators. Crucially, here we are not talking about giving tokens directly to validators through e.g. validator-specific investment rounds or incentivized testnets, which are other viable strategies to create alignment. Rather, we talk about delegating foundation tokens to validators based on some sort of evaluation. This mechanism can be used to continuously reward operators that add value enabling them to build a stake in the network via commission rewards. This cannot be underestimated as both a bootstrapping mechanism for validators to join your network and as a mechanism to reward valuable contributions, as well as continued participation and performance.
In the following table, we aim to highlight some of the different criteria choices providing examples of existing foundation delegation strategies that can be taken into consideration. We also look at two exemplary liquid staking protocols, another interesting party with similar goals to a protocol foundation that has been innovating on establishing methods of how stake is distributed among their validator sets.
Furthermore, most programs also institute a maximum fee that validators are allowed to charge. Notably, it can be observed that some liquid staking protocols actively try to minimize validator fees as their main product is the APY of their liquid staking token.
Finally, it is also interesting to note which programs are carried out in an automated fashion on-chain, which is spearheaded e.g. by Solana stake pools and Polkadot’s 1,000 validator program (see links below).
Once aligned on the desired criteria, you’ll need to decide on the frequency and how to communicate the criteria, how people can take part, and how decisions will be communicated. We recommend using a mailing list for upgrade communication and Discord or Telegram for active discussion. We have collected some critical resources from other delegation programs at the end of this post for inspiration.
An alternative to delegation programs that some networks opt for is to run foundation nodes themselves, a practice that we would largely discourage or at least try to limit for early phases of the network in which some additional control of the foundation might be necessary or in some minor fashion to ensure the network’s validator software and surrounding process are useable. At scale, this practice takes away the chance for validators to truly become a part of the network and will ultimately result in a centralized, and thus pointless, network.
Well-designed stake delegation strategies are a powerful bootstrapping mechanism to get independent operators interested in your decentralized network. In addition, they can serve as a mechanism to continuously reward valuable contributions such as community engagement and open-source tooling.
In this post, we touched upon why delegation programs are needed, the underlying goals, and what criteria can be used to conduct them. There is a lot of work to be done evaluating the effectiveness and improving and innovating on delegation strategies we have introduced here.
Chorus One is an experienced staking provider active on over 30 networks actively investing in the ecosystem and helping networks from conception to launch and beyond. We have also written about other tools, including incentivized testnets. We encourage builders launching their application-specific blockchains and researchers interested in this space to get in touch with us through ventures(at)chorus.one
Solana Foundation
Interchain Foundation
Web3 Foundation
Tendermint Team
Lido
Marinade
Terraform Labs
Celo Foundation
Socean
e-Money
Kava is a cross-chain, decentralized finance project focused on providing collateralized, USD-pegged stablecoin borrowing for assets from different blockchains. Kava is making use of interoperability solutions to bring its services to tokens like Binance’s BNB and Bitcoin.
Users of the Kava CDP system earn KAVA tokens and can delegate them to validators like Chorus One, which maintains and govern the protocol with the goal to create a stable platform for cross-chain decentralized finance.
Please note that the unstake period is 21 days. This means that you can only unstake and withdraw coins to your wallet after this time has passed. We wish you profitable staking!
In case you don't have the keplr extension installed in your browser visit https://www.keplr.app/ and click on Install extension.
Click on Install Keplr for Chrome if you are using a Chrome browser or Brave if you are using the Brave browser and follow the installation instructions.
Click on the extension in the Chrome/Brave toolbar and the following page will open up.
In case you do not have an existing Keplr account you can create a new account
You will be shown 12 words as your mnemonic seed. Select24 words option for a more secure mnemonic. Back it up securely (read the warning below)
Back up your mnemonic seed securely.
Enter an account name and a passphrase to unlock your wallet. You will be asked for the mnemonic again. Enter the 24 words in order. This is to make sure you remember the mnemonic.
Finally, click on Next to create your account
Regardless of whether you already have an account or if you created it just now you may now click on the extension to view your address or visit https://wallet.keplr.app/#/akashnet/stake to see the full dashboard.
If you don't already have KAVA in your account fund it with some tokens. You may use an exchange to transfer the KAVA tokens to your address or get it from someone who already holds those.
To stake click on the Kava network in the left panel and click on Stake
You will be shown a list of validators with whom to stake on the right side. Scroll to Chorus One and click on Manage.
A modal with Chorus One's description will pop up. Click once on Delegate to enter the amount of tokens you want to stake.
Clicking on Delegate again will take you to Keplr wallet for approval. Approve the transaction and you will be able to see your stake.
There is a 21-day unbonding process for staked KAVAs during which delegator KAVAs do not earn rewards and cannot be transferred, exchanged, or spent. KAVAs can, however, be slashed during the unbonding period.
Once your transaction is approved you will be able to see your Kava getting staked. Congratulations you have successfully staked your $KAVA!!
After some time you will see rewards getting accumulated in your account. You can simply go to the Keplr extension to claim them.
Avalanche is an open-source platform for deploying decentralised applications in a highly scalable environment. Avalanche takes a ‘network of networks’ approach to scaling and contains from the get-go a smart contracts platform designed for global finance, with near-instant finality. The network infrastructure allows applications to maintain sovereignty on their own “subnet”, while tapping into the Avalanche mainnet for interoperability with other subnets. Ethereum developers can easily build atop Avalanche via the EVM-compatible C-Chain. Through its novel Avalanche Consensus Protocol, Avalanche is able to scale capabilities to a processing capacity of 1,500 TPS (transactions per second) in the C-chain and upwards of 4500 TPS in the X-chain. In summary, Avalanche presents a revolutionary technology both in consensus and horizontal scaling design via subnets.
The main novelty of Avalanche is its approach to scaling, which involves the concept of subnets. A subnet is a set of Avalanche validators and the assignment of one or more blockchains for these validators to validate. There is a mainnet, or Primary Network, which consists of all Avalanche validators and that are assigned the P-chain, X-chain and C-chain to validate. As mentioned before, the C-chain is the smart contracts chain that is EVM-equivalent. The X-chain is an UTXO DAG-based chain specially tailored for high-speed asset transfers. The P-chain is perhaps arguably the most important one as its job is to maintain the coordination of validators and delegators on all subnets.
Other subnets are therefore subsets of the mainet validators that are assigned additional blockchains to validate. The reasoning behind this design decision is brilliant: Instead of having one chain accomplish everything in the Avalanche ecosystem, each “sub” blockchain can specialize for a certain use case.
In the meantime, the platform is expanding and enabling developers to launch their own customizable blockchains. Distributing activity over several chains keeps the Avalanche platform dynamic and flexible, enabling it to meet the blockchain’s trinity of decentralisation, security, and scalability.
Avalanche delivers even more in terms of technology by regularly releasing open-source code in the form of VMs ready to be picked up by projects looking to jump in in the subnet movement. @DeFiKingdoms is an example of a live subnet.
Other projects in Avalanche may soon start to shift to the subnet environment. For instance, liquid staking via BenQi (sAVAX) with three more solutions coming up: Lido on Avalanche, LAVA, and Eden Network + YieldYak. There is also a competitive DeFi landscape which may do the same, with TraderJoe (DEX), Platypus (stable swap), Aave (lending) and many others.
Becoming a validator in Avalanche requires expertise and a bonded stake. It would be troublesome if being a validator on the Avalanche network was free since a bad actor might start a large number of nodes that would be queried often. A node must bond (stake) something valuable in order to become a validator (AVAX). The more AVAX bonds a node has, the more often that node is requested by other nodes. A node’s sampling of the network is not uniformly random. It is rather weighted by stake quantity. Nodes are encouraged to be validators because they get a reward if they are sufficiently accurate and responsive when validating. Chorus One behaves in this way, helping to secure Avalanche. Users can delegate to Chorus One to and share the rewards.
Validating Rights: The weight of validators is determined by the amount of staking tokens bonded as collateral.
Token distribution and inflation of 9.2%.
Reward Rate: Rewards are paid out at expiracy of the validation contract provided the validator uptime as seen by the network is above 80%.
Chorus One Commission: 2%
Staking Limits: The maximum weight of a validator (their own stake + stake delegated to them) is the maximum of 3 million AVAX and 5 times the amount the validator staked. For example, if you staked 2,000 AVAX to become a validator, only 8000 AVAX can be delegated to your node total (not per delegator)
Slashing: No slashing. A validator will receive a staking reward if they are online and respond for more than 80% of their validation period, as measured by a majority of validators, weighted by stake. You should aim for your validator be online and responsive 100% of the time.
Re-Staking: You need to withdraw rewards and re-stake them with some frequency if you want to make use of compounding returns hence, additional delegation is needed for compounding.
Staking Guide: To read a step-by-step guide on how to stake AVAX, click here
Covalent is a protocol that collects data from various blockchain networks. Covalent attempts to gather granular information stored inside smart contracts that isn’t available with current technologies by completely indexing whole blockchains and accessing their data via a single API. In this way, Covalent wants to help developers have a better grasp of the whole blockchain ecosystem. Users will even be able to incorporate private business data after all blockchain data is indexed.
Covalent is gradually decentralizing and that will allow the Covalent Network to be owned and controlled by its users with the use of the CQT token:
Covalent is already demonstrating a wide range of applications. From taxation, where a trader can immediately obtain a CSV file of their transaction data, to NFTs, where NFT applications like ChainGuardians and Ethermon are now employing the Covalent API to not only enable innovative features unique to each project but also to enhance user experience.
To provide broader access to blockchain data, multiple roles such as validators, block-specimen producers, indexers, storage request responders, and others are required for data retrieval, storage, and query procedures. Learn more about them here. Covalent brings a great value to web3 developers and users and we’re excited to contribute as Block Specimen Producers, ensuring the accuracy of the distributed data.
About Staking on Covalent:
Validating Rights: The weight of validators is determined by the amount of staking tokens bonded as collateral.
Inflation and Distribution ($1Bn CQT):
- Seed: 10 %
- Ecosystem: 20%
- Private sale: 20.4%
- Private sale II: 2.9%
- Public sale: 3.4%
- Team: 14.4%
- Advisors: 2%
- Reserve: 18.9%
- Staking: 8%
- There will be a 2% inflation per year for 4 years.
Reward Rate: The amount of CQT that is rewarded per epoch (24 h). Learn more about staking CQT here.
Chorus Commission: 7.5%
Withdrawal Delay: 28 days for delegators and 6 months for operators.
Staking Limits: There is a ratio (currently 6:1, it will be upgraded to 10:1 in the short term, then up to governance) determining how much delegation an operator can receive on their own stake, ensuring operators have skin in the game. In addition, there are max. stake limitations in place to avoid centralization and to ensure the network grows in conjunction with its maturity.
Slashing: Currently, there is no slashing on the Covalent Network. Until slashing is live, network operators who produce Block Specimens with invalid proofs won’t receive rewards.
Re-Staking: Delegating is non-custodial. While CQT is held in the staking contract, it is only the owner of the respective staked CQT that can interact with it.
