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

News & Updates

The specification of the first phase of Ethereum’s plans to launch a sharded, scalable Proof-of-Stake network is on track to be finalized by June 30. The launch of the beacon chain, which will be responsible for all staking-related logic, appears to be on the horizon with implementer team Prysmatic Labs delivering the first public testnet to the Ethereum community. Chris joined the testnet and wrote about his experience:

“I felt excited to see Prysmatic launch their ETH2.0 testnet to the community. By the time I saw the tweet announcing the launch over 500 validators had come online. Over 900 validators were operating by the time I joined a couple of days later. Contrast this to a network like Cosmos, whose testnets ran with just over 100 validators at their peak. It will be interesting to see how many of these early ETH2.0 validators drop out and how many will stick around to run their validator well.”

Binance CEO CZ stirred up Crypto Twitter after putting a reorg of the Bitcoin blockchain to recover part of the 7,000 BTC (~$40mn) stolen from exchange controlled wallets following a hack up for discussion. Such a reorg would technically be possible due to the notion of probabilistic finality in Nakamoto consensus (check out this article for a comparison of finality in different consensus protocols).

Antonio Juliano’s tweetstorm explains how exactly a reorg could be accomplished. Many people argue that even if economic incentives for miners would work out, the required coordination and Bitcoin’s social contract of immutability will make pulling off a reorg much harder/impossible. In the end, CZ made the call not to pursue this approach.

TERRA LAUNCH - Terra, a decentralized stablecoin project built using the Cosmos SDK launched with the help of many familiar Cosmos Hub validators. Terra seeks to create a basket of stablecoins backed by their staking token LUNA and an economy bootstrapped by Asian e-Commerce partners. To learn more about Terra, check out the launch video and the Chorus One’s validator announcement post.

LIVEPEER'S ANNIVERSARY -  Congratulations to the Livepeer team on going live a year ago. Delegated LPT stake has increased from 16,173 LPT staked to 9 transcoders to 4,890,761 LPT staked to 25 transcoders since then, as seen on this dashboard from Scout.

NYC BLOCKCHAIN WEEK - Next week is NYC Blockchain Week. The quality of events varies widely, as many of you who’ve attended events during it in the past already know. This spreadsheet is the most comprehensive event list we’ve found. A couple free, not “invite only”, staking-related events you may want to think about attending include this event on Validator Economics, a Polkadot meetup, and PoS Validators and Protocols hosted by Solana.

Chris lives in NYC and will be attending the latter. Don’t forget to say hello to him if you attend too! You may also want to check with the community managers of your favorite PoS projects to see if they’re planning something that isn’t covered in the list.


Opinions & Observations

Proof-of-Stake Research Report

Our friends at Staking Rewards published an extremely comprehensive report about PoS and how it compares to PoW. The report has everything starting with definitions in PoS, data highlighting the trend towards PoS, advantages in terms of scalability and finality, comparisons and explanations around decentralization, possible attacks, the cost of network security, environmental impact, as well as governance and community engagement.

How to Choose a Validator

Will Little and Figment Networks published this post about how to evaluate validators when choosing one to stake with. The post is focusing mostly on the value of contributions that improve the network such as tooling, educational content, and participation in governance and warns about the perils of low fee validators. While a useful post, it shouldn’t necessarily be viewed as a comprehensive set of criteria. For example, important considerations like the security of a validator’s setup, how decentralized the current stake distribution is, as well as a validator’s underlying values aren’t mentioned. Nevertheless, delegator education is an important topic and it is great to see posts like this published.

The Value Proposition of Atoms

In this post, Charlie Morris of venture capital fund CMCC Global makes a case for how and why the cryptocurrency native to the Cosmos ecosystem, Atoms, could accrue value to token holders. The post is based on a clever analogy from medieval times, where lords provided merchants with physical security to trade on markets in exchange for a tax. Charlie compares this to the role of the Cosmos Hub in the interoperable ecosystem of blockchains, which will charge transaction fees to securely route assets across zones. The article also mentions the potential of competing hubs emerging within this ecosystem, it will be interesting to see if the Cosmos Hub can establish its position as the center of the Cosmos ecosystem.

Another way Atoms could accrue value not covered in the article that multiple parties in the Cosmos community are currently exploring is lending the security of the Hub to other zones in the network, a concept referred to as shared security or interchain collateralization.

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Staking Economy is written by Felix Lutsch from Chorus One with assistance from Chris Remus, operator of the Chainflow validator. Opinions expressed are our own and do not necessarily reflect the opinions of Chorus One. All content is for informational purposes only and not intended as investment advice.