Validator Selection

Types of Validators

Validators can encompass three overarching categories: Public, Public Anonymous, and Private.

Public validators include the widest range of entities from individuals acting as influencers to institutions. Public Anonymous validators are usually a group of individuals that have come together to offer validator services, but their identities are unknown. Private validators are best represented by institutions such as a fund, which validates its own assets, but does not accept delegations with the exception of its LPs.

Within these categories, the types of groups that validate include: exchanges, investment funds, companies, infrastructure providers, specialists, others, key influencers, and individuals.

Exchanges: Coinbase, Binance, Kraken
Investment Funds: Polychain Capital
Companies: Figment Networks, Staked, stake.fish
Infrastructure Providers: Bison Trails
Specialists: Tezos Foundation, Cryptium Labs, Iqlusion
DAOs/Other: Stake Capital
Key Influencers: Sikka
Individuals: You

Current State of Operations
Exchanges entered the staking space in 2019. Coinbase, Binance, and Kraken were the most notable operators to enter. Coinbase and Kraken solely support Tezos today while Binance is providing services for over a dozen assets. Exchanges tend to er on the side of caution on assets added given the reputation they have built, but it is likely that they will become comfortable with an accelerated pace of additions. For users, exchanges offer ease of use and in early December, Binance initiated a race to zero after introducing a 0% fee for staking Tezos. Investment funds are largely under the radar as they primarily only stake assets, which hold a place in their portfolio. Today, most funds do not run staking operations internally, but instead delegate their assets. Those that do stake internally often deploy significant human and monetary capital to stake their investments. Companies usually represent well-funded, VC-backed startups where the business model is staking-as-a-service. Companies currently navigate an environment rifled with margin compression so they seek opportunities to grow through volume. This is portrayed through the continuous addition of assets to their universe, but they all seek to provide additional methods of differentiation from community to financial incentive. Infrastructure providers offer a packaged product to launch staking-as-a-service so that a team can focus on marketing. These providers aim to offer the best possible service through rates that cover their operations and create a free option for exposure to the PoS space. Specialists represent teams with deep expertise in a particular network. These operators aim to differentiate through educational materials, technical development on the network, community development, etc. In the DAOs/Other category, unique use cases exist such as DAO-like models where the servicer creates an alignment of financial incentives when an investor delegates to the servicer. Key influencers, smaller validators, and even an individual can move faster in onboarding riskier assets if there is a defined interest in them. They can also focus on an alignment of values. These values mostly relate to decentralization or anonymity, but can encompass other reasons.

Assets Under Consideration
Large cap PoS assets naturally drive the most interest and today, these assets include: Tezos, Cosmos, Decred, and Algorand. Other large cap assets expected to go live in 2020 include: Polkadot, Cardano, Celo, etc while further out we expect to see Ethereum transition. Large cap assets are available to delegate across most validators while smaller cap networks have sporadic availability across validators. Smaller cap networks include: Loom, Harmony, etc.

Considerations Across Validators
Individuals seeking a place to delegate their assets to should keep in mind various factors. These factors include, but are not limited to: fees, performance, jurisdiction, reputation, AUM, number of delegators, operational longevity, customer support (availability + communication platforms), assets supported, and network-specific considerations.

Fees: What % of the rewards is the validator charging as a fee? Fees should be below 20%.

Performance: Is the validator actively approving blocks and generating rewards? Is the validator responsible and therefore avoiding slashing/penalties? Uptime and performance should be as close to 100% as possible.

Jurisdiction: Where is the validator’s country of business and can delegators seek legal remediation in the event of a dispute?

Reputation: How involved is the validator? Do they participate in governance, create tools, educational materials, etc? Otherwise, has the validator shown itself to be trustworthy thus far?

Security: Is the validator open about the various partners it uses e.g. cloud partners, data centers? Has the validator released an audit of its operations or open sourced its code?

AUM: How much has been delegated to the validator? AUM is a weak-form of trustworthiness.

Number of delegators: Are there numerous parties delegating to the validator instead of just 1 or 2 whales? Number of delegators is another weak-form of trustworthiness, although a better one than AUM.

Operational longevity: How long has the business been around?

Customer support: Is there someone available 24/7 for technical support? Is this via email and/or other channels like Telegram?

Assets supported: Does the validator focus solely on one asset or support multiple PoS networks?

Network-specific questions:
Capacity: Can the validator efficiently use my delegation?
Bonding Period: How long is the asset locked up for?
Slashing Penalty: What % of the staked value can be slashed?
Minimums: What is the minimum value required to individually validate?
Complexity: How technically complex is it to validate/delegate?
…and so on

Bringing it all together
For individuals, what may generally matter most centers around fees + reputation + ease of use. An example of an individual optimizing for these three factors is at exchanges. Individuals have generally had a good experience with an exchange like Coinbase or Binance so this covers the reputation consideration. These exchanges also demand no effort from their users to stake and generate rewards and therefore checking the ease of use box. Finally, an exchange like Binance is charging 0% in fees for an asset like Tezos, satisfying users across all three factors. Note: Security is crucial, but most users lack technical expertise and substitute reputation in place of security as a factor for consideration.

While all of these factors are important, some crypto participants have noted the trend toward centralization of staked assets. If an exchange controls a significant ownership of a PoS network, then the network’s security is potentially compromised. This calls for users to weigh in smaller validators in order to protect the long-term health of their investment. Smaller validators may have unfavorable fees or resources given the size of their business, but they may have a more personal touch to customer support and interest in the development of the network, its community, and values.

Incentive Designs
In continuing the conversation around supporting smaller validators, we scratch the surface of incentive designs. Incentive designs model for penalization of larger validators, subsidies for smaller validators, and subsidies for users. Penalization of larger validators occur through longer lock-up periods and decreased reward payouts. Subsidies for smaller validators occur through eased participation requirements while subsidies for both smaller validators and users occur through higher rewards when a user delegates to a smaller validator.

Paths to Innovation
While we’ve covered what the industry largely looks like today as well as today’s most important considerations, we think it is prudent to dig deeper into future innovations and how they enable validators to remain competitive. The first and least complex path is to build out interest e.g. volume in an options and swaps market to remove price risk and potentially, reward rate risk or slashing risk. This is not a novel thought and most validators are constrained by a lack of liquidity from the supply side. Outside of hedging programs, networks and validators can begin to explore liquid staking designs.

Liquid staking designs are currently being explored by several teams across the world through various implementations. These implementations in their own complex form begin as either network native products or non-native, but both seek to create a synthetic of the network’s token.

For further information, we’re working with Chorus One on a larger publication to explore liquid staking designs.

Overall, the PoS industry continues to mature and we at StakerDAO expect to contribute through multiple PoS staking products, including synthetic PoS network tokens.

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Dear Christian,

We would very much like to offer our services to StakerDAO through our public staking service StakeNow.

Fees: Our fee is negotiable and depends on the size of the delegation and the requested additional services (e.g invoicing, reporting).

Performance: Yes, we are actively producing and approving blocks and generating rewards. We are constantly ranked in the TOP 12 according to tezos-nodes or mytezosbaker in terms of efficiency. Due to the protocol design of Tezos, we are solely responsible for slashing. We only operate with our own capital and don’t offer bond pooling.

Jurisdiction: We operate in Germany and our infrastructure is hosted in Germany as well. Delegators can seek legal remediation in the event of a dispute. To support this and our aim for full regulatory compliance we have industry-leading terms & conditions in place which we could use as SLA with StakerDAO.

Reputation: StakeNow is very involved and well-known in the Tezos ecosystem. We have a governance participation rate of 100% according to tezos.help. Furthermore, we participate actively in discussions on Tezos Agora Forum and with other bakers.

Two of our team members are top contributors to the Tezos Reward Distributor - probably the most used payout tool for distributing rewards.

StakeNow is also “insured” by Baking Bad which builds trust for our clients. According to them, our payouts are precise and the payout period is stable - the best ratings one can achieve.

Security: We operate our own high security and high availability server infrastructure running on a 2 x 10 Gbit interconnected backbone in a German datacenter. In doing so StakeNow not only extends the validator set but also contributes to the diversity of the Tezos network infrastructure. The data center is certified after ISO 27001 and ISO 9001 - those certificates have become a de facto standard for IT security. Furthermore, the data center has state-of-the-art security technology (access, surveillance, fire protection) in place.

AUM: StakeNow currently has 1.8 Mio. XTZ under delegation. Our own balance is 280k XTZ. Those numbers add up to our total staking balance of 2.08 Mio. XTZ which makes us the largest Tezos validator in Germany.

Number of delegators: StakeNow currently has 557 active delegations. Our largest delegator has a share of 16%, the second-largest only 5%. We can state that our client structure is widely distributed and there is no dependency on individual clients.

Operational longevity: StakeNow operates since the beta net and therefore belongs to the early validators in the Tezos Network.

Customer support: StakeNow offers 24/7 technical support through email (info@vdl.digital) and via Telegram channel (https://t.me/StakeNow).

Assets supported: As you can already tell, we are focused exclusively on Tezos. This will not change in the near future. It gives us a 360-degree view with the intention to gain intrinsic knowledge of Tezos and the ecosystem to be able to provide the best possible service for our clients.

Best regards
Daniel

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Hi Daniel,

This is great! Very thoughtful and detailed. Looking forward to figuring out your participation in Blend. We will likely continue to discuss in March and submit the final selection in the April proposal, which we will keep you updated with prior to the proposal submission.

Thank you

Having contracted and worked with Figment Network for a while now in various capacities, I highly recommend them to be among the initial set of shortlisted validators.

Intro:
Figment Network’s mission is to support the wider adoption, growth and long term success of proof-of-stake based blockchains. This is Figment’s unique approach to Proof of Stake: they provide not just enterprise-grade delegation services to token holders but they also provide software such as the Hubble staking explorer, real world compliance & reporting tools, and actively contribute towards community & governance.

Fees:
Figments typical headline rate is a 10% fee for delegators with rebate options for large, long term holders.

Performance:
They are actively producing and approving blocks and generating rewards. They avoid slashing/penalties by operating a highly-secure and redundant physical infrastructure. One can read more about it here.

Jurisdiction:
Figment Network is based in Toronto, Canada. Canada is crypto friendly and also provides a well known and accessible legal system and rule of law.

Reputation:
Figment Network has built a strong track record as a contributor to the Cosmos blockchain through the creation of Hubble, their staking explorer. They have also contributed to various governance proposals since the inception of Cosmos and continue to do this kind of work across other networks as well. They have also obtained grants from a variety of networks to work on governance tooling for these networks.

Security:
One can read about their security here.
They employ multiple physical data centers combined with a multi (6) cloud environment. They recently received top score in the Celo security audit.

AUM:
Approx 40,000,000 tokens delegated with a value of ± $60,000,000.

Number of Delegators:
Figment Network serves large token holders to assist them with their staking efforts, but they also build tools for retail investors to delegate their tokens easily through their Hubble platform. Figment has over 400 unique delegation addresses across the networks it supports.

Operational Longevity:
Figment Networks was launched in 2018.

Customer Support:
Across team members and time zones you can reach them within any 24 hour period via telegram or email.

Assets Supported:
Figment supports a wide range of assets. The complete list can be found here.

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Hi everyone,

We would like to offer our validation services to StakerDAO with our company Agile Ventures. Under Agile Ventures we have been operating HappyTezos.com since the start of the betanet (July 2018). We will be validating on Celo as well once the mainnet will be live.

Fees:
HappyTezos currently has a 15% fee for delegators.

Performance:
We have been one of the most reliable baking service on Tezos since the beginning.

Jurisdiction:
Agile Ventures is based in Brno, Czech Republic (EU). Czech Rep. is crypto friendly and home to many crypto companies (for example Trezor.io, slushpool.com).

Our team is distributed between Wien (Austria) and Brno (Czech).

Reputation:
We have a strong reputation as one of the oldest and most reliable baking partners in Tezos. We are well known within the Tezos community. We have been working on a TaaS (Tezos as a Service) project (available on TezosLive.io) and received funding for this projects from Tezos Foundation.

Security:
We have always put security on the first place. We have been using HSMs since the beginning. We are using the combination of our own dedicated servers and cloud infrastructure distributed in multiple different regions.

AUM:
Approx 9,032,000 XTZ delegated with a value of ± $25,289,600 as of 3/3/2020.

Number of Delegators:
HappyTezos have over 1142 active delegators as of 3/3/2020.

Operational Longevity:
Agile Ventures was founded 2015 and HappyTezos launched in June 2018.

Customer Support:
We have a dedicated telegram, twitter and email support.

Assets Supported:
We are currently validating on Tezos. We will be validating on Celo.
We are investigating Decred, Algorand and Polkadot.

1 Like

Howdy, y’all. Below more information on Cryptium Labs Validator :switzerland:

Fees:

  • Generally 10%.

Performance:

  • Our liveness rate is of 100% wherever it is applicable. E.g. on Cosmos we’ve never been slashed for liveness. On Tezos it’s not applicable, as we insure liveness for delegators, so they receive rewards as if we baked / endorsed all the blocks we were assigned.

Jurisdiction:

  • Zug, Switzerland.

Reputation:

  • Our validator participates actively in governance, see for example our Tezos governance policy, which means that we do not only actively vote, but also write technical analysis on the proposals and have a platform for delegators to raise concerns or discussions.
  • We have contributed to the space of open-source tooling, e.g. Bäckerei or the KMS + Ledger integration on Cosmos. You’ll find the complete list here, under more open source contributions.
  • Since summer 2018, we’ve been publishing a substantial amount of learning resources for the diverse communities, making knowledge and understanding about these protocols accessible. They can be found in our respective Medium publications (Cosmos, Tezos). Some examples I wish to highlight are: The Hitchhiker’s Guide to Tezos, A Closer Look into Snapshots series or the Half-Baked is Always Better than Double-Baked series.
  • In addition to the above, we provide full transparency on e.g. rewards calculation (as we use Bäckerei) and payments (database open-source and auditable), and easily browsable through our delegator dashboard.
  • Finally, the added value of our technical expertise as protocol developers and researchers, which translates into, in the case of Tezos, in protocol upgrades; or in the case of networks under development, such as Kusama, into testing, bug reporting, and feedback cycles, supporting their respective developers.

Security:

  • Our security architecture is described and public on our website. All networks in mainnet are operated through dedicated physical hardware and not reliant on cloud providers. Fun fact, our datacenter has been categorised as national security critical infrastructure– meaning that under necessary circumstances, the Swiss Army will be deployed to defend it.

AUM:

  • Staking balances are available here, values are updated automatically. The metrics of some networks such as Kusama will be enabled soon.

Number of delegators:

  • Cryptium Labs is a public staking service. We do not collect data of our users, but for reference on Tezos we have 1,941 active delegations.

Operational longevity:

  • Since June 2018.

Customer support:

  • Support is available via our respective telegram groups (e.g. Tezos), inquiries over email (validator@cryptium.ch) and Twitter are also accepted and processed. Response times vary, they are typically within minutes.

Assets supported:

  • We’re supporting multiple PoS networks and planning to support more. At the moment, the ones in production are the networks listed under mainnet. The other ones under our radar, currently in testnet phase can all be found here: https://cryptium.ch/networks.
2 Likes

CryptoDelegate pioneered the Tezos delegation industry by announcing in August 2017 and launching in July 2018 the first Tezos Delegation service. We offer the fastest pay out of any Tezos delegate, 20 days before we even bake the blocks and 31 days before we receive blockchain rewards. Our secure profile login anonymously validates your account ownership on the blockchain and gives you private access to your rewards dashboard without the need for name or email validation.

Fees: Currently guarantee 5.51% APR flat payout. Generally translating to between 8 & 15% fee. (STC)

Performance: We started accepting delegation on June 30th 2018, and we have been continuously validating blocks, using the same Ledger secured tz1 address, since the first publicly available Tezos cycle on July 21st 2018.

Jurisdiction: CryptoDelegate LLC is registered in and operates out of the state of Washington, USA.

Reputation: CryptoDelegate has been heavily involved in Tezos community building since immediately after the ICO in 2017 by participating in and hosting meetup events, YouTube videos, and public forums. We also actively and financially supported petitions and legal efforts to set up new foundations and associations in the event that the Tezos Foundation was blocked from launching the protocol.

Security: We take security and privacy very seriously. We operate numerous secure on premise and virtual international nodes. Our baker has been validated by Ledger since day 1 and our private keys have never been digitized or online in any way shape or form. We have several redundant nodes that are ready to bake at a moment notice without any of them having the chance to activate too early. This eliminates the possibility of double baking/endorsing.

AUM: Currently 4.8M XTZ staking balance.

Number of delegators: We currently have over 625 tz1 and KT1 accounts delegated to us.

Operational longevity: Announced service in August 2017. Incorporated March 2018. Launched operations in July 2018.

Customer support: We have a telegram but most clients chat with us via Twitter DM, email or occasionally phone.

Assets supported: Currently we focus only on Tezos but we are open to the possibility of other tokens.

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Hey Christian,

We at Chorus One are excited about StakerDAO’s approach and would be honored to be one of the validators providing security to BLEND holders. In your taxonomy, you could probably place us as “Specialists”. Aside from our focus on providing a secure and great staking experience to delegators, we are heavily involved in the intersection of decentralized finance and Proof-of-Stake, interoperability, and validation infrastructure design.

Fees: We generally charge a fee ranging from 7.5-15%, depending on the rewards/cost structure of the network in question.

Performance: We are currently live on Cosmos, Terra, Kava, and Chainlink. We usually rank within the top 20 of validators and have been providing >99% uptime on all networks we are operating on.

Jurisdiction: We are a Swiss AG and our infrastructure is hosted across multiple jurisdictions for redundancy (bare metal in UK&US, cloud across the globe). Our terms of service can be found here.

Reputation: We are a well-known brand in the ecosystem with a long history of creating public content and tooling (e.g. Anthem staking platform for historical reward data and Solana StrongGate).

Security: As stated above, we run a geographically distributed bare metal/cloud setup with enterprise-grade key management practices using HSMs. More info on our infrastructure can be found here.

AUM: We currently have 4.4m ATOM, 6.2m LUNA, and 2.3m KAVA delegated to us (at the time of writing (post-Black Thursday ;)) amounting to $12m.

Number of delegators: We have 276 active delegators (before shutting down our Loom validator we had ~1,000 delegations on there).

Operational longevity: We have been operating since Cosmos Hub genesis and on testnets before that (founded February 2018).

Customer support: 24/7 through our website via Intercom (https://chorus.one) and on Telegram (https://t.me/ChorusOne). For partners also via Slack, Email, etc.

Assets supported: Multiple assets from the Cosmos ecosystem and other upcoming PoS networks (e.g. Solana, Celo, Oasis, Polkadot). More at https://chorus.one

We’d be excited to provide our knowledge, research, and network to the StakerDAO.

Best,
Felix

Hi all,

I’d like to recommend Staked to be among the initial set of validators for Blend.

Fees:
Staked currently has a 10% fee for delegators.

Performance:
Staked’s two-year track record with no slashing events across 18 networks is a testament to its best-in-class infrastructure setup.

Jurisdiction:
Staked is based in the United States and has a Cayman Islands subsidiary if a non-U.S. presence is preferred. The Staked team has a presence in both New York and Boston.

Reputation:
Staked operates the most secure, performant, and cost-effective block production nodes for decentralized PoS protocols on behalf of institutional investors. The Staked team has a long and successful track record of starting, building and operating web services at companies such as IAC, Vimeo, MediaOcean, PlanetTran, Flavors.me, Haystagg and Think Gaming (YC 2014).

Staked is a well-known brand in the ecosystem with a long history of creating educational resources and content for supported networks. For example, Staked’s Validator Views series covers proof of stake chain progress, timelines, and more. Staked also publishes a weekly newsletter called Seeking Yield about the most interesting things happening in staking and lending.

In addition, Staked actively participates in the governance of supported cryptonetworks and votes on behalf of customers.

Security:
Staked’s multi-tier signing and listening node architecture delivers stakeholders the ideal combination of security, scalability, and decentralization.

Staked spends a ton of time and money ensuring that delegators will never get slashed and puts a 100% uptime SLA against performance.

AUM:
Staked has $50MM+ in delegated assets in public pools and operates white-label offerings with substantial holdings.

Number of Delegators:
Staked has over 2500 active delegators as of 3/31/2020.

Operational Longevity:
Staked was founded in 2018.

Customer Support:
Staked has a dedicated Telegram, Twitter, and Zendesk help desk. Email and phone support is also available for both new and existing customers.

Assets Supported:
Staked offers the industry’s broadest chain coverage with support for chains including Tezos, Cosmos, Algorand, Livepeer, Decred, Terra, Edgeware, Kusama, Kava, Cardano, Everitoken, v.systems, Horizen, Iris Network, Orbs, and Loom.

Staked is also currently live on a number of testnets including Ethereum, NuCypher, Oasis, Celo, Keep, Solana, Coda, and more.

Heya Christian,

I’m Michael from StakeWith.Us. We would love to be in consideration by your board to become one of the initial shortlisted validators.

Fees:
We set a 10% - 15% fees depending on our cost structure.

Performance:
We have never been slashed since inception, and have been providing >99% uptime across all networks, such as Cosmos, Terra, Kava, IOV and Persistence.

Jurisdiction:
StakeWith.Us is wholly incorporated in Singapore. We have a presence in Singapore and Vietnam.

Reputation:
We are the only Staking Infrastructure company in the world that is publicly backed by a government entity (SGInnovate, Singapore government’s deep tech fund). We also founded Cosmos Singapore, a community driven initiative to educate local developers about all things related to Cosmos/Tendermint. We have been consistently hosting meetups for various projects, or on educational topics that might be interesting for our community. Some examples of meetups we have hosted are: i) Project introductions (Skale, Tendermint projects), ii) Technical meetups (Tendermint) and iii) Educational content (All about staking). Our Terra oracle voter has also been open sourced for any validator to utilize.

Security:
Security is of utmost importance to us. We disclosed our infrastructure setup last year (will be following up with another update this year) and also wrote a guest post on setting HSM policies.

AUM:
StakeWith.Us currently secures more than $10MM+ of assets under its infrastructure (delegated + whitelabel service).

Number of Delegators:
At the moment, we have approximately 80 delegators (Prior to the shutdown of our Loom validator, we have approximately ~1,600+ delegators).

Operational Longevity:
We started validating on Loom’s testnet since Q4 2018, but was formally operational as a company since February 2019.

Customer Support:
We have dedicated support on Telegram, Twitter and Email.

Assets Supported:
We are live on Cosmos, Terra, Kava, IOV and Persistence. We are currently on the testnet for Skale, Ethereum 2.0 and other promising POS networks.

We are also in the midst of launching a yield related platform known as Unagii - More updates on this will come soon!

The team at StakeWith.Us looks forward to support StakerDAO!

Hi Everyone,

We at Blockdaemon would love to offer our services to StakerDAO.

Intro:

Blockdaemon is a middleware tooling platform with the main goal of making it easier for developers to connect and interact with blockchain networks. We build tooling acros the lifespan of networks including infrastructure testing/testnet, node services and validation for investors, APIs for exchanges and custodians, and on-prem plugins for developers and enterprises.

Fees:

Fees vary depending on the network but generally fall in the range of 10-15%.

Performance:

We operate on a hybrid cloud and geographically distributed infrastructure. We have built in monitoring and failovers to assure maximum uptime. We generally guarantee at least 99.99% uptime and insurance on slashing for large investors.

Jurisdiction:

Blockdaemon is headquartered in New York city but also has an entity in Ireland.

Reputation:

Blockdaemon has built a strong reputation as a leading node provider over the last 2 years. We are foundation partners of almost all major proof of stake networks (Polkadot, Filecoin, tezos, Celo, Algorand, Oasis Labs, Skale etc.) and often receive grants to build out tooling, APIs etc. We are trusted by the largest exchanges, custodians and investors in the space to deploy, manage, and monitor critical infrastructure on their behalf.

Security:

Blockdaemon uses AWS, Google Cloud, Azure, and Digital ocean for hosting and are SOC 1 compliant.

AUM:

AUM is ~$500mm. We run nodes for many large investors as well as protocol foundations.

Number of Delegators:

We don’t know the exact number as we run validators for others who have delegates themselves, but we have over 100 institutional customers currently.

Operational Longevity:

Blockdaemon has been operating since 2017.

Customer Support:

We have full time customer support team that can be reached 24/7 by email, chat box, or slack/telegram if we have a shared channel. We are spread globally across multiple time zones.

Assets Supported:

A list of all of our supported assets can be found here.

1 Like