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

As most of you reading this probably already realized, Facebook and partners announced their “cryptocurrency” Libra with aims to become a global payment currency and the basis of a fundamentally new financial infrastructure. Overall, the vision resembles the concept of an open financial system and programmable money brought forth by Ethereum, while staying grounded in the fiat world through a stablecoin-esque, reserve-backed digital currency.

The Libra blockchain is governed and validated by up to 100 entities (find founding members of the Libra Association and requirements to become a member here) and will use a two token model: a private security token and the actual Libra token, which is backed by government securities and other assets that are used to keep the value of Libra stable. Blockchain-related founding members of the Libra Association include Coinbase, Xapo (custody), Anchorage (custody and blockchain infrastructure) and Bison Trails (blockchain infrastructure).

With the Calibra wallet planned to be embedded in the Facebook social suite, the payment system seems to resemble a Western version of WeChat Pay. Libra is based on sound architectural design choices (e.g. smart contracting language Move; LibraBFT, based on HotStuff (which is itself inspired by Tendermint and also used e.g. by Celo). Read Alex Skidanov’s thread for a comparison between Tendermint and HotStuff). Libra embraces open-source values (Apache 2.0 licensed, run as a Swiss not-for-profit organization).

To say the least, Libra is both a powerful competitor and a potential on-ramp for the adoption of other cryptocurrencies. It could be argued that Libra will need to engage with regulators, which could be of great value for the crypto space in general. Additionally, with the most used word in the technical Libra whitepaper being validator (180 mentions!), the announcement definitely put validation (and staking (?)) on the map for a larger audience.

For some of the best takes of what Libra means for the crypto space enjoy the following two tweets(torms):

The first conference focused on the Cosmos ecosystem titled “Interchain Conversations” took place in Berlin on the 13th and 14th of June. The event was attended by many Cosmos zone developers, validator teams, Tendermint and Interchain staff, as well as other Cosmos enthusiasts. It was followed by a hackathon on the weekend, where around 50 people developed applications using the Cosmos SDK toolkit. Both events were filled with insightful talks, interesting conversations, and innovative hacks. Adriana from KalpaTech recorded and uploaded some of the conference talks here (official recordings are in the works).

A tweetstorm on the winning hackathon participants can be found here. There were two staking-related projects. The Chorus One team collaborated with Sikka on a project we call “Delegation Vouchers”. Korean validator team B-Harvest worked on a similar concept (“Staked Atom Atomic Swap”). Our delegation voucher implementation, which is an alternative staking design that allows for tokenization of staking positions useable in decentralized finance applications (#StakingisDeFi), was among the winning entries. We published a writeup of the design concept, its potential use cases, and advantages to the current implementation. Find it here.

Martin Dyring-Andersen organized a validator speed dating event at the conference. The purpose was for staking networks to meet interested validators. To keep the idea going, the Decentralized Staking Defenders started the “Find a Validator” category on their forum.

This category is for:

  • Staking networks to describe their project and gauge interest from validators.
  • Validators to express their interest in staking on various networks and ask any questions they may have.

For key takeaways from the Interchain conference, especially focused around this validator <> network relationship, check out Figment’s summary here.

ALGORAND AUCTIONS - The first of Algorand’s dutch auctions concluded at the price of $2.40 per ALGO (0.25% (25mn ALGOs) of the projected supply after 5 years were sold). This implies a reasonable market cap of $24bn, about the same as that of Ethereum, which feels unsustainable. The auctions also include a refund clause. It allows purchasers to receive a refund of up to 90% of the purchase price within a year of purchase.

Algorand auctions excludes participation for a variety of jurisdictions, which makes it difficult for validators operating from these jurisdictions to join the network.

TOUR DE SOL - Solana launched their new network page with explanations of the two roles in the network (validation and storage), as well as a first announcement of their testnet competition “Tour de Sol”, which will probably start in August this year.

TEZOS FORK - Early contributors to the Tezos codebase and grant recipients OCamlPro appear to be planning to hard fork Tezos this September and are forming an SPV to raise funds to do so. OCamlPro apparently violated terms of their grant by not open sourcing some or all the code they built that was funded by the grant. Tezos documents their side of the story here.

Chris' take: Forking is a known risk for any blockchain. It is one of the risks that people know can happen, yet typically choose to believe won’t happen, until it does. The same goes for hoping grant recipients act in the best interests of the network. Social pressure within the network is usually enough for most recipients to resist the temptation of trying to profit from innovations built with grant money.

From a staking perspective, if the fork happens, it will be interesting to see how bakers respond. Will they choose one network over the other or will they operate on both? Only time will tell.

DECENTRALIZATION - LongHash compared power distribution in PoW and PoS cryptocurrencies. Cosmos community member Asmodat wrote about decentralization and minimizing risk in PoS introducing his criteria to evaluate and rank validators.

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Staking Economy is written by Felix Lutsch from Chorus One with assistance from Chris Remus, operator of the Chainflow validators. 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.