A Talk with Chun Wang, Jun Soo (JK) Kim and Ric
stakefish is the leading staking service provider for blockchain projects. stakefish is running validators on Cosmos, Tezos, IRIS Network, Kusama, Loom Network, The OAN, Kava and also securing Chainlink, Algorand, Storj and BOS. In total, stakefish is currently facilitating staking for approximately $65M worth of assets.
Q: Aside from Staking-as-a-Service, do you have any additional revenue streams currently or planned?
A: Let me first preface the answer by reiterating our commitment to putting our staking services first. We will always prioritize our delegators and the projects we support before considering any additional revenue streams.
We have some additional internal projects going on that will diversify our business offerings. Not all of these will lead to strong income, but we know a few of them will eventually add long-term value to both the ecosystem and stakefish.
Q: Which value-added services do you offer to your customers?
A: We have built out some tools that are helpful for delegators on Tezos and Cosmos. We have a validator leaderboard, calculator, and staking rewards dashboard. We will constantly expand the tools we provide for our community members.
We also produce videos from presentations at various events and videos explaining how to stake different coins. We strongly value education and will keep creating fun visual content that is both fun and informative.
Additionally, we try to be as helpful as possible to the projects we support. Sometimes this means we offer feedback on technical documentation or economic design. Other times, we help on marketing or event co-hosting since arranging these solely by one project may be challenging.
We are constantly thinking of new ways to provide additional value-added services to both our staking community members and the projects we support. We are always open to feedback, so feel free to reach out at [email protected]!
Q: In your opinion what is the best way to ensure and incentivize further decentralization within the staking ecosystem?
A: I think it is first important to define what decentralization means first. Each network and its community members have drastically different definitions and targets. This naturally leads to arguments rather than productive forward looking discussions. Once a soft target or some consensus is achieved amongst community members, we will be one step closer to further decentralizing the staking ecosystem.
I wanted to show support for one mechanism however that has been gaining steam. One design that may apply to all staking protocols is “proportional slashing.” The core idea is to have a higher slashing rate for nodes that go offline within the same time frame. There are three advantages to adding this mechanism. First, stakers would have to consider stake diversification in order to hedge from aggravated slashing. Second, validators would re-consider spinning up multiple nodes with similar setups. Third, validators would re-consider using major cloud service providers so that they are not susceptible to aggravated slashing in case AWS or Google Cloud suddenly goes offline.
Q: What’s your take on 0%-Fee Exchange Staking? Is it a real danger for networks?
A: I think it is encouraging to see exchanges, custodians and funds actively participating in staking, which ultimately increases the security of Proof of Stake networks. There is no way to prevent these players from entering the validator scene and I think it is best to guide them towards active participation. The fees they decide on should be entirely up to them.
For those that are concerned about exchanges capturing the entire staking market, I want to highlight two points. First, there will always be a good portion of the community that values the “not your keys not your coins” mantra. 0% exchange staking will not be reason enough for these community members to give up true ownership of their coins.
Second, exchanges are unlikely to be able to provide the best staking reward rates even if they charge no fees. Exchanges will have daily withdrawal requirements and will have to set aside some coins in cold storage for security reasons. These considerations will lower the amount of users’ coins that exchanges can effectively stake, which lowers the staking rewards that users will receive at the end of the day. For these two reasons, I don’t foresee independent validators getting totally pushed out of the staking market by exchanges.
Q: What are the most relevant differences between Proof of Stake and Proof of Work? Why is every new blockchain launching with some kind of PoS?
A: The biggest difference is the lower barrier to participation in network security. The Proof of Work mining industry has become intensely industrialized at this point. Anyone seriously looking to get involved in mining will need to procure ASIC hardware, find the cheapest electricity, find good connections to other nodes and partner with existing mining pools to get started. It is no longer economically feasible for anyone to mine at home.
On the other hand, in Proof of Stake, anyone can get involved with staking. While in most cases coin holders may need to participate through a validator, there are many validators that offer extremely low commissions, which is pennies compared to how much they would need to pay to participate in mining.
Launching with Proof of Work has its challenges, as these projects are susceptible to 51% attack if they share the same mining algorithm with another network. With Proof of Stake, as long as projects take sensible precautions on token distribution and staking economics, their chains will not be susceptible to attacks by validators. However, we have had interesting Proof of Work projects like Handshake launching recently, so I would not write Proof of Work off entirely.
Q: What are your future thoughts for the Staking and DeFi Market in coexistence?
A: It surely is exciting to see how quickly DeFi is developing. The different DeFi stacks will help staking become more capital efficient. We will see derivatives helping alleviate the staking lock periods, insurances decreasing slashing risks and swaps locking in staking reward rates. These are just some examples and I expect DeFi will create interesting synergies with staking.
Given most of the DeFi projects currently exist on Ethereum, we will be paying close attention to how DeFi evolves as soon as Ethereum 2.0 launches and staking rewards start flowing in. Other base layer protocols should strongly consider building bridges to Ethereum from early on in order to take advantage of the DeFi projects that are deployed on it.
Q: Which projects are you most excited about launching in 2020?
A: There are way too many! We are excited about: Ethereum 2.0, Cardano Shelley, Polkadot, Solana, NEAR, Coda, Oasis, Casper Labs, Celo, NuCypher, SKALE, Edgeware, Centrifuge, Matic, Harmony, and Elrond.
Given the number of projects that are slated to launch, we are paying close attention to how each project is planning to attract demand for their protocols. The strategies taken to bootstrap demand will ultimately determine which protocols survive in the long run.
Q: Which data/metrics or tools would you like to see on Staking Rewards?
A: The data/metrics available on Staking Rewards are awesome! I know a lot of media companies and data service providers opt to use Staking Rewards when gathering staking related information. I would love to see visual comparisons and explanations on how staking for each project works. This will be quite an undertaking, but it would provide so much value to all users who may not be familiar with how staking works differently across projects.