It’s no secret that institutional interest in staking is on the rise and one could argue that Ethereum’s recent move to Proof-of-Stake was a major boost in this regard. Due to the highly technical nature of running validator operations, institutions generally partner with staking providers like Chorus One to manage their node infrastructure. This is a crucial step as the node operator is not only expected to have protocol-specific failover strategies and all regulatory compliances but also be well versed with on-chain matters.
New staking entrants are often left with the question of what factors to prioritize when partnering with a node operator. Security, commissions, compliance or all of them?
To simplify these matters, we’ve made a list of 10 factors that any fund manager or institutional investor should consider when speaking with a staking provider. These are by no means exhaustive but are some of the most common questions we face when speaking to any institution. Ultimately your choice of a staking partner should encompass POVs from your colleagues in the legal, security, and finance teams too.
The staking provider’s fees should be based on the protocol rewards earned and not on your total staked value. Consider the two scenarios listed out below:
If the staking provider’s fee is based on the total value of your staked assets, there’s a high chance that you’ll end up paying a higher fee. The fee percentage might seem lower when compared to other providers but as they say, the devil is in the details.
“Picking the right staking provider will have a big impact on fund yields. Fund Managers need to weigh rewards and many other factors like counterparty risk and MEV policies,” says Neal Roche, Chorus One’s Business Development Manager working with institutional clients.
You ideally want your staking provider to have equal skin in the game too and charging a fee on the protocol rewards rather than value of staked assets is one way to do that. Needless to say, Chorus One always follows this rule.
MEV stands for Maximal Extractable Value and refers to the additional rewards a validator can make by reordering, adding, or removing transactions from a block. In the last 12 months, MEV has been extensively discussed and various protocols like Skip and Jito exist today that are fully focusing on this subject. A validator participating in MEV can boost their share of rewards that are indirectly also transferred to their delegators. For an institution looking to stake, it’s a no-brainer to partner with a staking provider that runs relays like MEV-Boost to earn additional rewards.
At Chorus One, our team is fully invested in the MEV space and wants to create as much transparency around this subject as possible. Our Research Team has written extensively about MEV on our blog and we’ve even released a MEV bot on Twitter that delivers MEV extraction updates from Osmosis every day. You can also check out our Ethereum MEV dashboard and Solana MEV dashboard on Dune Analytics.
Fund managers usually like to diversify their assets into a couple of networks and hence like to work with multi-chain providers. Owing to the fast-paced nature of this industry, staking providers that onboard newer networks quickly are preferred. Major node operators like Chorus One work with over 30 PoS networks including all major Cosmos chains, Solana, Avalanche, NEAR, Tezos, etc. and are also involved with the testnet/incentivized testnets for multiple networks at the same time.
Another key piece of the stack that will influence your time-to-deploy-funds. The last thing you want when you want to stake more or withdraw your assets is needing human intervention on the other side of the operation. You shouldn’t need to delay your transactions, because your staking provider is on leave. This is why it’s wise to evaluate if you can automate your staking procedure through an API.
This is exactly what OPUS is. You have FULL control over your validators and can increase allocation/withdraw assets whenever and wherever you wish. Your stake stays backed by Chorus One’s secure infrastructure with 24/7 supervision from our team.
This is arguably the most critical factor and one that separates the crypto natives from the hobbyists. Staking is non-custodial but if the node operator’s security practices are not up to the mark, your assets are at risk.
Governance is both a power and a responsibility. The power to shape a network’s future and the responsibility of an educated vote. Deploying capital in different networks also means looking into proposals, analyzing them and casting votes. Ideally, your validator should be actively voting on these proposals as some of these could involve things like incentive updates and inflation reduction which impact you directly.
Chorus One works with 30+ networks and we take on-chain governance very seriously. Our Research Team looks into every proposal, discusses it rigorously, and then votes for them. We even release the rationale behind votes on our social media channels every week.
An equally important aspect is the protection a staking provider offers against being slashed and other similar penalities. Penalties differ from one protocol to another, but in essence stakers can lose rewards or, in the worst case, stake if the staking provider is slashed. Chorus One AG is a privately owned Swiss company with a strong balance sheet and over four years of staking experience with institutional clients. With over $750 million in AUM, we offer a standard SLA of 99% uptime and a “no slashing” guarantee to our clients. We have never had a node slashed and even offer Ethereum node slashing insurance as an option to our clients.
Validators with an in-house Research Team closely study almost all the networks and hence they’re also the first ones to spot the high-potential ones among the array of new networks launching everyday. Since they will be the ones maintaining the infrastructure, they’re also some of the most knowledgeable teams a network could speak to. A few months back, we announced Chorus Ventures, a $30M initiative to invest in some of the most interesting PoS and interoperability networks, and middleware protocols. To date, we have made over 30 investments including Celestia, Quicksilver, Osmosis, Agoric, Uqbar, Lido, Anoma among many others. We continue advising and investing in projects with a crystal-clear focus and a passionate team. Our exclusive research is also shared with our clients to help them shape their investment strategies better.
So there you have it. The ten most important points that should be on your mind when partnering with a staking provider. What other points would you mention here?
“Sometimes a bull market, sometimes a bear market, always a builder’s market” — Sahil Lavingia
Chorus One was incorporated in 2018 when Proof-of-Stake was still in its nascency. But as all of us have seen, it’s now proven to be more secure, decentralized, and energy-efficient than Proof-of-Work. The maturity and adoption of PoS brought in increasing institutional interest as the low-risk profile of staking acted as a conducive entry point for many institutions who were testing the crypto waters. We covered more on this topic in an article some weeks back. Chorus One has been helping institutions get PoS exposure through our white-label and research services and today we’re extremely excited to announce the launch of OPUS — a multi-chain staking solution that will significantly speed up and scale an institution’s staking operations. The needs of any institution vary quite a bit and there aren’t many enterprise-ready staking solutions catering to them all. OPUS was designed after months of research and conversations with our existing clients and other crypto-friendly companies, keeping their needs at the center.
“Cryptoassets are becoming an integral part of the world’s financial system. They open the possibility for a more efficient and innovative economy. Staking cryptoassets allows participating in this revolution and earning strong returns with minimal risks. At Chorus One, we are grateful to be able to support institutions of all kinds to safely and effectively participate in the Proof-of-Stake economy.” — Brian Crain, Co-Founder and CEO, Chorus One
OPUS also follows industry-leading security standards and access to MEV rewards, the latter now being an important factor post the Merge. Here’s a quick overview of OPUS’ primary features -
Security is of paramount importance and one that’s non-negotiable. Hence, OPUS follows a range of security practices like authorizations/authentications using Open ID Connect (OIDC), double signing protection to prevent losses, and all private keys being stored in FIPS 140–2 compliant vaults. OPUS is also non-custodial meaning customers remain the sole possessors of withdrawal keys.
Every client would have a dedicated infrastructure with multi-region redundancy that would also allow them to increase or decrease validators as and when required, depending on the protocol. This is also supervised round-the-clock by our DevOps team for issues and real-time updates can be enabled on Telegram or Slack.
OPUS is designed to be chain-agnostic. Starting first with Ethereum, this will soon expand to other networks so you can use the same interface to interact with multiple networks.
MEV-Boost queries and outsources block-building to a network of block builders. The validators that run MEV-Boost on their nodes will earn maximum rewards that then increase the rewards of all OPUS users too. Since the rewards generated by the non-MEV-Boost validators would be substantially lower, it would be prudent for institutions to partner with solutions that already enable MEV rewards.
That’s not all. We have many exciting features in the pipeline that will be rolled out in the next few weeks. If you’re interested in exploring OPUS and knowing more, drop an email to staking@chorus.one
Uqbar is building a decentralised network on an operating system known as Urbit, an identity-driven, peer-to-peer, deterministic system that uses a functional programming language called Hoon. Urbit was originally conceived in 2002 to solve what was seen as a failure of the modern internet to live up to its expectations as a peer-to-peer network of personal servers.
The failure of the modern internet can be described as vulnerabilities and inefficiencies that occur as a consequence of using old operating systems such as Unix, which are more prone to bad state, undefined behaviour, memory leaks, and/or crashing. When we access the internet today, we use operating systems that do not allow for our identity to be transferred or traced, we cannot easily understand the state of our current system without trusting a centralised third party to give us the information, we use computer resources inefficiently and store information across a multitude of servers and interact with peers in a non-private manner, exposing our personal information.
Urbit built an identity-driven, deterministic, functional, peer-to-peer and private operating system to solve all of the abovementioned problems. Urbit’s operating system gives users an alternative way to access the internet to retain ownership of their own data and become digitally sovereign citizens, released from the shackles that centralised technology companies have over most of the internet’s population. It comes as no surprise that the Uqbar team concluded that Urbit would be the ultimate system to build a blockchain on top of. Uqbar is venturing into the unknown, by creating an zero-knowledge execution layer that settles on Ethereum but is run on top of Urbit.
Urbit and blockchain share many similar properties (in fact, Urbit uses Ethereum NFTs to record IDs) but primarily differ in the way that blockchains are purpose-built to solve the double spend problem. Urbit does not need to solve the double spend problem because there is no such concept as a fungible currency in Urbit. Instead, Urbit needs to solve a ‘double-sell’ problem, to avoid a ‘parent’ selling one ID to two sellers at the same time. As Urbit IDs act more like real estate than as a currency, it is much easier to solve this problem because the chance of one ID being sold to two parties at the same time is negligible (especially as reputation and governance exist in the system, meaning IDs implicitly have an economic stake in this imperfectly decentralised system).
Indeed, choosing to build a blockchain on top of Urbit actually solves many problems of what blockchain itself faces today, such as; fragmented middleware, expensive versioning and central points of failure. When Uqbar launches on Urbit and as an execution layer for Ethereum, it solves the above-mentioned blockchain problems to create a private, unified and composable environment for on-chain and off-chain data. To elaborate, Uqbar is interoperable with all applications built on Urbit itself. To date on blockchain, if we hold financial assets such as ERC-20s on Ethereum, it cannot be interpreted by any web2 websites (e.g. Instagram does not understand if you transfer an NFT to it).
When Uqbar launches, any financial asset on Uqbar can be interpreted by all applications outside of Uqbar in Urbit (e.g. send an NFT from Uqbar to a non-blockchain Urbit application such as a blog to be used/viewed there). Urbit and Uqbar are fundamentally recreating what the internet is and what we can do with it. Urbit is a system built as if cryptocurrency was invented at the same time that the internet was created, perfectly suited to facilitate cryptocurrency transactions. To move to the next evolution of the internet, we need to rebuild the past. Forget web3, web0 is here.
To understand how powerful Uqbar is, we first need to further understand what Urbit is, the operating system that overlays traditional operating systems such as Unix that is architected to be identity-driven, deterministic, functional, peer-to-peer and merkelisable.
One of the most powerful properties of Urbit is that it is identity-driven. Urbit has a built-in identity system in the form of PKI on Ethereum. Having the private key is having the urbit instance. This coincides with the ethos of cryptocurrency as attributable ownership of computation is a desired property in the crypto world. The internet of today does not have a canonical identity system, which allows for sybil attacks such as spam and phishing. Urbit decided to make its operating system identity-driven in order to establish cryptographic accountability in the system, which is non-existent in existing operating systems.
Within Urbit, all messages are securely signed and encrypted by the sender and verified by the receiver. Having an identity in an operating system makes life much more frictionless because it is immutable and persistent. This means that an Urbit ID will always exist and it cannot be changed in a way that is not authorised by the owner of the ID. For once, a user has an identity that can be used across an entire system, rather than needing to create a new identity and password on every website they sign up for.
A deterministic system is a system in which a given initial state or condition will always produce the same results. Urbit is a deterministic operating system — the state of the OS is a pure function of the event log. The event log in this context means a complete, ordered description of everything the OS has been asked to compute. All of the data is stored in a single binary tree of integers, and every computation it performs is a series of manipulations of some sub-tree following 12 allowed operations. This means the current state of the urbit instance is fully determined by its genesis state and the sequence of inputs given to it. This is entirely different to operating systems today that are non-deterministic and vulnerable to going into a bad state, producing undefined behaviour (often resulting in bugs), memory leaks, or crashing.
Urbit also greatly differs from existing operating systems as it is built using a functional programming language, called Hoon. One major benefit of using a functional programming language is that side-effects seen in imperative programs are minimised (such as mutable state having unintended consequences from user interactions), which makes a system more reliable and therefore easier to maintain. Functional programming languages also make it easier to reason about software, which results in it being easier to debug than other types of programming languages.
A good way of thinking about a functional programming language versus other types of programming languages is to think of mathematical functions versus computer functions. Functional programming languages closely resemble mathematical functions whereby the same input will always equal the same output, which ultimately results in it being easier to debug than other types of programming. As well as the above, functional programming also avoids mutable/shared state, which is important for concurrency and increases performance of an entire system.
Another property of Urbit that is unique to its operating system versus others is the way in which the network topology is defined a-priori and completely via a peer-to-peer (p2p) network. The location of a computer in the Urbit network is defined by its name (at genesis). All communication is fully encrypted leveraging the built-in identity system (PKI). This makes it trivial to do peer-discovery, software distribution and identity verification.
Finally, state in Urbit is represented as a single binary tree. All of the data/code in Urbit is stored in a single binary tree of integers, and every computation performed in Urbit is a manipulation of some sub-tree. For those already familiar with cryptocurrency, a binary tree data structure is also used in blockchains (merkle trees). This makes Urbit an ideal system to build a blockchain on top of.
By understanding the architecture of Urbit and what makes it unique from the properties mentioned above, such as the deterministic, functional, identity-driven, peer-to-peer and merkelised nature of the system, we can begin to understand what makes it a lucrative operating system to build a decentralised network on top of.
Firstly, Urbit is deterministic. This is the exact same computational model that is used in blockchains. The same inputs will always equal the same outputs. The operating system of Urbit is as reliable as the Uqbar decentralised network itself, an ideal combination.
Secondly, Urbit is unified. The structure of Urbit means all applications are encoded in the same way that they are in the state. This means that smart contracts written for Uqbar are eventually available to the wider Urbit computer. For example, one could write a smart contract on Uqbar that is a financial application, which receives oracles updates of values directly from an application built on Urbit, like a weather app. Or, a smart contract on Uqbar could be written that executes upon actions being taken outside of the blockchain (e.g. an NFT is minted to an address when an Urbit ID purchases an item on a shopping application on Urbit).
The point to understand here is that data that exists on Uqbar and Urbit is interpreted in the same way. Any financial assets that a user holds on Uqbar will be able to be understood by any Urbit application. Applications on Uqbar and Urbit execute in the same way and are understood by each other’s environments, unifying the on-chain and off-chain world for the first time.
Thirdly, Urbit is intrinsically private. Urbit uses a public key infrastructure (PKI) called Azimuth, which exists on the Ethereum blockchain, recording ownership and public keys of Urbit IDs. Ames (Urbit’s encrypted p2p protocol) encrypts every message sent on Urbit using symmetric-key encryption derived from the public key of the peers. One concludes that all communication on Urbit has at least the same privacy guarantees as messaging someone on Signal. All communication and data transfer on Urbit (DMs, blog posts, file-transfer, etc.) is private.
However, it should be noted that whilst the data of the communication (ciphertext) is private to both the sender and receiver, the metadata (to and from address of each packet) can be ‘watched’ by middlemen. However, users in Urbit have an assurance that the ciphertext of the communication itself is private (e.g. a user saying hello to a friend cannot be read by anyone but the friend in Urbit). This in itself offers stronger privacy guarantees than what exists now in web2 (or web3).
In the future, it is likely that a privacy network will be built within Urbit, which could ‘mix’ addresses (Urbit IDs) to make it extremely difficult for any third party to work out an identity based on types of packets it receives and further enhance privacy guarantees when using Urbit.
Fourthly, Urbit is identity-driven, much like a decentralised network itself. Urbit’s PKI Azimuth is used as a decentralised ledger for what are known as Urbit identities. The fact that Urbit leverages a blockchain already for identities shows the clear link between both technologies. Urbit decided that a blockchain was the best technology to store IDs, which is necessary to use the Urbit network. Azimuth is a parallel system that can be used as a generalised identity system for any Urbit application. All users have an identity in Urbit. Once an identity is linked to an Urbit instance, it cannot be unlinked as an Urbit ship acquires its identity at boot and retains it for its lifespan. In order to use a different identity in Urbit you would need to boot a new ship. This is somewhat similar to how decentralised networks work today, whereby a public address is needed to interact with any blockchain.
However, Urbit made one key critical breakthrough in decentralised identification. In Urbit, an ID (for the most part in the form of an NFT, apart from moons or comets) is needed to access the network. The amount of IDs that exist in Urbit is limited, hence identity is scarce. Scarce identities are inherently valuable because only a limited amount exists. This differs from a centralised network, which can disperse identities at will with no extra cost. Not only that but IDs can be transferred and traced, meaning a user can take their identity with them wherever they go within the system. This powerful concept is a breakthrough in decentralised identification, which is another example of how well suited Urbit is for building a blockchain on.
Fifthly, Urbit is perfect for software versioning and distribution. It becomes very efficient to distribute software using Urbit because all users have an identity, therefore users are able to send and receive data with just one signature. Application developers are able to easily ship different versions of their product and send the different versions to different IDs. For example, contract developers could A/B test applications on the blockchain itself to experiment with their products by sending different versions to different Urbit IDs. Testing different versions of smart contracts for different users is not possible on blockchains that are built on existing operating systems today.
Another advantage of using Urbit for a blockchain is that it gives developers the optionality to charge different users different prices. To elaborate, it is easy to verify blockchain state within the bounds of a single application. It is possible to verify that a payment was made by a specific Urbit ID, to then automatically send some data or software to that Urbit ID in response. This is somewhat possible with the existing stack (non-Urbit), except that wallet addresses and contact addresses are not linked by default, so some bookkeeping is necessary.
Applications could offer different pricing packages for users dependent upon their use of the application and actions taken. Separately to the above, applications that exist in Urbit outside of the Uqbar blockchain could request payment from a user via Uqbar blockchain itself. An application developer could receive payment on-chain and then ship the software off-chain. Software versioning and distribution on Urbit is a perfect match for a blockchain to leverage as it provides more flexibility for application developers and a better user experience for users.
Now we know what Urbit is and why it makes sense for a blockchain to be built on top of, we can put the pieces of the puzzle together to understand the similarities and differences of Urbit and blockchains as they exist today.
Firstly, the similarities. Both Urbit and blockchains have multiple design similarities with each other, which include:
A p2p networking layer
Public key infrastructure as identity
A functional system
A permissionless system
However, blockchains have a value transfer layer that Urbit currently does not have, which is the major difference between the two technologies. For example a blockchain is built specifically to solve the double spend problem. Satoshi Nakomoto, the creator of Bitcoin, solved the double-spend problem, which was an ubiquitous problem within the cypherpunk space at the time in order to remove the necessity of having a “trusted third party” for digital currency.
In particular, Satoshi came up with a system, known as blockchain, which had within it a sybil resistance mechanism (Proof-of-Work), a consensus algorithm for nodes to adhere to (Nakamoto consensus), game theory (cost of attack is more than cost of work) and a currency to reward those that verified transactions on the blockchain (Bitcoin). Soon after the invention of Bitcoin, Ethereum was created. Ethereum introduced the notion of building a virtual machine on top of a blockchain, which paved the way for ‘smart contracts’ in the blockchain space.
Since then, there has been a vast amount of blockchains that have experimented with sybil resistance, consensus, game theory, virtual machines and currencies in different ways.
The double spend problem that Bitcoin originally solved that accounts for most of blockchains success, is a similar but somewhat different problem to what Urbit calls the ‘double sell problem’. Bitcoin and its relatives are designed to secure a complete, interdependent, collective transaction history. Bitcoin uses UTXO to verify whether or not a transaction is valid by looking at a history of previous transaction inputs. Urbit does not have such a thing as UTXO because Urbit ships are non-fungible and have no collective history or dependencies, which removes the need for a ‘chain’.
Another major difference between Bitcoin and Urbit is the way in which both have different hierarchies; Bitcoin has a completely flat, trustless and decentralised system whereas Urbit is more hierarchical. ‘Parents’ in Urbit can theoretically sensor ‘ships’ that are spawned from them (e.g. DoS) and as a result, Urbit could be argued to be more centralised than a permissionless blockchain such as Bitcoin.
However, it should be noted that ships that spawn from parents do have the optionality to take their ship elsewhere (e.g. if a provider is denying a ship service, the ship has the option to transfer its identity to another provider, which enhances the decentralisation of the whole system). In this way, Urbit is imperfectly decentralised with a less flat hierarchy than what Bitcoin has. Uqbar noticed an opportunity to build a value-transfer layer on top of Urbit that is completely flat and permissionless.
A value transfer layer whereby every transaction is recorded on a universal ledger, able to be read by anyone. However, blockchains as they exist today are not perfect. If Uqbar was not built on top of Urbit, it would likely run into the same types of problems that most blockchains experience today on existing operating systems. .
Fragmented middleware / non-unified environments
A major downside of blockchains is the incapability of each to provide any service outside of consensus on internal state changes (accounts and balances). For this reason, if an application wants to do more than just tracking state changes of accounts that live on a blockchain, it must leverage a middleware protocol. However, middleware protocols that are built to enhance the capabilities of decentralised applications are often networks themselves and require a completely different skill-set to run and maintain.
Consider this, a decentralised application would like to use a middleware protocol such as an oracle network to update the value in a smart contract of an event taking place outside of a blockchain (e.g. the weather temperature), as well as an RPC network to read the state of the internal blockchain (e.g. account balances). Most likely right now, an application developer would have to learn the tools of each middleware protocol in order to utilise it in the most secure way possible. As you can imagine, every time another middleware protocol is used by an application, it gets more and more difficult to manage. There is not one unified middleware protocol that is capable of providing any middleware service (e.g. oracle, RPC, cloud, analytics, etc.) for an application.
Expensive versioning
To understand what we mean by expensive versioning, we must first define versioning. Versioning is the process of assigning either unique version names or unique version numbers to unique states of computer software. Due to the intrinsic nature of a blockchain being fully focused on solving the double spending problem, it cannot easily iterate on versions without a fork taking place, due to the consensus required in order to change what version all nodes follow. There is no way in a blockchain to distribute software to specific identities. All nodes must upgrade in order to avoid forking of a blockchain.
Censorable
Realistically today, although most decentralised applications are deployed in decentralised networks, most users interface with decentralised applications through a server (or node) that is hosted by a centralised party (e.g. AWS or Infura). For example, most DeFi applications might be accessed through a website that is hosted by AWS, or an interaction with a blockchain can only be made through a centralised provider that relays transactions from a user to the blockchain.
Uqbar is a decentralised network that leverages the best properties of Urbit’s operating system and blockchains to create a self-sovereign, private, functional, unified and composable environment for on-chain and off-chain data
Uqbar is going-to-market as a zero-knowledge execution layer (‘Layer 3’), using Starknet as a settlement layer by posting proofs to Starknet’s ‘Layer 2’ for verification. Uqbar is a highly scalable, customisable and composable decentralised network that is leveraging Urbit’s performance and capabilities (networking, identity, databases, authentication, and software distribution) to build an execution layer on top of Urbit’s operating system that settles transactions on Starknet. Uqbar’s permissionless network is architected through shards, flexible time-to-finality, inter-shard interoperability, inter-shard composability, customisable data availability, a unified developer experience, privacy and on-chain governance.
Shards (Towns)
Shards are called towns in Uqbar and each town has different rules and regulations. For example, sequencing times and data availability methodology across towns will likely look vastly different. Some towns might require fast sequencing times for fast finality, whereas others might not require such fast sequencing times if finality does not need to be sub-second.
How data is made available across shards will likely be different too. For example, some towns might use validiums for data availability, whilst others might use volitions for data availability, and so on. The important thing here is that each town does utilise a data availability solution to avoid itself from becoming ‘locked’ (e.g. from nodes not being able to compute the balance of every account at a given state because data is not available, therefore a new state is unable to be propagated).
Flexible Time-to-Finality Finality
Finality across towns in Uqbar is customisable and each town will have a different time-to-finality depending on its own requirements. Shards that want faster finality (e.g. a CLOB) will likely require node operators that have specialised resources for executing proofs. There are two types of finality in Uqbar, business and settlement finality.
When it comes to business finality, Uqbar classifies this as the time it takes for x transaction to be sent to a sequencer and for a sequencer to verify x transaction. The second type of finality in Uqbar can be defined as ‘settlement finality’. Settlement finality occurs after business finality and once a sequencer has batched all transactions from users, submitted them to a prover, had a proof generated by a prover that then submits the proof to Starknet, posted state changes the transaction caused to Starknet for data availability and finally called the settlement contract on Starknet to record and update the new stored state of a particular shard.
In a nutshell, business finality is once a sequencer has received and signed confirmation to a user on Uqbar (execution layer), whereas settlement finality is when the settlement layer (Starknet) has verified (via a contract on Starknet) that a proof being generated is valid. Having a proof verified on a settlement layer gives a user a higher guarantee that their transaction will not be rolled-back or tampered with.
Figure 1 — Uqbar’s Transaction Lifecycle and Data Flow using Starknet as a Settlement, Consensus and Data Availability Layer
Inter-shard Interoperability
Trust-minimised bridging is possible between towns in Uqbar. Users send assets to a ‘burn’ smart contract in their ‘origin’ town and include what destination town they would like to bridge their assets to in the payload. After a user has indicated their cross-town intent, the ‘burn’ smart contract increments the nonce of the origin town to keep track of the sequence of the transaction.
Afterwards, the destination town claims the asset from the source town by providing a merkle proof of the burn state, which is verified via a settlement contract on the Layer 2 (Starknet). When a user’s bridging transaction is verified by the settlement layer (Starknet) the user is able to bridge the assets and amount specified in the original burn transaction payload to be used on the destination town.
Inter-shard Composability
There is no such thing as slots or epochs in Uqbar. Transactions are sequenced depending on rules and regulations governing a town. This unlocks experimental composability across towns. Composability leverages atomicity, meaning either a transaction executes within a given timeframe, or it doesn’t. In the context of Uqbar, it is possible for towns to have different ‘clocks’, meaning town clocks do not have to be synchronised.
As a result, it is possible to bridge to another town from a source town, send a proof to the destination town and have it sequenced before the destination town has itself sequenced transactions to Starknet L2 to be settled. Because there is no such thing as a clock in Uqbar, synchronous composability across towns is possible, a property that is not possible in other asynchronous execution layers.
Customisable Data Availability
Data availability is a crucial element of Uqbar’s architecture because full nodes need to be able to verify the correctness (integrity) of state updates to the settlement layer (Starknet). The zero-knowledge proofs guarantee computational integrity (i.e. that the proof was generated correctly) but it does not guarantee integrity of the data used in the actual proof generation. If a block producer proposes a block without all the data being available, it could reach finality whilst containing invalid transactions. To avoid this, a data availability solution is needed for zero-knowledge execution layers such as Uqbar.
Data availability can range from on-chain (where all transaction data is posted on-chain and verified by all nodes) or off-chain (where data is stored/made available in another layer and a cryptographic commitment is published that proves the availability of the data in an off-chain location). There are many solutions to solve the data availability problem off-chain (when data is being withheld when blocks are being proposed) and they range from data availability sampling, to data availability proofs to data availability committees.
In Uqbar, each ‘town’ (shard) will have the opportunity to customise and choose their own data availability solution depending on their needs. For example, one town might choose to use validiums for data availability, whilst another town might use volitions for data availability. The economics for data availability solutions per town will be different and will depend on the option a particular town has chosen. Any data availability layer solution comes with a cost that towns can weigh trade-offs of before deploying on Uqbar. Uqbar towns will always have the data availability layer option of Ethereum as a failover (on-chain) if other solutions (off-chain) are not optimal for their needs.
Figure 2— Data availability customisation options available to Uqbar’s execution layer
Unified developer experience
For Uqbar developers, infrastructure is inherently built in for free (e.g. p2p messaging, identity, version control is taken care of, developers just need to focus on the business logic). This makes it a suitable base layer to build complex applications on (e.g. games). The outcome of only needing to focus on business logic is increased speed of innovation. This is as a result of application developers spending less time on platform management (like they do now in web2 and web3) and more time on actual contract logic (as all platform, network, identity, etc. is automatically handled for them by Urbit).
Uqbar application developers are programming front-end and back-end in the same language (Hoon). This again amplifies the speed of innovation on Uqbar as any deployed Hoon code could be front-end or back-end, which can be re-used by any other developers depending on their needs. Essentially all developers and all applications speak the same language, front-end and back-end, which is Hoon. This unified developer experience greatly increases collaboration and innovation in Uqbar’s ecosystem.
Privacy
All of the data/code in Uqbar (and Urbit) is stored in a single binary tree of integers. Every computation performed in Uqbar (and Urbit) is a manipulation of a sub-tree of integers. As Uqbar is a binary tree of integers, it is easily merkalisable and therefore suitable for merkle trees. Merkle trees create the ability to prove certain data is included without sharing all the data, which makes it very suitable for zero-knowledge proofs. Zero-knowledge proofs involve one party (a prover) proving the truth of a statement to a second party (verifier), without the prover revealing all of the statement’s contents or revealing how they discovered the truth.
Ultimately zero-knowledge proofs facilitate privacy as users can prove a statement (e.g. a user wants to transfer x amount of assets from one wallet to another) without giving away to the verifier the exact metadata (e.g. the amount of assets or what the asset is in the transfer). The verifier is able to verify that the user in this example can indeed transfer their assets to another wallet without knowing the amount of assets or what the asset is. After verification, the transaction is executed on-chain, all-the-while a user is assured that their activity on-chain is undiscoverable by outside parties. In this sense, all users are assured that their transaction data is private on Uqbar.
On-chain Governance
As it stands right now, most on-chain governance in Uqbar is being done in a relatively centralised way by Uqbar’s development DAO that mainly makes decisions on upgrades of the Uqbar’s settlement layer smart contract on Starknet. However, in the future it is likely that Uqbar’s governance will decentralise over-time. For example, governance might be used to vote on towns being proposed to launch on Uqbar in the future.
Decentralised / Permissionless
Any validator can become a prover or a sequencer. In practice, there will likely be a spectrum of some at-home sequencers and some professional node operators, depending on the frequency of proving required by a town. In the future, any town will be able to propose to launch on Uqbar and any validator will be capable of becoming a sequencer or a prover on the network.
After understanding what Urbit is, the problems of traditional operating systems it solves, the similarities with blockchains it has and why it is the ultimate operating system to build a blockchain on, we can begin to envision the types of unique use-cases that Uqbar will spawn. In particular, it is likely Uqbar will propagate a new era in DAO tooling, NFTs beyond the blockchain, web3 (social media) and gaming.
When it comes to DAO tooling as a use-case, Uqbar will enable communities to form in a much more decentralised manner than ever before. For example, it will be possible for DAO members to activate an Urbit desktop that has programs pre-installed that are specific to the DAO (e.g. an application to vote in governance).
Uqbar will unleash a new era for NFT use-cases too, as we begin to see NFTs being integrated wholly and natively into applications that exist outside of Uqbar’s blockchain (e.g. use an NFT to obtain discounts at a supermarket site). NFTs created on Uqbar can be used across Urbit wherever an owner can authenticate their Urbit identity. It is not hard to imagine a variety of use-cases that come about as a consequence of NFTs being able to be used beyond the blockchain. Another example might be that an NFT is required in order to co-program smart contracts that a DAO is developing through an integrated development environment that exists as an application on Urbit. The potential basket of use-cases here is really unlimited.
Any communities that develop on Uqbar will be able to communicate natively with each other through decentralised social media applications built on Urbit. For example, a decentralised venture capital community can coordinate decisions on a communication platform such as Escape and then propose a confirmation of transaction intent on the Uqbar blockchain via Escape. Uqbar will be able to natively interpret intent from community members on applications that exist off of the blockchain.
In turn, Uqbar nodes have the ability to execute upon transaction intent signalled on communication platforms outside of Uqbar. Identity, transactions and applications will all be natively integrated through one operating system. Not to forget that all applications on Uqbar are self-hosted and private, so all communication channels have no way of being surveilled by intermediaries. In the not so near future, centralised communication channels such as Discord and Twitter could become obsolete.
Uqbar will unlock creative use-cases that were not possible previously too, due to the sheer execution power that Uqbar has as a result of being built on top of Urbit. In particular, because of the unified and zero-knowledge environment that Uqbar capitalises on, creative use-cases such as gaming and visual art experiences will improve monumentally as Uqbar’s native networking and unified functional programming experience orchestrates unprecedented composability. Today, NFTs often only represent data that is hosted elsewhere (e.g. an NFT has a hyperlink, which directs to a JPEG file hosted on IPFS). Tomorrow, on Uqbar, NFTs will represent data that is hosted natively, on Urbit or Uqbar, fully scalable, online and available.
Uqbar’s Testnet and Ziggarut Developer Suite launched on September 25 2022, when it was announced by Hocwyn-Tipwex at the Assembly conference in Miami. Developers are currently building their first unified, private and composable applications on Uqbar. If all goes well, Uqbar is planning to launch their Mainnet in Q2 2023.
To conclude, Uqbar is a decentralised network that leverages the best properties of Urbit and blockchains to create a private, unified and composable environment for on-chain and off-chain data. Uqbar is recreating the internet by building a blockchain on top of Urbit’s operating system, an identity-driven peer-to-peer, deterministic system that uses a functional programming language called Hoon. Uqbar itself acts as an execution layer as part of a modular blockchain stack, which is likely to settle transactions on Ethereum to begin with.
There are many similarities between the Urbit and blockchain stack that have not been assembled together to create one unified experience before. Uqbar is venturing into the unknown and embarking on a mission to solve existing problems of blockchains such as fragmented middleware, expensive versioning and points of centralisation by building a blockchain on top of Urbit, which fundamentally solves most major problems of blockchains whilst enabling new types of use-cases that are not possible in blockchains today.
We cannot begin to imagine the new types of use-cases that will be possible on Uqbar that come about as a result of combining two groundbreaking p2p technologies in Urbit and blockchain. However, it is not hard to anticipate a variety of use-cases that simply do not exist on the internet today. Financial assets that natively integrate with applications outside of the blockchain. Reputations being built with intrinsic value through accessing applications with Urbit ID that can be used within Uqbar. Art that is actually stored on the blockchain. Synchronous, multiplayer actions being taken by members of DAOs.
The amount of use-cases that will be unlocked with Uqbar is unlimited. Uqbar is fundamentally recreating what the internet is and where it came from.
Acknowledgements:
Thanks to Erwin Dassen, Gary Lieberman, Brian Crain, Jennifer Parak for their contributions, thoughtful insights and review of this article.
Xavier Meegan is Research and Ventures Lead at Chorus One.
Medium: https://medium.com/@xave.meegan
Twitter: https://twitter.com/0xave
Chorus One is one of the largest staking providers globally. We provide node infrastructure and closely work with over 30 Proof-of-Stake networks.
Website: https://chorus.one
Twitter: https://twitter.com/chorusone
Telegram: https://t.me/chorusone
Newsletter: https://substack.chorusone.com
YouTube: https://www.youtube.com/c/ChorusOne
Uqbar is a one-stop coding environment that makes writing and deploying smart contracts simple, efficient, and secure.
Website: https://uqbar.network/
Twitter: https://twitter.com/uqbarnetwork
Discord: https://discord.com/invite/G5VVqtjbVG
GitHub: https://github.com/uqbar-dao
Blog: https://mirror.xyz/0xE030ad9751Ca3d90D4E69e221E818b41146c2129
At Chorus One, we pride ourselves in being a full-stack partner to the protocols we choose to operate and support. This goes beyond the highly available infrastructure we provide to secure and maintain networks. It includes assisting in ecosystem-building via our ventures and business development teams, as well as participating in network governance and — most notably — deep research. Since our inception, we have been at the forefront contributing to core topics of interest in Proof-of-Stake such as liquid staking.
In recent months, we have shifted a big part of our research focus onto a complex topic that underpins the core fabric of any crypto protocol: MEV (Maximal Extractable Value). This emerging field deals with the value that can be extracted through reordering transactions in the block production process. (A collection of resources on MEV can be found here).
MEV has become an ubiquitous topic for many ecosystem participants. Primarily being a validator, our position in the network places us at a spot within the MEV supply chain that comes with great power, thus also great responsibility. Generally speaking, our mission is to maximize freedom for crypto users and to contribute to the creation of long-term sustainable, user-owned decentralized network infrastructure. Since MEV is a crucial domain that — if not adequately dealt with — might threaten the mission we are set towards; we recognized that we should leverage our expertise and resources to contribute to the MEV space in a way that ultimately benefits networks and their users.
The goals we want to contribute towards in the MEV space are two-fold. On one hand, we aim to make visible and help minimize extraction of value from users through e.g. front-running, sandwiching, and other exploitative practices. On the other hand, we strive to redistribute revenues from non-exploitative MEV that comes into existence from market inefficiency to our delegators that contribute security to the underlying network.
The rest of this article lays out the core pillars of our approach to MEV providing examples of our existing and planned engagements in the area.
What is MEV and how does it impact networks and their users?
Before deciding how we should engage with MEV, we seek to understand what we are dealing with. We are proponents of the open-source crypto ethos and don’t want to keep the information we are gathering to ourselves, but rather share it with the wider ecosystem. Thus, the first pillar of our MEV policy is Transparency. We are actively researching, building dashboards, and publishing other materials to create a shared understanding and to help lighten up the “dark forest” that is MEV.
Our exemplary work in the MEV Transparency domain: Dune Analytics Ethereum MEV dashboard, MEV Extraction Twitter bot, various MEV-related articles (e.g. our series on MEV on Solana).
How can we help to minimize negative externalities of MEV?
As a result of our research effort, we deeply understand MEV in the context of the ecosystems we are a part of. We recognize that MEV can pose negative externalities to users and ultimately the protocols they are trying to utilize. We are actively engaging to help minimize negative externalities in various ways, depending on how deep our engagement in the respective ecosystem is. This can include creating awareness and participating in the dialogue around MEV, research on related problems, as well as supporting and building solutions seeking to minimize exploitative MEV and to decentralize MEV extraction.
Our work in the Network Sustainability domain: operating and participating in public discourse and communities of block building solutions such as Flashbots, investments in projects seeking to minimize front-running (including e.g. Anoma and Osmosis). We have additional projects in this domain in the pipeline and are looking into operating infrastructure to help decentralize block building and relayer infrastructure.
How can we optimize and distribute MEV rewards to our delegators?
It would be hypocritical to say we are in this for the good of it only. There are clear incentives associated with engaging in MEV. Practically speaking, we are looking to optimize the return we can achieve through MEV and pass it through to our delegators creating a differentiated service while helping to improve network usability, security, and ultimately sustainability via the first two of our MEV pillars (see also Phil Daian’s early post “MEV wat do?” on this topic).
For institutional clients that want to offer staking to their users, we are happy to assist in navigating the space and finding the optimal solutions as part of our white label staking services.
If you are building in the MEV space, are trying to understand how MEV will affect your protocol, or are interested to work with us on research topics, feel free to reach out to us through the appropriate channels:
Research: research@chorus.one
Ventures: ventures@chorus.one
Sales: sales@chorus.one
