Interview with David Park of COSMOSTATION
We asked David‘s opinion regarding several topics such as decentralization, incentivisation, challenges and differentiation in context of our Staking Ecosystem Case Study.
COSMOSTATION provides State-of-the-art Security, fuels the Cosmos ecosystem while prioritizing its Delegators. You’ve docked your Spaceship at Cosmostation. It’s our duty to keep you as safe and protected as possible. Cosmostation provides your universe to explore. Operation at Cosmostation is driven by and for the community. In delegation we trust.
SR: How do we ensure and incentivize further decentralization within the staking ecosystem?
DP: There are a variety of ways we could bring further decentralization within the staking ecosystem – both from a validator’s point of view and from a delegator’s point of view. The majority of validators in the Cosmos Hub are highly professional with strong setups for their nodes and strategically organized operations. Each validator has its own characteristic and focus. They offer delegators the option to select a validator or several validators of their liking depending on what the delegator is looking for.
We are currently more focused and concerned about innovation around the technology and expansion of the ecosystem. Decentralization will happen naturally when the amount of value each validator brings to the network evens out. It could mean anything from providing transparent information on the validator node infrastructure to focusing on community building and communication. Our focus at Cosmostation is product and community engagement. Validators have the responsibility to maintain and showcase a unique set of values in order to bring decentralization to the network and thus provide a natural environment for delegators to spread out their delegations to several validators.
One could however make an argument that some delegators do not really take into account the value proposition of validators and instead simply delegate to validators that have low commission rates or higher voting powers. I’ve seen some discussions for a solution around this topic – one of which was to implement upgrades to the network to give longer unbonding periods or lower rewards for higher-ranked validators. Solutions like this could be considered an undeserving handicap to delegators simply wanting to delegate at their will. It would be in the community’s best interest to look for more natural ways of bringing further decentralization, both for the health of the network and continued innovation and commitment of validators.
SR: What are the biggest challenges for Proof of Stake and Staking, that we still have to overcome or may still face?
DP: One of the biggest challenges for Proof of Stake and Staking is sustainability. Operating a validator node entails various operation costs, which includes server & infrastructure costs, employee payroll, rent, and much more depending on the setup of the validator. In most cases, these costs are paid for after validator rewards are converted into fiat.
For this reason, in Proof of Stake chains, price volatility of the protocol’s native token could bring extreme difficulty in bringing sustainability for node operators. Validators that participate early on since the beginning of Mainnet launch may find profit – especially if they participated in the fundraiser and have a lot of stake from the beginning. However, on the long run, a lot of other factors may have an impact on whether or not validators can sustain their node operations.
Another challenge would be clarity on regulation. Staking is a relatively new field even in the cryptocurrency world. There currently aren’t any clear guidelines on how staking as a service businesses should be recognized and how rewards should be recorded and taxed.
SR: What do you consider to be the most important aspects to attract delegators to your staking service?
DP: As a validator and ecosystem builder, our mission at Cosmosation is “to bring value and create network effects for the chain by providing powerful tools and products that can help lower its entry barrier and enhance user experience.” Our node operation with secure setups and monitoring systems is of course, the most important aspect of our staking service – on top of our node services, we are heavily focused on building products and communities.
Without intuitive UI/UX, the usefulness or innovation of a technology could easily get lost in translation—especially with newer technologies like blockchain. With our past experience working with various chains and developing user-focused tools(web wallet, mobile wallet, etc.), we aim to fill this gap for the network. Being product-focused is both a strategy to attract more delegators to our node and an effort to bring more usability and awareness around the network, thus contributing to the expansion of Cosmos as a whole.
Each validators have different strategies to attract delegators. Our priority is to first and foremost provide tangible value to the community at the front-end application level. Our Cosmos Block Explorer(https://www.mintscan.io), Android & iOS wallets, Web Wallet are all part of this effort. We are working to advance our products by actively reflecting user feedbacks and communications through our online/offline presence. Apart from delivering products, we are also very focused on expanding the Cosmos developer pool by providing open source projects and spreading awareness by giving talks at meetups and conferences. We position ourselves as the validator that provides necessary tools to facilitate adoption and create network effects for the chain.
SR: How can smaller Staking-as-a-Service companies differentiate themselves from large players like exchanges providing staking services (e.g. Coinbase)? Is there a danger of centralization? Binance Staking in 2019, yes or no?
DP: Danger of centralization definitely exists for PoS chains although it is fair to say that compared to PoW chains like Bitcoin, the state of Cosmos validators is comparatively much more decentralized. Exchanges, funds, and enterprises with big capital flow immigrating from PoW to PoS staking services would eventually and inevitably take a significant portion of the voting power. In order for smaller SaaS companies to differentiate themselves from large players, there needs to be more value propositions and innovations from smaller validators.
For this reason, as mentioned in one of the above sections, we are more focused on bringing value and innovation around Cosmos. At this stage of the Cosmos Hub, we believe that it is more important to discuss how we can bring forth more productivity, products, and conversations surrounding the ecosystem. As smaller validators, we must differentiate ourselves by being in the center of innovation and grow together as the network expands. This can be done through finding a niche market, providing localized customer service, developing tools for the ecosystem, operating strategically in areas bigger players would find too small or specific, etc.
On another note, some centralization at this early stage could encourage faster decision making and also incentivize those who are actively contributing to the ecosystem with strong infrastructure, long development hours, and strategic operations – the current distribution of voting power partially reflects the amount of contributions different validators are putting into the ecosystem. In order for the Cosmos Hub itself to keep up with the developments of other platforms, there must be speed in execution and innovation, driven by incentivisation to those who make tangible contributions to the ecosystem.
SR: Which value-added services or products are the main focus for you at the moment? (e.g. insurance, governance dashboards, staking mobile wallet, custodial services, open source contributions, community meetups etc)?
DP: We are focusing on two ares: providing user-friendly tools for the ecosystem and expanding the Cosmos SDK developer pool.
One of the tools we built is Mintscan(https://www.mintscan.io), a Cosmos block explorer designed to facilitate network monitoring and navigation for exchanges and everyday users. We have been making significant feature and speed upgrades to Mintscan over the past few months, and it is now being used as the official explorer for Cosmos by most of the exchanges. Our development team has been on the grind to provide useful and detailed data for our users in a user-friendly manner. Mintscan is currently providing private APIs to CoinGecko, and has been online since the Gaia testnet before Mainnet launch.
We also developed iOS, Android, and Web wallet with Ledger integration for Cosmos. Both mobile applications are each iOS and Android native with support for local-signing and HD wallets. We released the Android wallet prior to Mainnet launch, and the iOS version was released shortly after. Cosmostation iOS, Android, and Web wallets currently have over 5,000 users combined. We have been continuously working to implement new features in our wallets such as redelegation, reinvest, reward destination change. With our recent partnership with IOV, we are also planning to bring a better user experience for Cosmos by implementing name services in our wallets.
SR: Do you see the necessity to educate Delegators on Protocol Governance? Grassroots Democracy or parliamentary democracy?
DP: We see the necessity to educate delegators on protocol governance. Protocol governance in a PoS system is like a government. In a democratic government, people who wish to acquire information about politicians, the decisions they make, the overall sentiment of the legislature and certain policy changes seek for information from sources provided to them. They process accessible information and act or express on their own behalf. On the other hand, those who are not interested in the government and politics simply choose not to seek information, and some do not even vote.
Even if a person does not vote, it does not change the fact that this person is a citizen of a certain country and therefore will be affected by the policy changes and power dynamics of the decision makers. As validators, we have the responsibility to provide the basic information and discussions going around in regards to protocol governance to our delegators and community members. Information should be accessible to those who seek it, and it should also present itself in a readable way. It may differ for each person, but it is important to share these discussions that may affect and govern the very chain they are participating in.