Return of the Validators
NEAR’s MainNet recently launched into its first phase, called “POA” (see full roadmap). This means that a small handful of validating nodes are currently being run by the core team. In order to progress to the next phase, “MainNet: Restricted”, the operation of the network will be handed off to a large group of node operators called validators. The goal of Stake Wars: Episode II is to onboard those validators, test the stability of the system and begin introducing some of the unique aspects of NEAR’s delegation system in preparation for the next phase of MainNet itself. Stake Wars: Episode I occurred in late 2019 as a way of stress-testing the network. It helped to expose key areas for stability improvements and drove improvement of release processes. We hope that Episode II will be similarly helpful for enhancing the stability of the system but, additionally, it is about bringing new and old validators up to speed so they can begin staking immediately at the launch of MainNet: Restricted. This post will discuss the unique features of validation and delegation on NEAR, show how Stake Wars: Episode II will work and describe the rewards for successful participation.Contract-Based Delegation
One of the key features that NEAR offers which differentiates it from many Proof-of-Stake networks is contract-based delegation. “Delegation” is when one token holder lends their tokens to a validating node to use them on the delegator’s behalf. This is important because not everyone wants to -- or is able to -- run a full validating node. While the minimum requirements for running a validating node are not technically challenging, the operational efforts are multiple. They consist in ensuring that updates are deployed at the same time with other validators; and building a robust infrastructure, optimized for uptime and security. Since these requirements can require a professional level of oversight and expense, more casual token holders generally prefer not to do this. Other protocols typically implement delegation at the protocol level, meaning that it is exactly the same across all validators. Validators generally compete with each other purely based on what price they offer -- for example, if the protocol is providing a 5% reward for validation, these validators may provide 4% of that as return to people who delegate to them and keep the 1% for themselves. This generally results in a price war where the only differentiation between validators is what return they offer and reputational factors like how many people already delegate to them. Also, custodial centralized exchanges frequently take a large fraction of the delegation market as they allow to offer additional financial instruments that regular validators can’t. Because delegation in NEAR is done through smart contracts, it is far more flexible. Each validator could theoretically produce its own delegation contract or configure the parameters of a widely trusted contract to offer a broad range of services. For example, one validator might offer delegators a better return if they lock up their capital for a long period of time while another might offer better returns for larger size delegations. This contract-based delegation makes it easier to pipe together Open Finance components, so you can imagine contracts which dynamically allocate delegators’ funds to lending protocols or validators depending on the prevailing interest rates and return in the market. Essentially, staking becomes a core component of the Open Finance ecosystem while still providing security to the system as intended.How Delegation Works
Delegation on NEAR is done by transfering funds to the validator’s account via a secure, trust-less smart contract. There is a reference implementation of such a smart contract available now on Github, which we encourage you to explore to better understand the mechanics of delegation. Over time, it is expected that validators will roll out more features for contracts like this, for example, tax optimization for different regions, staking tokens to provide better liquidity for validators and delegators, or any of the previously-described return optimization strategies. Delegation during Stake Wars: Episode II will occur through direct interaction with these contracts via the command line tools but, in the future, explorers and wallets will support an user interface on top of this tooling to make it easy for non-technical users to participate (check out code example and video walkthrough if you want to build this into your wallet/explorer/tool).Validator Participation
Validators are important participants of the NEAR network. As mentioned, they provide the core operation of the network, ongoing security guarantees and participation in technical governance. They run the nodes that generate new blocks, and are instrumental in rolling out technical upgrades and security patches across their systems, coordinating with the NEAR core development team, and other validators. Their voice is heard through the direct aspects of technical governance (upgrades) as well as participation in voting processes which support other areas of network governance. During the rollout of MainNet, validators play a particularly important role because their voting power will determine when transfers are unlocked and MainNet officially enters its final community-governed stage. While some validators may participate with only their own stake (for example if they have a sufficient allocation of tokens to begin with), many are professionals who rely on the support of delegators to source enough stake and participate early in validation. Thus, in order to earn the trust of prospective delegators, it is important that such validators are visible and vocal in the community. In the early days of MainNet, the minimum stake required to become a validator is fairly high because the total number of “seats” available for validation is determined by the number of shards the network has been broken into. NEAR initially contains a single shard with 100 seats. As the usage of NEAR grows, the number of shards will grow as well and, with it, the number of seats will grow too. With 100 validator seats available during the initial rollout of MainNet, it is expected that 1-4M NEAR tokens will be required to take one seat on MainNet. This is determined by the overall distribution of tokens staked - see more details in the Economics blog post. To be clear, the tokens that a validator bids in for validation are the sum of their own tokens and those tokens which have been delegated to them, thus delegation will be quite important for many validators to achieve sufficient balances to participate in running nodes. In upcoming months, more seats will become available as the number of shards grows and a security feature called “hidden validators” will be released. This will provide more opportunities for validators to participate in the network operations with lower capital requirements. Stake Wars will take place on the BetaNet network and not MainNet, so it uses the native tokens of the test network BetaNet, which are allocated to participants upon registration. Validators who didn’t already submit their application can create their account, set up their node and begin participating in validation. This initiative is already quite popular. There are already 180+ applications from the previous phase of Stake Wars to participate even before this announcement, with over 60 active validators and 100 nodes currently running. Initially, 75k BetaNet $NEAR (NOT MainNet tokens) will be provided to the new applicants of Stake Wars. Depending on how popular the Stake Wars is, this amount may become insufficient to earn one seat so delegation could increasingly become important. Additionally, to make room for interested parties, we will work to span Stake Wars: Episode II over multiple test networks (see below for details).Path to Community Governed MainNet
The overall goal is for validators and token holders to take over technical governance of MainNet (see MainNet Roadmap for more details). To achieve this, Stake Wars is an opportunity to identify the best validators and for them transition from BetaNet to TestNet and then MainNet and provide them with the ability to attract delegations. Every validator will go through these phases:- Join Stake Wars on BetaNet
- Successfully complete BetaNet Validator challenges
- Get promoted to TestNet
- Successfully complete TestNet Validator challenges
- Start staking and accepting delegations on MainNet
- Vote for unlocking transfers
Judgement Criteria and Rewards
As a validator, one of the main criteria to determine success is running secure and live infrastructure. This means setting up infrastructure for updating software, having a hot swap setup to keep uptime when updating software (NEAR has the unique ability to atomically switch staking from one node to another). Additionally, it’s about participating in discussions, helping other community members and attracting more delegations. A new leaderboard will rank validators based on:- Uptime
- Capacity to update the node and closely follow latest releases
- Correct deployment of the delegation contract
- Involvement in community discussions and helping other members
- Building open source tools and other code contributions
Validator Advisory Board
We are also launching the Validator Advisory Board, a selected group of professional validators who,over time, will become key voices in the technical governance of the community. These validators are engaged in group discussions, product advice and feedback, testing beta releases, and suggesting features that support other validators, and the ecosystem at large. The initial members of this board were the first participants who started running validator nodes on BetaNet, helping the NEAR Collective with technical details of validation and supporting fellow validators with setting everything up. Going forward, this group will stay at the forefront of NEAR’s advances in staking, providing product feedback and building tooling. Initial members of this Validator Advisory Board are: Bison Trails, Buildlinks, Figment Networks, HashQuark, Sparkpool and Staked. There are still a few vacant spots on the Board. If you are a professional validator participating in Stake Wars and want to join this group, reach out to us.How to join Stake Wars: Episode II
There are a few steps to follow:- Open the initiative official page at nearpages.wpengine.com/stakewars.
- If you haven’t already, you must sign up for NEAR’s BetaNet Wallet at this link. It will allocate you the few test tokens necessary to deploy a delegation contract.
- If you haven’t already, you have to enroll in the Stake Wars program, from this form, to subscribe to our technical bulletin, and receive new releases information.
- Follow the indications on Github, at the address https://github.com/nearprotocol/stakewars, to deploy your own node and add it to the VALIDATORS.md list.
- Deploy the staking pool smart contract, to enable delegation on your node.
- Once the contract is deployed, you will receive extra tokens: differently from the past weeks, this time the tokens will come in the form of delegation, and not tokens available in your wallet.
- Join the official community channels on Discord or Telegram and follow any weekly updates or actions required (such as update your node to a new release)
