Staking as a service: return of fractional banking

Cartoon by Tom Toles, Washington Post

Co-written with Collin Myers, research lead for staking as a service at Token Foundry. Edited by Chris Battenfield, Luke Loreti, and Nathan Chen.

The cryptosphere has been talking about staking as a service for the better part of a year, with protocols like Tezos and EOS hitting mainnet using various configurations like PoS, DPoS, or hybrid PoW/PoS. The market demand for such a service is obvious: hedge funds, VC’s, and whales are holding tons of illiquid tokens that could be supporting networks and generating additional revenue, but spinning up and managing nodes is not something they can or want to handle themselves. Setting up dedicated machines, ensuring physical security, and being on the hook to troubleshoot nodes on immature networks while risking stakes getting slashed should be done by dedicated professionals, not money managers.

The problem with staking as a service

Imagine there’s a box.

There is only one way to prevent this future: by empowering all individuals to be truly self-sovereign not just in how they spend tokens, but also in how they hodl them and stake them.

The biggest challenge we face is building self-sovereignty into the system from the start. People do not want to work to be self-sovereign; they will not choose it. It is too hard and too stressful and has way too much weight to look down at a USB that holds your life savings.

Protocol Specialist at Bison Trails. ex-ETHDenver, ConsenSys, EY.