Stake Wars Episode II

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

The teams who will transition from one network to the other will be asked to unstake their tokens, and focus on the new network. This process will both make room for new Stake Wars entries on BetaNet, and will progressively increase the number of validators running on MainNet.

Note: every reward will pass case-by-case evaluation and KYC controls, to discourage automated scripting to bias any metrics, or participants not interested to run a node on MainNet.

For more details on differences between BetaNet and TestNet checkout last section of the Roadmap to MainNet blog post.

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

A new leaderboard will be published in the Stake Wars Repo on Github, however some parameters will be shared, if requested, during 1:1 conversations and reviews.

The primary reward for participating successfully in Stake Wars: Episode II is that top operators will be onboarded as the initial set of validators of MainNet. This makes them the initial stewards of the network and leaders in the community, which is very helpful for attracting the delegation of other token holders from across the ecosystem.

Additionally, because “MainNet Restricted” doesn’t have inflation yet, to cover the costs and motivate for getting in this set, such validators will receive 10,000 $NEAR a month.

Stake Wars: Episode II is a dynamic program that will evolve over time. It will introduce increasingly difficult challenges on BetaNet and will progressively migrate to TestNet. Activities for validators will be hard-forks, unplanned restarts, deploying new node releases, updates to delegation contracts, and following best practices on their infrastructure. On a bi-weekly basis, new challenges will be announced in the community channels, and participating will unlock additional rewards, including the opportunity to be officially invited to join TestNet and then the MainNet.

These challenges will unlock additional rewards: NEAR Foundation allocated up to 1 Million NEAR tokens in total for the participants of these initiatives.

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)

All node operators who are already running their node on BetaNet will have only to deploy the Staking Pool Contract, and update VALIDATORS.md file on Github accordingly.

NEAR Stake Wars is waiting for you, start today your validator journey at nearpages.wpengine.com/stakewars.

Getting Involved beyond Stake Wars

Even if you aren’t planning to participate in Stake Wars, there are a number of things you might be interested in:

Tokens: Some validators will use their own stake and others will receive delegation. If you would like to get a stake in the network via acquiring tokens, be sure to sign up for the token list to hear news of any opportunities to do so.

Developers: Check out the docs quickstart for information about how to get started building on TestNet and ask questions in the chat. If you are ready to deploy to MainNet, register for the Developer Program.

Interested Contributors: If you run your own community and we can help out or if you are interested in helping out directly, learn about our community programs or ask questions in the chat.

Startup Founders: NEAR is a supporter of the Open Web Collective, a protocol-agnostic community of startup founders who are focused on building on the decentralized web. They provide education, networking and support during this process. Learn more and join at https://openwebcollective.com.

Business Leaders: If you are curious about how to integrate with NEAR or whether it might be a good fit for your business needs, reach out to [email protected].