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Jon (@jon_charb on X) of DBA has put out a great piece on L1 and L2 value capture. The post unpacks the economics of token holders (stakers), validators, and protocol issuance in great depth. It's quite a long read, so prepare a big cup of coffee this weekend before diving in.
Thank you to Dan Smith and Mike Ippolito for valuable input, review, and related discussions. The views expressed in this post are solely my own, and do not necessarily reflect those of the reviewers. You can also listen to our podcast covering this post on Spotify or YouTube.
Celestia
Just a reminder that the delegation program application for Cohort 3 is now open. This delegation program will be the best way to get into Celestia's active set. At time of writing, you need at least $4 million in TIA stake to make it into the top 100.
https://docs.celestia.org/community/foundation-delegation-program
Polkadot
The Web3 Foundation has announced the Decentralized Nodes Program. Validators have until October 31, 2024 to submit their applications for a chance to become an active Polkadot validator. At time of writing, you need at least $8 million in DOT stake to make it into the 400 active set.
We are thrilled to unveil the Decentralized Nodes Program, an initiative designed to support and empower validators within the Polkadot ecosystem. This program will enhance decentralization...
The inflation model has been significantly modified to become simpler. I recommend checking out the following forum discussion for more details.
Validator set size will increase from 400 to 500 if the following proposal passes, which seems highly likely.
Stacks
The highly anticipated Nakamoto upgrade has been delayed by a week. A final testnet hardfork will be conducted this week before a mainnet hardfork block height is decided.
As a reminder, here are key changes from the Nakamoto upgrade.
Blocks no longer follow Bitcoin block times. A selected miner can propose multiple blocks, targeting for a 5 second block time.
Validators (signers) have the responsibility of validating, propogating, and finalizing the blocks proposed by a miner.
After the successful hardfork of the Nakamoto Testnet last week, the latest stacks-core software Release Candidate 2
Tezos
The latest upgrade proposal for Tezos has been highly contentious. Two proposals were initially proposed: Quebec A and Quebec B.
Block time reduction from 10 seconds to 8 seconds.
Fixes to how delegations are computed.
Adaptive maximum issuance bound.
Reduction to the stake power of delegations (only for Quebec B).
The adaptive maximum issuance bound was introduced in order to prevent a scenario where issuance remains too high despite As a response, Qena proposal was put forward, which includes the block time reduction and delegation computation fixes, but forgoes any changes to the economic parameters.
While Qena has yet to pass quorum or supermajority (both conditions required for the proposal to pass to the next stage), it has been getting more support than the Quebec proposals.
Tezos Explorer and API with high data detalization, user-friendly interface and free open-source blockchain indexer.
Both EigenLayer and Celestia enabling staking for investors have been widely discussed on CT this past 2 weeks. It's surprising that this topic comes and goes every cycle. Despite the public outcry, this practice will likely not change any time soon. No protocol has ever been punished by the market for letting investors stake. As long as the market shows indifference, this will continue to be common practice.
Despite the increase in demand for validators from L1s, AVSs and other middleware, we have yet to see a wave of new validator entrants. I wish I am exaggerating, but by my count there are at least 60 AVSs in the pipeline alone. Big validators cannot be present on every single one of these projects. There is bound to be opportunities that are missed. If you are a validator that have recently entered this space (< 1 year), please reach out. I am keen to connect and learn more about you.
Please subscribe to our newsletter if you found this useful! You can always send me feedback on X (https://x.com/proofofjk) or Telegram (@proofofjk). Let me know what protocols you want me prioritized or if I missed any important news!
JK
