SafeStake

<img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/4295b97507934e2c9d03dcc8006b621c.jpg" />Review2022 was quite a chaotic year for the entire crypto industry. We’ve all seen the news about the hundreds of millions of dollars stolen in cross-chain bridge hacks; we’ve watched the collapses of Luna, 3AC, Celsius, and BlockFi; and we were hammered by the FTX fraud at the end.Nonetheless, 2022 was a year of progress for ParaState. We successfully closed the IDO on Republic in January 2022. We’ve been running the Substrate-based testnet for a year, and it was the first layer 1 to support an EVM &amp; EWASM runtime infra side by side. We also built the first Rust SDK, enabling developers to build on top of our infra to implement ERC20, ERC721 and ERC1155 protocols in an EWASM runtime environment.However, 2022 was also a bit of a disappointing year for us. The Geminis network, a Substrate-based parachain supported by ParaState tech stacks, took part in the <a href="https://parastate.substack.com/p/parastate-crowdloan-geminis-network" rel="noopener noreferrer nofollow">Polkadot #14-#18 Slot Auction</a> but failed to win a parachain slot. This led to our Substrate-based testnet failing to gain traction in the developer community, all proving to us that EWASM runtime has no PMF in the crypto sector, at least at the current time..But every coin has two sides, and 2022 became a year of transformation for ParaState. When we learned there is no PMF (product-market fit) for EWASM at this stage, we decided to pivot our resources to<a href="https://www.parastate.io/safestake/" rel="noopener noreferrer nofollow"> SafeStake</a>, a DVT (Distributed Validator Technology) infrastructure and protocol we’ve been incubating internally for more than 12 months. That decision was also approved by a <a href="https://vote.parastate.io/#/" rel="noopener noreferrer nofollow">community/DAO vote</a>.The key reasons the ParaState core team and ParaState DAO (consisting of $STATE token holders) decided to make this roadmap shift is summarized in the following points:.<ol><li>Our team’s core competency is not to build a new layer1 to compete with the current ones. Instead, our goal was to implement the advanced EWASM runtime in different layer1s to provide high-performance Ethereum-compatible features. This has not been possible to achieve, as it has been proven that it is too early for the crypto sector to adopt the EWASM (Ethereum-flavored WebAssembly) runtime.</li><li>We have doubts that the current Polkadot parachain auction economy is sustainable. Looking at the current status of the <a href="https://parachains.info/auctions/polkadot-26-32" rel="noopener noreferrer nofollow">parachain auctions</a>, most of the slots were either self-funded by the project team or gained less than $2M in DOT funding. Also, even if a parachain does gain popularity and grow, it doesn’t contribute its fair share back to DOT, since the amount of DOT deposit is fixed for the whole 96-weeks slot auction period.</li><li>Based on the latest <a href="https://etherworld.co/2021/12/02/ethereums-latest-roadmap/" rel="noopener noreferrer nofollow">Ethereum Roadmap</a>, the current priorities are things like zkEVM,  Danksharding, etc. After the Merge, the Ethereum Foundation still includes EWASM runtime in their roadmap, but it probably won’t happen until sometime in the Splurge stage, with no definitive timeline for adoption. With the success of The Merge after the Paris upgrade back in September 2022, Ethereum is now the largest PoS consensus layer1. However, it is important to note that currently, there is only a 12% staking ratio on Ethereum’s Beacon Chain. If we look at other layer1 networks like ADA, Tezos, and Cosmos, they have at least a 50%&#43; staking ratio. If Ethereum follows suit, a minimum $60B staking marketCap is coming to Ethereum in the next two years.  This situation presented an exciting opportunity for the ParaState team to build a decentralized staking infrastructure  to improve the security and robustness of validators securing the Ethereum network.</li><li>ParaState is a startup running on limited resources. However, the capital we currently have on hand can ensure the project has another 23 months of runway. It is crucial that we bet our limited resources on the tech stack that will gain PMF in an affirmative market sector with high demand.</li><li>It was after considering all of the above points that the ParaState core team and DAO made the decision to build and launch SafeStake.</li></ol>Where is ParaState now and where is it going?We’re completely focused on testing SafeStake at scale and have published the official 2023 SafeStake <a href="https://www.parastate.io/safestake/#Roadmap" rel="noopener noreferrer nofollow">roadmap</a>. The team launched the <a href="https://parastate.substack.com/p/safestake-incentivized-galileo-testnet" rel="noopener noreferrer nofollow">Galileo incentivized testnet</a> in August 2022, and after more than 12 months of development, our <a href="https://github.com/ParaState/SafeStakeOperator" rel="noopener noreferrer nofollow">node backend</a> has accumulated 100,000&#43; lines of code.SafeStake is the first DVT infra and protocol written in Rust. It uses a BLS signature scheme, MPC (Multi-Party Computation), and DKG (Distributed Key Generation) protocols, along with HotStuff consensus, for improved security and robustness.Currently, we are proactively debugging the current Galileo testnet code and plan to implement updated code that will include support for tokenomics ($STATE token economy) at the end of this month. We will continue testing the tech stack at scale with validators (supporting a 32 ETH staking deposit) and operators, and are planning to bring the code from our Stage1 testnet to Ethereum mainnet by the end of March 2023.OutlookOther DVT players, SafeStake’s core competencies, and our positioning in the Eth2 staking sector.Let’s assume the staking ratio on Ethereum will hit 50% in the next two years. The current <a href="https://beaconcha.in/" rel="noopener noreferrer nofollow">staking ratio on the Beacon</a> Chain is around 13%, pointing out a potential $69B&#43; (based on the current spot ETH price) marketCap growth in the Ethereum staking sector.Who are and will be the major players to divide up the pieces of this massive pie?Let’s look at some non-custodial service providers and ignore things like centralized exchanges (CEXs) and solo-stakers.  It is my expectation that non-custodial service providers will play the biggest role (80/20) in the sector in the coming two years.Lido, a top-tier liquidity staking protocol on Eth2,  is responsible for about <a href="https://beaconcha.in/pools#distribution" rel="noopener noreferrer nofollow">25% of liquid staking</a> pool shares on the Beacon Chain, and is currently working with Obol Tech and SSV to <a href="https://blog.lido.fi/dvt-pilot-with-obol-network/?pk_vid&#61;0559f5141af420fa16739129199b8bbc" rel="noopener noreferrer nofollow">pilot DVT</a> into its ecosystem.Obol tech was cofounded by Collin Myers (former head of product strategy at Consensys) and Oisin Kyne (formerly of Blockdaemon). They raised $6.15M in 2021 via Ethereal Venture, an investment arm of Consensys. The Obol Network is responsible for fostering the adoption of multi-operator validation as a use case for Distributed Validator Technology.SSV network is the next iteration of non-custodial staking service, Blox Staking. They raised $10M in 2021 and focused on deploying “secret shared validators” that fragment control of the network’s validators between multiple nodes. SSV was also awarded a grant from the EF to help bring DVT into the Ethereum ecosystem.Rocket Pool is a community-driven, non-custodial staking protocol. Rocket Pool occupies about 2.2% of staking pool shares on the Beacon Chain right now. Validators run on solo nodes, presenting a single point failure, and the network relies on a DAO oracle to monitor the operator nodes to prevent front-running and falsely claiming all the ETH rewards when a validator exits the Beacon Chain.SafeStake is a trust-minimized middle layer for the most secure and decentralized ETH staking. Imagine SafeStake as an enhanced iteration of Rocket Pool by <a href="https://parastate.gitbook.io/safestake-overview/safestake-tech-stack" rel="noopener noreferrer nofollow">implementing BLS, MPC,and DKG protocols with HotStuff consensus</a> to provide the highest levels of security and validator robustness, while keeping everything as decentralized as possible, and not relying on an oracle to prevent front-running. SafeStake is positioning itself as a fundamental DVT infra that is not only great for solo stakers but enables other liquidity and staking pool protocols to decentralize their validators. Our goal is to acquire at least 10% of the growth marketCap in the ETH2 staking sector in the two years following SafeStake’s official launch on Ethereum mainnet.I truly hope this annual review and future outlook can help answer some of the questions and alleviate the concerns we have heard from the community and unite all community members towards the same goal in 2023 – to become the major DVT infra in the ETH 2.0 staking space.Join the ParaState community:<a href="https://www.parastate.io/" rel="noopener noreferrer nofollow">Website</a> | <a href="https://medium.com/ethereum-on-steroids" rel="noopener noreferrer nofollow">Blog</a> | <a href="https://twitter.com/parastateio" rel="noopener noreferrer nofollow">Twitter </a>| <a href="https://t.me/ParaState" rel="noopener noreferrer nofollow">Telegram</a> | <a href="https://discord.com/invite/zFS3Mnfpwj" rel="noopener noreferrer nofollow">Discord</a> | <a href="https://github.com/ParaState" rel="noopener noreferrer nofollow">Github</a>|

Annual Review and Outlook

SafeStake

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