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

Our friends at Staking Rewards conducted a massive study that put together interviews with 16 key players from the staking industry (including e.g. Chorus One, Staked, Staking Facilities, and others) and results from a user survey taken by 224 stakers.

Read key takeaways from the study here and find the complete study including charts showcasing results from the survey here.

Aside from covering stakeholder views on incentivization and governance, upcoming protocols, and the future of staking, some of the most interesting insights come from the user survey. More than 50% of participants stated that they would be fine with using a custodial solution. Another insightful chart shows the answer users gave to the factors they use to evaluate staking providers:

"What are the most important aspects when choosing a staking provider" - Staking Rewards User Survey

As expected, fees play a major role, but it seems as if delegators are largely taking secure setups and community contributions into consideration. It is also interesting to see that the notion of requiring staking providers to stake themselves plays a minor role. A missing factor that would have been nice to cover is whether users care about decentralization when making the decision to stake.

Gavin Wood announced the launch of Kusama, Polkadot’s “canary” network, which will be used to test the protocols and code that will be deployed as the official Polkadot network, which is set to launch at the end of this year.

The Kusama network will utilize a staking token (KSM) that is 1:1 mirrored from balances of the official DOT distribution. The purpose of the network is to provide a long-term testing ground for all technologies and mechanisms, as well as updates to them, before they are deployed on the official Polkadot network. The Web3 Foundation reserved a portion of 100,000 DOTs (1% of the total supply at launch) as an “eventual incentivization for Kusama’s stakeholders and community”. Likely this means that contributions to the network and participation will be rewarded from this pool to some extent.

In another post, the Polkadot team went deep into the governance protocol that the network will utilize. The potentially most complex blockchain governance mechanism to date is centered around on-chain token voting and a rotating set of council members. Overall, the protocol introduces multiple checks and balances to ensure that only decisions that are beneficial to the network are actually adopted.

The Ethereum research team answered a second round of questions around the project’s upcoming migration to a sharded Proof-of-Stake network. Key things covered include incentivization and penalties, timelines, as well as how the current Ethereum chain will migrate. The idea is to fold the current chain into a shard of the new system as an execution environment. Eric Conner summarized key insights in a tweet thread:

Staying current with critical validator updates takes a lot of time and attention. Doing this also requires monitoring many communication channels, across multiple platforms. The Decentralized Staking Defenders want to make this easier. We started posting daily lists of critical validator updates, as well as a master update schedule. We're also tweeting the daily updates @stakingdefense. Please take a look and let us know how we can make the updates more useful to you.

TEZOS DEXter - Development team camlCase is building a token exchange protocol inspired by Uniswap (another Uniswap-like protocol is also launching on BinanceChain soon). The announcement is interesting for two reasons: 1.) there are no tokens on the Tezos blockchain yet, and 2.) the protocol will support earning staking rewards on XTZ, while simultaneously earning fees for providing liquidity to the protocol. The design of Tezos’ staking protocol that only requires validators to lock their tokens and assume slashing risk allows this natively. In designs where all staked tokens are locked (e.g. Cosmos), the usage of staked assets in other decentralized finance applications could be achieved by creating tokenized representations of staking positions (see delegation vouchers).

SOLANA’S KEY TECHNOLOGIES - The Solana team is putting out a series of blog posts covering details of the 7 technologies that make Solana the most performant blockchain network to date. Solana’s design is radically different to other PoS networks: read about the key innovation Proof of History to understand the basic approach. Multicoin also covered the concept of a global clock in a BFT system in an article. If you’re keen to dive deeper into Solana consensus, transaction forwarding, VM, replication and block propagation are covered separately.

NEAR PROTOCOL RAISE - The NEAR team announced the closing of an investment round of $12.1mn raised from MetaStable, Pantera, Coinbase, and others to continue to build their sharded PoS network with a focus on scalability and developer experience. Together with the raise NEAR announced the upcoming launch of a Nightshade (their sharding protocol) testnet and a beta program for developers that are interested to launch their applications on the NEAR mainnet, which is also targeted to launch at the end of this year.

PS: The Chorus One team is at BUIDL Asia 2019 and surrounding events. Let us know if you are in Seoul! There is also a Tezos Meetup on the 31st July in Berlin, where I (Felix) will be present.

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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.