Q4 has come, what are the highlights of PoS and staking worth paying attention to?
Three-quarters of 2019 has passed, and people have entered the fourth quarter, eagerly looking forward to new opportunities in the industry. In the previous article, we explained theThe concept of staking and the overall data of the first three quartersfirst level title
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1. Forfeiture can no longer be ignored
The event of slashing in the interests of token delegators is no longer just a concept, it actually happened this year. On June 29, the first slashing event occurred on the Cosmos network. A node suffered a certain percentage of tokens slashed due to double signature. Double signature means that a node approves two transactions on the network at the same time, which has always been considered a serious misconduct.
After the node has been offline for a long time, it will be punished with 0.1% of the tokens, which is not a large proportion, but it will be locked up in the "little black room" (jailed) for a short period of time. In the process of returning to the line, the backup node of this node also accidentally participated in the network consensus process. Two identical nodes participated in it at the same time and actually constituted "double signature". 5% of the funds entrusted to this node were confiscated, and the address also Permanently banned (tombstoned) as a validator.
At that time, $1.8 million worth of tokens were staking on the node, but nearly $60,000 of tokens disappeared "overnight" due to fines. What's more serious is that the staking business of the dual-signature node may also end here.
Previously, slashing had occurred on the Tezos network, but its network design was such that only verification nodes would be punished. Of the $58,000 tokens confiscated on the Cosmos network, $7,000 was node funds, and the rest came from client.
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2. Large-scale "grabbing the beach" of exchanges
The advantage of the exchange is that it can fully host the digital assets of users. Therefore, its biggest advantage is that it can "digest" the trade-offs people need for staking to a certain extent, without transferring liquidity, and without considering the waiting time of several days between delegating and trading.
Exchanges mainly carry out staking in the following three ways:
Reward staking tokens. In some exchanges, staking can automatically obtain this kind of token reward. For example, if you hold XTZ tokens and stake them on Poloniex and Gate.io, you will automatically get the benefits of XTZ tokens, and people can also trade without unbinding time and no liquidity loss.
Alternative tokens are rewarded. For example, when staking ATOM tokens on GDAC, the trading platform will create a token named ATOMX, and you can also trade without unbinding time or loss of liquidity.
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3. Intensified competition for verification nodes
In addition to the above two points, we also found that the competition among validators is increasing day by day.
Competition first manifests itself in commissions. Take Tezos and Cosmos for example. The average rate for both networks is around 10%. Those that set rates below that figure were all closer to 40%. Looking at the lowest quintile of nodes on their respective networks, Tezos charges up to 7%, while Cosmos takes no higher than 5%. Nodes with the lowest fees on Tezos set the commission rate at 2.5%. Many nodes on the Cosmos network have a fee rate of 0. A low fee rate is beneficial to the client, but it also means fierce competition among nodes.
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4. High-quality nodes are more "sought after"
At present, there are about 30-40 well-known nodes or infrastructure providers that verify in multiple blockchains in the world, and they are all engaged in similar work on almost the same network. These players are proven, safe, reputable, and cooperate with well-known funds and exchange wallets.
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1. The PoS project "Get Together" goes online
In the fourth quarter, many PoS network mainnets or staking models will be launched.
On the one hand, people’s eyes are on the latest progress of projects such as Polkadot, Solana, NEAR Protocol, Coda Protocol, SKALE, NuCypher, Oasis Labs, Telegram Open Network, and Enigma. These projects are expected to go live in the fourth quarter.
On the other hand, many existing blockchains promised to switch to PoS consensus or support staking in the fourth quarter. Ethereum 2.0 will complete a lot of development work in the fourth quarter in preparation for its launch early next year, and Cardano will support staking in the fourth quarter. The latest progress of projects such as ICON, Wanchain, Harmony, and Aion are also worthy of attention.
One thing worth noting here: Many projects will move forward as incentivized testnets.
Cosmos first proposed this concept. The Tendermint team used this method to simulate an environment close to the Cosmos mainnet, encouraging nodes to run on the testnet for construction and stress testing.
Different from the more direct rewards before, the value of the incentive test network lies in: 1) attracting external verification nodes, and promoting the launch of the main network with experienced verification nodes; 2) providing verification node performance guidance for future professional investors and retail clients Reference; 3) Stress test the protocol in a safe and close to real environment.
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2. The initial wave of staking related products
We found that people have started to develop related products around staking, mostly to make staking easier and more efficient. The project aims to focus on:
Solve the lack of liquidity. For example, financial derivatives that allow people to trade their own staking tokens have begun to be discussed, and people have proposed concepts such as staking vouchers (staking vouchers) and bATOM.
Avoid the risk of confiscation. The risk of confiscation is worrying, but related "insurance" projects are already being developed.
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Focus on a broader market
Today, the value of tokens being staked is about $5 billion, and is expected to rise to $30 billion in the next year.
Many new networks will adopt the PoS consensus. Existing networks are considering implementing the staking mechanism. People’s awareness of participation and user performance will increase together. Many reasons will gradually increase the staking ratio in the future.
The industry needs more financial products, infrastructure, and data analysis, and this is where the opportunities lie. It is time for people to think about further strategies for staking and ways to build the entire network from different perspectives.
Note: This article is compiled from a speech given by stake.fish operations manager Jun Soo Kim at this year’s CoinDesk “invest:asia” conference in Singapore.
