The core piece of the research report takes a holistic approach to alternative liquid staking protocol designs that seek to tokenize stake, and the implications that this trend might have on the wider Proof-of-Stake ecosystem. Covering potential risks and benefits of tokenized stake (sometimes also referred to as staking derivatives), this spotlights its potential impact on protocol governance, network security, and decentralization.
Finally, the report establishes criteria that an ideal liquid staking solution should possess and proceeds to evaluate 8 designs aiming to bring liquid staking capabilities to various current Proof-of-Stake networks, including projects such as Rocket Pool, StakerDAO, Stake DAO, and Acala.
Billy Rennekamp, Board of Management at the Interchain Foundation, said, “Staking derivatives are a potential solution for a looming existential threat to the viability of Proof-of-Stake networks. Should the validation of networks like the Cosmos Hub converge on centralized exchanges instead of a robust and diverse validator ecosystem, the security assumptions of Proof-of-Stake may fall apart. At the same time, staking derivatives fundamentally alter Proof-of-Stake economic design. It’s important to treat this issue with extreme diligence and Chorus One has done a fantastic job studying the problem, surveying all implementations to date, and extrapolating future directions of development. I’m excited to see this work taking place and proud that the Interchain Foundation has been able to support it.”
