Validator update: a new staking service and what’s coming next

Today, we are pushing live a new staking service for validators who lack the resources or know-how to maintain their own nodes. The core team will run virtual nodes on behalf of those who opt for this alternative, and pay out up to 40% APY depending on the terms chosen.

How to participate >

Please read on for more context behind this new feature, and how it interacts with related elements of the Incognito roadmap.

Another option for validators

Over the past few weeks, we have spoken to a significant number of validators. Many of whom have made large investments into the future of incognito and want to continue powering the network – but have found themselves unprepared for what it takes to maintain a healthy node. Now that slashing has been implemented, requirements are more complex than simply being online.

Since pNodes have been phased out, there is a need for a more accessible and user-friendly option for validators. With this staking service, we hope to achieve greater stability, community participation, and continued network growth. So as not to derail our efforts towards decentralization, we are working in parallel to release the network, as well as to lower the difficulty of running a virtual node.

What’s next for validators

More network ownership. Within this year, community nodes (self-run or through staking services like this one) will comprise the majority of every committee. More details will be released soon.

Easier node operation. Upcoming and new improvements like staking flow v3 will improve the validator experience and make it simpler to maintain healthy nodes. Our @support team is on hand for those who choose to do so.

A healthy ecosystem needs to be varied enough to support different needs and requirements. Our hope is that more community members will create their own staking initiatives to help out fellow node operators, present and future. If you are thinking of doing so and want to bounce ideas, we are happy to support you to the best of our ability.

How the staking service works

So we can roll this out quickly, the new staking service will be accessible from the Provide interface. Here’s a high-level diagram of how it works.

It is still on the roadmap to phase out Provide (as a liquidity provision feature), in favor of decentralized provision in pDEX v3. What remains will simply be an additional staking option as detailed above, perhaps as an extension of the Power tab.

Please note that this staking service has centralized elements. At this time, self-run virtual nodes are the only fully decentralized option for powering the Incognito network.

How terms and rates are determined

Based on historical data, we project that the equilibrium of the number of nodes in the network is around 2500, each yielding about 40% APY over the course of a year when taking into account random selection. This comprises the upper bound.

Based on this projection, the staking service will launch with 3 options to choose from.

  • For flexibility: the current withdraw anytime option stays at 21% APY.
  • For medium term: 6 months at 30% APR.
  • For longer term: 12 months and 40% APR.

Depending on network conditions, terms and rates may be subject to change in the future. However, rates at the time of deposit will remain fixed for the duration of the chosen term.

The staking service goes live today

You will be able to access it from the Provide tab in your Incognito app.

Here’s a short walkthrough >

16 Likes

What’s is the incentive to maintain a vnode now compared with staking? The only thing I can see is greater flexibility in not having to commit to a 1 year lock up but more effort to maintain it. The differential in rewards between provide and running a vnode made sense. More effort = greater reward. Why bother with a vnode now?

3 Likes

I can think of a few reasons myself, you have already mentioned one of them.

1.) No lockup required - vNode operators can join and exit the network as they please.

2.) vNode operators get regular (random) rewards for running a vNode. Provide pool only pays out rewards at the end of the term.

3.) Decentralization, decentralization, decentralization. vNode operators know they are doing their part to support decentralization and bring privacy to all!

I will say, I do see your point of view, running a vNode will not be as attractive to some users and they will opt to just use provide.

6 Likes

How can I offer stakepool services to the community? I am a experienced stakepool operator on other networks like Cardano and would love to provide a similar service to Incognito users as well. From what I see in the app there is no way for delegators to choose a specific pool but just choose „staking service“. So how does it work from a node operator‘s perspective?

2 Likes

They are valid points too - I guess I’m more disappointed that this is going back to a centralised element and the level of rewards for staking are higher than running a vnode after you consider server costs.

It’s a surprising announcement given all the progress made towards decentralisation. I don’t like the rationale that because some validators are unprepared for what it takes to maintain a healthy node that this is the solution. Decentralisation requires individuals to take on responsibility and slashing has barely been active. If no one is willing to do that there will always be dependency on the Incognito team. The best way to achieve that responsibility is to incentivise people. My concern is that this doesn’t do that by diminishing the attractiveness of running your own node.

The upside to this solution is that there’ll be a lower volume of queries re: node issues. It also offers a high yield and simplicity which should help bring more people / interest to the platform which ultimately everyone wants.

4 Likes

These are fair concerns. But do keep in mind – neither Provide nor this staking service are core features of the protocol. That is – these are not critical infrastructure to the network. If either feature failed/went offline tomorrow, the Incognito protocol would continue on … uh, protocol-ing without them. And that’s because the core element – Nodes, whether they be vNode or pNode – are decentralized* (*pNodes as validators are semi-decentralized/permissionless since the stake for each is owned by the team). vNodes are fully permissionless meaning anyone, anywhere can download the code, obtain the 1750 PRV stake and begin securing transactions.

I believe the real issue is that the non-core & centralized elements (the current app, Provide, pNodes & staking) are being provided by the dev team under the same banner as the code/project. These should be in a separate business unit from the development team, similar to many other crypto projects. This would go a long way to emphasizing that those elements – though important/exciting/lucrative features of the Incognito protocol – are not intrinsic to the overall network in the same way that SparkPool (and now BeePool), as a separate mining entity, is not intrinsic to Ethereum.

Provide and this new staking service are built on top of the core network. Most of the confusion stems from the fact that these “extra” features are available from the core dev team and through the official app. There were several efforts last year for third party wallets, including one that was going to (finally) offer third party access to the pDEX. Those efforts ultimately died with the dismissal of the growth team. But that doesn’t mean someone else couldn’t develop a new third party wallet for Incognito. Even several somebodies. And even with “extra” features such as pool staking and their own subsidized pNodes.

That the dev team has, is great. But for clarity’s sake, these should be spun off and managed through a separate business unit apart from the core development efforts and basic network utility (addresses, transactions & pDEX).

8 Likes

Really appreciate your thoughts and the well articulated post.

1 Like

Hi @SPAddict25, @Mike_Wagner,

As @hiennguyen mentioned in the topic, we always wanted the community to run and maintain their own nodes, this is obviously the best way to increase the network’s stability and decentralization. The staking service should not compete or demotivate vnode’s owners from running their own nodes. Putting locking time aside, 40% is an average apy a node earned when the network had around 2500 nodes but it only has 1800 at the moment. the average apy is looking higher for vnode operators with healthy nodes right now. for this reason, the staking service operator (the core team for now) can cover server cost from the difference. Also, with a plan of increasing committee size by the end of the year, the fixed nodes won’t hold majority slots in a committee so community nodes will have more slots and be able to earn more (it’s expected to be greater than 40% even when the total node is back to 2500). Thereby, we still commit to doing everything toward our main goal - making the network more decentralized where a newly created block will be only included in the blockchain if both the fixed node (operating by the foundation team) and community nodes consensus on it.

@Mike_Wagner, your comment does make sense, the staking service might be run by anyone (not or not only the core team, cc @scooter ) to help those who aren’t able to maintain a healthy node yet. as there aren’t other viable options at the moment, we thought that the core team could be the first service operator. we don’t treat this as a business to make money but wanted to make sure it can work as expected for the goal first, and maybe prove viability to community operators. hopefully there will be more community-run options in the future for validators. i do agree also that the ‘app layer’ should be distinct from the ‘protocol layer’, and will be in the future once the ecosystem is more mature.

Lastly, the core team still commits to focus on fundamentals as we claimed 1.) making the network more stable and decentralized. 2.) building a better product with pDEX as a key functionality/utility.

6 Likes

Thank you for the explanation. Really appreciate it and keep up the development.

1 Like

This is awesome! Huge step forward in the evolution of Provide :tada:

A few quick thoughts:

  1. Is 40% sustainable? My avg return from vnodes is 40-50% but the infrastructure cost is not factored in. The lockup should definitely help, but we want to make sure the core team can support this long term and still turn a profit.

  2. Can we democratise the staking pool? As in allow other experienced validators behind the scenes to host and manage the vNodes in order to increase decentralization and reduce dependence on the core team (similar to how Lido operates in eth2 staking)

3 Likes

Hey @scooter,

The team has chosen the trusted setup for Provide but Incognito is also well suited to trustless staking. Last year a community member had an effort for this but I think it didn’t take enough attention.

An Incognito account has a different key than the private key to stake: validator key. With the help of validator key, you may provide someone, who wants to stake but does not want to maintain any node, with the trustless staking service. Here is the basic procedure:

  1. A PRV holder gives you the validator key.
  2. You start to vNode software with the given validator key.
  3. She puts 1750 PRV into her account and stakes her account via the app or incognito-cli.

She can withdraw her rewards and use her account safely (without trusting anyone). The node control is on you. If she does not pay your commission/fee, you may stop the node. So as the other validators, we share your last reward due to slashing :joy:

A safer approach would be using escrow for the rewards. As I explained here (Tired of transferring your rewards from multiple validators' accounts to a single account?), the staker can choose another address for receiving rewards. In that case, that address can belong to an escrow service provider.

If I had time, I would put some effort to implement this approach as a one-click service (similar to StrongBlock service).

2 Likes

I’ve convinced 6 people to get into the project from the new staking setup. Helps that I’ve been involved in PRV for a while. The simplicity and yield is what seems popular. Spreading the word!

3 Likes

I did this and it unstaked my node how do I fix that it says now I need 1700 PVR to restake I didn’t have 1700 to begin with

Hello @nate44432,

It sounds like you have a funded pNode by Incognito. Follow this FAQ to get your pNode re-staked:

If you require further assistance message the @Support account.

Thanks for this update @hiennguyen.

I am a huge fan of the Incognito Node Tree. I saw it as a great way to expand the decentralisation of this project and allow non-technical consumers the ability to participate in a Blockchain based privacy-first network.

Even though I eventually decided to run a few vNodes, what sparked my initial interest in this project was the pNode product.

I saw the pNode as a huge differentiating factor that allowed anyone to plug in a device that supported the network and in return earnt the participant PRV tokens.

Has this aspect of the Incognito project still alive somewhere?

Can someone on the core team please provide an update on what’s happening with Node Tree?

1 Like

Hi @Linnovations,

I share your same passion as well.

I’m afraid it is only alive in our hearts and minds. :sweat_smile:

The dev team has made it clear to me that development and customer service requirements are too much of a burden as their focus needs to be on the core components of Incognito.

Members of the community are open to offering this service to the community. Although, there is a reason why the majority of crypto projects and coins offer more of a vNode approach. This is due to too many variables with a residential-based device.

I have spent a lot of hours researching a cheaper Node Tree device and right now it is near impossible due to the supply chain issues and chip shortages. Boards costs are now double or completely sold out altogether.

2 Likes