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

With $25.5m raised in their Series A, white-label blockchain infrastructure provider Bison Trails takes the crown for the largest non-protocol raise (to our knowledge) in the space in 2019. Congratulations!

This round shows that the market believes there is a large opportunity in operating secure infrastructure for blockchain networks. We expect this raise to increase interest in this space and hope that the team will contribute back to the ecosystem by improving tools and practices to enable diverse and performant networks.

An upcoming open-source protocol developed by the Chorus One team to allow for high availability validation on the Solana network.

Infrastructure failure handling in Proof-of-Stake blockchains is a highly sensitive topic since mistakes can mean loss of funds in the form of slashing penalties. StrongGate will allow validators to run failovers while eliminating the risk of accidental double-signing. The protocol could also be adapted to help validators automatically scale their infrastructure depending on network load, potentially reducing costs significantly, see also Solana CEO Anatoly Yakovenko’s tweet thread on the topic.

A comprehensive walkthrough on the state of token economics. Richard Li, COO of Certus One, goes into different mechanism designs currently being explored in the space providing examples and insights from other ecosystems (e.g. in-game economies).

The long read also includes some cool ideas on how validators could differentiate their service, e.g. through an insurance pool or by offering benefits like gift cards to delegators. It also teases an upcoming guide on validator economics and a fungible staking token design, so stay tuned for more content from one of the strongest validator teams out there!

Taxation of staking rewards is a highly debated topic. Are they income? Do you have to account for rewards when you receive them or when you withdraw them? Or only when you sell tokens? Is there a difference between block rewards and transaction fees? What about staking provider commissions?

The article above presents an argument for why block rewards should not be taxed as income, focusing on explaining how staking prevents network maintainers from getting diluted. There are many initiatives forming to represent the interests of the staking industry (e.g. PoSA) and aiming to educate regulators about this new paradigm of securing public infrastructure. It remains to be seen how different jurisdictions will deal with these issues.

OAN UNITY LAUNCH - The Open Application Network (OAN), formerly known as Aion, launched the Unity upgrade on November 20th. The OAN follows in Decred's footsteps and uses a hybrid consensus protocol. The OAN team developed a staking interface that allows AION holders to stake to the set of validator launch partners. You can also see the list of validators on Staking Facilities without having to login to the OAN interface. Finally, there is an updated whitepaper answering questions about incentives, block distribution, and network security.

KAVA LAUNCH - It turns out the third time’s a charm for Kava’s launch. The network launched successfully on November 14th, 4 days before Maker’s Multi-Collateral DAI went live. Congratulations to the team for responding quickly and consciously to the lessons learned and applying those lessons thoroughly and consistently to enable mainnet launch!

COSMOS VALIDATOR MONITORING AND ALERTING - Chris is building a Cosmos validator monitoring and alerting tool after receiving an ICF grant to do so. He’s published an initial spec for comment and would appreciate the community’s feedback. This initial feedback window will close in the next few days. The tool is being built to benefit any and all validators on networks built using the Cosmos SDK. It will be open-sourced when completed. If you plan to use the tool when it's available, this is your chance to help shape it to your specifications!

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Staking Economy is written by Felix Lutsch from Chorus One with assistance from Chris Remus, operator of the Chainflow validators. Join us in the Staking Economy Telegram to discuss staking. 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.