We are about to witness a wave of high-profile Proof-of-Stake projects launch their main networks. At Chorus One, we have spent more than a year researching the ecosystem, designing our infrastructure, and most importantly, actively participated in multiple PoS networks. This led us to experience different approaches to bootstrap a staking community.
A key question is how to transition from testnets to a permission-less, decentralized network with millions of dollars of value at stake. This post summarizes the problem statement and introduces the concept and value proposition of incentivized testnets. Another follow-on post will cover more concrete insights, learnings, and recommendations on how to ideally bootstrap a staking community utilizing testnet competitions.
The goal for a PoS network is to be maintained by a multitude of independent, geographically diversified entities (validators). Voting power should (ideally) be somewhat evenly distributed across these validators to minimize the likelihood of a small number of actors wielding outsized control over the network. A genuinely decentralized network will also assist with network stability and favorable regulatory treatment.
Operating blockchain nodes costs money. There are costs related to provisioning and configuring the infrastructure. But there are also, often overlooked, costs associated with the time and skill (human capital) that is required to set up, operate, and maintain a validator.
Proof-of-Stake networks have a token that is supposed to compensate validators for these costs. But rewards are only paid out once the network is live. Who is incentivized to run nodes on a testnet with no compensation?
One approach is to assume that the community aka investors holding the token will run nodes themselves and will prepare adequately for the mainnet by participating in testnets. In reality, it is likely that the best node operators aren’t already invested in the project. The skills and capacity for investing capital in early-stage projects can be totally orthogonal to the skills required to operate a node well. Also, having investors as node operators will probably result in a more centralized network, especially considering concentrated token distributions.
Some node operators will participate in testnets in expectation of delegations on the mainnet. This implies the existence of some form of delegation mechanism. But what about validator skin in the game? Many projects emphasize the need for validators to have some economic stake in the project. This mostly translates to requiring a minimum buy-in for validators, which narrows the set of potential node operators to those that have enough capital to invest relatively large amounts themselves.
Additionally, because there are no economic incentives to participate in testnets, operators won’t put in too much effort to seriously test the software or optimize their architecture and operations. Finally, the choices of networks to validate on for node operators are increasing. Joining a testnet has associated opportunity cost for validators. In conclusion, PoS projects need a way to convince good and dedicated node operators that will increase the value of the network to join their ecosystem.
As a summary, the high-level goals to accomplish before launching a PoS mainnet are:
An emerging trend is to run an incentivized testnet competition that rewards participants with tokens based on their performance during the competition. The idea is to bootstrap a community of high-quality node operators while at the same time testing and improving network performance, robustness, incentives, and other features in adversarial conditions that resemble a live network.
The project that first established and carried out such a competition is Cosmos with their “Game of Stakes” (GoS). Multiple PoS projects are currently exploring their own testnet competitions. We’re aware of the Enigma incentivized testnet and many others that didn’t announce their plans publicly yet.
The common thread across these competitions is the desire to battle test the protocol’s cryptoeconomic design, network performance, and features such as governance and delegation. Often additional rewards (bounties) are offered to participants that scrutinize each part of the system to uncover code or incentive flaws.
Going back to the PoS network launch goals stated above, we can see that an incentivized testnet competition is an amazing tool to realize them:
Another positive side-effect of a testnet competition is that it enables project teams and validators to test and establish communication channels and coordination processes that will persist to the mainnet. This can include announcement and discussion channels, upgrade processes, call schedules, etc.
While GoS worked out incredibly well on many fronts, we believe that there is room for improvements for future incentivized testnet competitions. We’re always happy to share our experiences and feedback, reach out to us to learn more! A follow-on post will go into detail covering learnings and recommendations gathered from the GoS experience, our research, and conversations with validators, protocol designers, as well as other players in the staking space.
Dear Loom community,
We are excited to announce the launch of the Chorus One Loom validator today!
What drives us at Chorus One is the mission to create a more efficient and open world, where people have control over their own actions and assets. Gaming has become a big industry over the last decade and it is growing at a rapid pace. Many games have become their own little closed-loop economies. Players can buy and earn in-game items and this is becoming the primary way to monetize games.
But the assets of gamers in games aren’t truly theirs. The game economies created tend to be closed. You can’t move assets out of a game into a different game. You’re at the mercy of a company that can seize assets at will. You can’t just sell them to anyone. Or have a community fund and own a game collectively.
Blockchain, in the end, is about enabling human collaboration on a massive scale. We believe that gaming could be the bleeding edge in exploring the future of collaboration and creation. But the issue with games is that there are a lot of actions with relatively small monetary value. The low throughput and high costs of blockchains so far have made that adoption by games a big obstacle.
Loom plans to change that. Loom is a platform built on top of Ethereum that allows building large-scale decentralized applications. And the first area of focus for Loom is to create the blockchain platform for gaming. A place where games can issue assets, assets can be traded, games can become interoperable with each other and the emerging internet of blockchains.
This is a vision we believe in and we are excited to support it going forward. But besides the compelling vision, what else attracted us to Loom?
The Loom team is building cutting-edge technology, but they’re also pragmatic. They recognize that the goal is to bring blockchain capabilities to gaming, not to build fancy systems for their own sake. We think the tradeoffs the Loom team is making are solid.
It was only in January 2018 that Loom closed its funding round. Since then, they have made a massive amount of progress including launching CryptoZombies, a gamified course on Solidity that attracted an astonishing 370,000 signups.
Loom is using many technologies that we are interested in and bullish about. They are building one of the first Ethereum Plasma chains. They are using Tendermint as their consensus algorithm for the Plasma sidechain. They are planning to be one of the first blockchains to connect to the Cosmos Hub via IBC.
Now, you may ask yourself how we will be supporting the Loom Network. Here is what we will do:
We will be running a Loom PlasmaChain validator. We are scheduled to go live within the next two weeks and you will be able to delegate your LOOM to our validator in the very near future when the Loom Delegation UI is launched. Any LOOM holder will be able to earn tokens by delegating to our validator.
We will be participating in Loom’s governance and help steer the project to long-term success.
We will help the Loom team with making sure the network is stable, issues are ironed out and contribute tools for building a robust validator ecosystem.
We will publish regular updates about Loom to keep people informed about the project. These will include monthly video updates, but we also have an in-depth Loom Investment Thesis, which we will publish in the coming week.
Before we wrap up, a few words about Chorus One:
The company was co-founded by myself and Meher Roy. We have both been working in the blockchain space for many years. You may have heard us as co-hosts on Epicenter, which is one of the longest running and most popular blockchain podcasts. My involvement with Tendermint also goes long back. In 2015, I worked for Monax (then Eris Industries), which was the first user of Tendermint. In 2017, I became COO of the Tendermint team and helped run the Cosmos fundraiser and scale the organization. And just about a year ago, we decided to build a company to operate infrastructure for Proof-of-Stake networks.
Since then, we’ve assembled an outstanding team, which includes expertise in distributed systems, DevOps and information security, scaling tech companies and economic research. We are one of the leading Cosmos validators and will be launching staking services on many networks in the future.
We’d love to work with you make Loom reach the moon. Sign up for our email list and we’ll keep you up-to-date when we publish new content and when delegation on Loom goes live. You can also check out our blog for a lot of staking related content, follow us on Twitter, or join our dedicated community channels on Slack and Telegram. We would love it if you stop by and introduce yourself!
Brian Crain and the Chorus One Team
Photo from Unsplash by Matteo Vistocco.
Originally published at blog.chorus.one on February 11, 2019.
At this point it is hard to argue with the fact that most projects in the crypto space are being built on Ethereum, but there are many upcoming smart contract platforms that may present an alternative for developers. The Cosmos Network is one of these highly anticipated “third generation” blockchains. Cosmos is using a modular architecture and allows for easy developability and better scalability, if you want to learn more about Cosmos and its value proposition check out our introductory blog post here.
This post is introducing some of the top projects that are currently developing on Cosmos and what made them choose the Cosmos Network to host their applications.
IRISnet aims to build an interchain service protocol for building next-generation distributed applications. The goal is to provide an interface to integrate business services from heterogeneous systems into the Cosmos Network. IRISnet is extending the Cosmos inter-blockchain communication protocol (IBC) through standard transaction types with the goal of functioning as an adaptor of business logic from other private or public blockchains or even legacy systems.
The project is a strategic partner of the Interchain Foundation and Tendermint, who are the main driving forces behind the Cosmos Network. The IRIShub will potentially be the first hub to interoperate with the Cosmos Hub and its connecting zones. Bianjie.ai, the core team from China behind IRISnet, is currently focused on getting their hub ready for mainnet and developing the IRIS Service layer. IRISnet has started its own incentivized testnet, where participating validators can earn IRIS tokens for completing tasks. There are plans to launch a hackathon titled Game of Genesis after the final Cosmos testnet competition Game of Stakes took place. If everything goes as planned, the IRIShub will be live shortly after the Cosmos Hub, with a targeted launch date around the end of Q1 2019.
When asked why IRISnet chose to build on Cosmos, Suyu Huang from the Bianjie.ai team said the following:
“IRISnet believes in the vision of an internet of application-specific blockchains and aims to amplify the value of business applications. The interoperability solution of Cosmos (IBC) was a natural fit for this problem.”
Sentinel is building a multi-protocol network layer to provide access to services and distributed resources for P2P and decentralized applications. Their first service is a decentralized Virtual Private Network (dVPN) that allows users to redirect and mask their internet traffic through a set of high-bandwidth nodes.
Each service on the Sentinel network will be a Tendermint zone with its own network of service nodes and validators staking tokens, which will be able to interoperate within the Cosmos Network. Another exemplary service on the Sentinel network is Swixer, a cryptocurrency mixer that is utilizing cross-chain swaps allowing users to anonymously convert tokens. The Sentinel team is planning to develop a SDK to enable easy integration of third party applications that require access to distributed resources and services.
Sentinel is being built using Tendermint and the Cosmos SDK due to their core strengths in the areas of scalability, governance and interoperability:
The Agreements Network is a decentralized contract management platform aiming to serve as the legal layer for the networked world. Lawyers can generate template agreements and represent them on the network using a toolkit consisting of standard processes like signatures, payments and registrations. These templates can then be invoked and operated in an automated fashion and at scale, with the network providing data assurance for contract formation, chain of custody and fulfillment of obligations.
The Agreements Network is a Proof-of-Stake blockchain based on Hyperledger Burrow utilizing Tendermint consensus and a custom EVM implementation optimized for executing legal processes. The project’s goal is to function as a hub within the Cosmos Network through which other zones can access and interact with the legal agreements between participants stored on the Agreements Network.
The advantages of this approach are:
FOAM aims to bring location-based information to the world of blockchains and smart contracts. By combining low-frequency radio hardware with a peer-to-peer network of nodes staking the FOAM token and token curated registries (TCRs), the FOAM network is incentivizing the creation of a GPS alternative including a world map filled with information (Points of Interest). The project aims to enable parties querying the network to provide a so-called “Proof of Location” to smart contracts, which could be useful in many applications spanning from blockchain gaming to trade finance.
The team raised around $16.5 million at the end of July 2018 through an innovative token sale approach that required users to interact with the protocol before being able to sell their tokens.
FOAM will utilize Tendermint consensus in combination with staking FOAM tokens for consensus between nodes belonging to a FOAM zone. A zone in FOAM refers to a set of radio beacon nodes covering an area of the world within the FOAM network. The team is currently developing an architecture for how such zones could connect to the Cosmos Network.
TruStory is a social network application that wants to bring an end to fake news by identifying the truth behind claims through a decentralized network of topic experts. TruStory is using tokens to incentivize identifying accurate and refuting inaccurate information. In the first version, TruStory will be purely focused around cryptocurrency-related questions.
The team behind Preethi Kasireddy creating TruStory decided to develop on Cosmos for a number of reasons:
The Cosmos Network is positioned as an attractive platform to host decentralized applications. The separation of the consensus and application layer logic (ABCI) together with the modularity of the Cosmos SDK allow developers to easily compose applications with modules fitting to their use case.
Application-specific blockchains utilizing fast finality Tendermint consensus that are able communicate through the IBC protocol could help to usher in a new era of scalable and interoperable blockchain applications. We are excited to see how the Cosmos Network will evolve and are looking forward to help secure this ecosystem in our role as validators. If you are searching for validators for your zone on the Cosmos Network, don’t hesitate to reach out to us through our website or our other channels linked below.
About Chorus One
Website: https://chorus.one
Twitter: https://twitter.com/chorusone
Medium: https://medium.com/chorus-one
Slack: https://chorus.one/slack
Telegram: https://chorus.one/telegram
Originally published at blog.chorus.one on November 29, 2018.
