One year ago, we were launching our staking service as what was initially a Tezos bakery 🥖. We are now a multi-asset staking provider with operations on leading protocols.
In 2019, we saw the growth of the staking economy with many staking providers emerging. Some long-awaited proof-of-stake protocols launched their Mainnet (Cosmos, Kusama). Cryptomedias started to embrace staking as leading exchanges/custodians joined the party (Coinbase, Binance). Some proof-of-stake protocols even outperformed the crypto market (when Proof-of-Stake tradable index? 🌕).
If you think 2019 was intense, in our opinion, 2020 will be the year of staking. Proof-of-Stake market cap accounts for $10bn (5% total crypto market cap) and includes protocols such as Tezos and Cosmos. Next year, we expect more large-cap protocols to join the staking ecosystem: Ethereum 2.0, Cardano, Polkadot, and others. With this in mind, Proof-of-stake market cap in 2020 could account for $30bn (15% total crypto market cap) 💹.
As we are entering 2020, we are grateful for the delegators who have chosen to be part of our journey. We are also thankful to the crypto communities that welcomed us, and to our partners (The Family, Digital Ocean, Google Cloud, local media, among others).
History
Starting from a Tezos bakery, we expanded staking to many key proof-of-stake protocols. Our view is that the future of blockchain lies in interoperability. With this thesis in mind, we are strong supporters of ecosystems such as Cosmos, Polkadot, and Icon. We do not take the view that one protocol will end up ruling the blockchain ecosystem, but rather that a myriad of application-specific protocols will emerge.
During 2019, we launched our operations on 9 Mainnet protocols. These protocols, among which Tezos, Cosmos Network or ICON Foundation have been chosen for the quality of their technology and community. As a staking provider, we have provided secure validation for more than 1,000 delegators.
But our role goes beyond providing a secure infrastructure. Governance, education, Testnet involvement, partnerships, and product development are also part of the job. During the year:
- We have expressed our views and taken part in more than 10 protocol upgrades;
- We have written 70 articles discussing protocols, governance, wallet use, and security practices. These articles generated 50,000 views on Medium and hundreds of hours of reading time 📘;
- Our content has been published in leading blockchain media including Finyear, JournalduCoin, Cointribune, CryptoGlobe, and even got us mentioned in Cointelegraph;
- We created 1 blockchain-focused media: DailyICX. Including Stakin, we have posted 662 Tweets, which have appeared 1.8 million times into peoples’ feed.
- We have taken part in 15 Testnets for current or upcoming protocols, such as Regen Network, Ethereum 2.0, Solana, Sentinel, Harmony, and Cardano;
- We have organized 2 competitions for our delegators, on Cosmos and Icon;
- We have worked on being implemented on leading crypto wallets such as Ledger, Trust Wallet, Atomicwallet, and Wetez;
- We have built a dashboard for our Tezos delegators, and are still working on a multi-asset delegator interface.
5 Thoughts for 2020
- Growth, more growth: Proof-of-Stake has undeniable advantages such as low energy consumption and high security. Ethereum shift to Hybrid PoS could cut energy consumption by 99%. To control the network, a node would have to own a majority stake in the network, also known as a 51% attack. For these reasons, more protocols are adopting Proof-of-Stake as their consensus model. Our view is that there will be around 15% of the total crypto market cap available for staking next year ($30bn at current market cap). With larger protocols joining the ecosystem, and major custodians or exchanges already developing staking, we also expect to see dozens of new smaller PoS protocols and new staking providers in the next year.
- Low fees and competition: Despite protocols requiring a minimum of assets or a self-bond ratio, barriers to entry in staking are relatively low. Also, differentiation is tough for new staking providers. Moreover, comparing all staking providers is time-consuming for a new crypto holder. Additionally, custodians and exchanges develop staking as an add-on to their core business. Because it can attract further clients to the core business, they have an incentive in setting low fees. For these reasons, staking fees face a lot of downward pressures. We have seen a race to the bottom competition happening in many protocols in 2019. We expect 2020 to be even tougher because of hundreds of new entrants. Some protocols have taken notice and incorporated fixed fee % into the protocol, which is not necessarily the solution. We also expect more debates happening on how to maintain a PoS network secure, decentralized, and with aligned incentives.
- Consolidation: Because of the need for decentralization, staking is not a winner-takes-all market. Otherwise, all protocols would look like TRON (TRX), where Binance controls 56% of the votes. Nonetheless, we expect to see further consolidation among the top staking providers. In PoS, it is not rare to see 30% to 50% of the votes controlled by 3 to 10 providers. Top providers enjoy a virtuous circle where they can earn more, invest more into marketing, network infrastructure, appear at the top of blockchain explorers, and in turn gain more delegates. Staking might quickly turn into an oligopoly, with a few multi-asset staking providers ruling many different chains. Additionally, as exchanges are launching into staking, we might see a few acquisitions happening.
- Interoperability: 2020 will be the year of staking, but it will also be the year of interoperability. This revolution is led by Proof-of-Stake protocols and notably Cosmos, Polkadot, and Icon. 2020 should see the launch of long-awaited Polkadot Mainnet, and initial releases of Cosmos IBC (Inter-Blockchain Communication). Blockchains of the same ecosystem will be able to communicate together and exchange value, data and messages. Ultimately, this will enable a new kind of horizontal scalability. Prepare yourself to see many new Cosmos hubs, parachains and other interoperable blockchains.
- Staking derivatives: Staking is a nascent industry, but it is already possible to sell rights to future rewards with services like vest.io or Everett. We expect more staking based products emerging. Some products could bring more liquidity to locked bonds, others offer a hedge against the volatility of the underlying, while some staking providers might turn into DAO-like businesses.
That’s it for 2019 and our thoughts for 2020. Thanks for your support during the past year and for reading our article. 🚀
DISCLAIMER: Staking and cryptocurrencies investment involves a high degree of risk and there is always the possibility of loss, including the loss of all staked digital assets. Additionally, delegators are at risk of slashing in case of security or liveness faults on some PoS protocols. We advise you to DYOR before choosing a validator.
