Staking in a Multi-Chain World - Key Analytics & Concepts to Know
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The document discusses the evolution and concepts of staking in a multi-chain world, highlighting key topics like proof of stake (PoS) algorithms, liquid staking, and the application layer's role in decentralized finance (DeFi). It details the various staking mechanisms and innovations, such as liquid staking that enhances utility and accessibility while addressing limitations of traditional PoS. The conclusion emphasizes staking's importance in web 3.0 and its potential to unlock new economic opportunities.
![Term Clarification
● Yield farming/liquidity mining = depositing liquidity, earning
tokens (inflation)[example: Compound, PancakeSwap pools]
● Staking = depositing liquidity in one asset, earning fees from
revenue + inflation [example: veCRV, xSUSHI]
● Liquidity providing (LP) = depositing liquidity into a pool of
assets, earning fees from revenue [example: Uniswap]
● Pool 2
● Different definitions in different protocols](https://image.slidesharecdn.com/stakingwebinar-211216205634/85/Staking-in-a-Multi-Chain-World-Key-Analytics-Concepts-to-Know-22-320.jpg)
Staking in a Multi-Chain World - Key Analytics & Concepts to Know
- 1. Staking in a Multi-Chain World - Key Analytics & Concepts to Know December 2021
- 2. Agenda ● Intro to PoS & Consensus Algorithms ● Liquid Staking ● Staking in the Application Layer ● The Future of Staking
- 3. A quick update about ITB
- 5. New Algorand dedicated analytics ● 150+ unique indicators dedicated to ALGO across 7 categories: ○ Financial ○ Network ○ Ownership ○ Exchanges ○ Social ○ Derivatives ○ Capital markets
- 6. Intro to PoS & Consensus Algorithms
- 7. Proof of Work ● Establishing agreement without having to trust a third party ● Byzantine Generals Problem ● Rewards for contributions to a decentralized network “The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
- 8. From Proof of Work to Meme Coins ● Once Bitcoin proved it could be done, innovation and speculation followed ● Dozens of consensus algorithms in base layer ● Hundreds of incentive systems in application layer
- 9. Proof of Stake ● The dominant consensus algorithm ● Deposits validating transactions ● Capital securing the network ● More accessible ● Lower (0.05%) electricity consumption ● Different implementations
- 10. Delegated Proof of Stake ● Consensus validated only by set of delegates ● Elected or assigned ● Increasing scalability, reducing decentralization ● Cartel risk Image source: Medium
- 11. Proof of (Staked) Authority ● Similar to DPoS ● Staking reputation rather than capital ● Known entities, typically assigned ● Same trade-offs as DPoS
- 12. Smart Contract Platform Comparison
- 13. Liquid Staking
- 14. Problems with PoS ● High minimum requirements (tokens + hardware) ● Illiquid - locked, withdrawal times ● Not composable
- 15. Unlocking Utility ● No minimum ● No withdrawal periods ● Using staked tokens as a “money lego” ● Building on top of staking Image source: Blockspaper
- 16. Liquid Staking Infrastructure ● Smart contracts, validators and incentives
- 17. Liquid Staking Share in Ethereum ● Currently 20% from 3% in January
- 19. Liquid Staking in Other Chains ● Lido in Solana, Terra and soon Polygon ● PStake launch for Cosmos hub ● Early stages
- 20. Staking in the Application Layer
- 21. DeFi Staking ● Around 2018-19, protocols started testing inflationary rewards to incentivize growth ● Synthetix staking in 2019 ● Myriad of different versions in 2020-2021
- 22. Term Clarification ● Yield farming/liquidity mining = depositing liquidity, earning tokens (inflation)[example: Compound, PancakeSwap pools] ● Staking = depositing liquidity in one asset, earning fees from revenue + inflation [example: veCRV, xSUSHI] ● Liquidity providing (LP) = depositing liquidity into a pool of assets, earning fees from revenue [example: Uniswap] ● Pool 2 ● Different definitions in different protocols
- 23. Building on Top of Staking Image source: Abracadabra
- 24. The Future of Staking
- 25. ETH 2.0 Staking ● The merge - Q2 2021 ● No more Proof of Work ● No changes in L1 fees
- 26. ETH 2.0 Staking
- 27. Cross-Chain Staking ● Being able to move staked positions across blockchains ● BETH in Terra ● Cosmos IBC for staking Image source: Symbol
- 28. Crazy Ideas With Staking ● Smart contract platforms as new economies ● Staking as GDP-mining ● Earning value from all networks you participate in Image source: Collective Campus
- 29. Conclusions ● Staking is a critical piece for web 3.0 ● Incentive systems for L1 and dapps ● Liquid staking unlocking capabilities ● Endless possibilities…
- 31. Thank You! Questions? Lucas Outumuro Head of Research at IntoTheBlock Email: loutumuro@intotheblock.io Twitter: @LucasOutumuro
Editor's Notes
- #6: A lot of people requested us to include new analytics of L1’s, so here we are. These analytics are freely available even for those not registered -> check website/source