Proof of Stake (PoS) has become the de facto consensus mechanism for smart contract platforms. While the core concept is the same, implementations of PoS can vary significantly depending on a set of optimizations brought forward by developer teams. Key takeaways: Intro to PoS & Consensus Algorithms Liquid Staking Staking in the Application Layer The Future of Staking For more information go to app.intotheblock.io

1. Staking in a Multi-Chain World - Key
Analytics & Concepts to Know
December 2021

2. Agenda
● Intro to PoS & Consensus Algorithms
● Liquid Staking
● Staking in the Application Layer
● The Future of Staking

3. A quick update about ITB

4. Partnerships
● Decrypt, Altrady

5. New Algorand dedicated analytics
● 150+ unique indicators dedicated to ALGO across 7 categories:
○ Financial
○ Network
○ Ownership
○ Exchanges
○ Social
○ Derivatives
○ Capital markets

6. Intro to PoS & Consensus
Algorithms

7. Proof of Work
● Establishing agreement without having
to trust a third party
● Byzantine Generals Problem
● Rewards for contributions to a
decentralized network
“The root problem with conventional currency
is all the trust that's required to make it work.
The central bank must be trusted not to debase
the currency, but the history of fiat currencies
is full of breaches of that trust.” - Satoshi
Nakamoto

8. From Proof of Work to Meme Coins
● Once Bitcoin proved it could be done, innovation
and speculation followed
● Dozens of consensus algorithms in base layer
● Hundreds of incentive systems in application layer

9. Proof of Stake
● The dominant consensus algorithm
● Deposits validating transactions
● Capital securing the network
● More accessible
● Lower (0.05%) electricity consumption
● Different implementations

10. Delegated Proof of Stake
● Consensus validated only by set of
delegates
● Elected or assigned
● Increasing scalability, reducing
decentralization
● Cartel risk
Image source: Medium

11. Proof of (Staked) Authority
● Similar to DPoS
● Staking reputation rather than capital
● Known entities, typically assigned
● Same trade-offs as DPoS

12. Smart Contract Platform Comparison

13. Liquid Staking

14. Problems with PoS
● High minimum requirements (tokens + hardware)
● Illiquid - locked, withdrawal times
● Not composable

15. Unlocking Utility
● No minimum
● No withdrawal periods
● Using staked tokens as a “money lego”
● Building on top of staking
Image source: Blockspaper

16. Liquid Staking Infrastructure
● Smart contracts, validators and incentives

17. Liquid Staking Share in Ethereum
● Currently 20% from 3% in January

18. Liquid Staking Players

19. Liquid Staking in Other Chains
● Lido in Solana, Terra and soon Polygon
● PStake launch for Cosmos hub
● Early stages

20. Staking in the Application
Layer

21. DeFi Staking
● Around 2018-19, protocols started testing
inflationary rewards to incentivize growth
● Synthetix staking in 2019
● Myriad of different versions in 2020-2021

22. Term Clarification
● Yield farming/liquidity mining = depositing liquidity, earning
tokens (inflation)[example: Compound, PancakeSwap pools]
● Staking = depositing liquidity in one asset, earning fees from
revenue + inflation [example: veCRV, xSUSHI]
● Liquidity providing (LP) = depositing liquidity into a pool of
assets, earning fees from revenue [example: Uniswap]
● Pool 2
● Different definitions in different protocols

23. Building on Top of Staking
Image source: Abracadabra

24. The Future of Staking

25. ETH 2.0 Staking
● The merge - Q2 2021 ● No more Proof of Work ● No changes in L1 fees

26. ETH 2.0 Staking

27. Cross-Chain Staking
● Being able to move staked positions
across blockchains
● BETH in Terra
● Cosmos IBC for staking
Image source: Symbol

28. Crazy Ideas With Staking
● Smart contract platforms as new
economies
● Staking as GDP-mining
● Earning value from all networks you
participate in
Image source: Collective Campus

29. Conclusions
● Staking is a critical piece for web 3.0
● Incentive systems for L1 and dapps
● Liquid staking unlocking capabilities
● Endless possibilities…

31. Thank You! Questions?
Lucas Outumuro
Head of Research at IntoTheBlock
Email: loutumuro@intotheblock.io
Twitter: @LucasOutumuro