I’ve been thinking about staking in ZKsync, and I wanted to open a topic about the ZK staking roadmap.
Why staking?
Staking is the crypto-native way to incentivize almost anything. In ZKsync’s case, staking can create a market incentive for the key services that the network needs. Staking, as opposed to centralized services, is particularly aligned with the principles of the ZK credo:
Trustlessness
Security
Reliability
Censorship-Resistance
Privacy
Hyperscalability
Accessibility
Sovereignty
Why now?
It’s staking season! These days, token utility is not just possible, but expected. Staking aligns tokenholders and secures the protocol. Done well, it can be compatible with governance and with future staking plans. The decentralized proving milestone on the roadmap could use staking to secure provers.
Examples
There’s a lot of prior art here. Ethereum, of course, has staking, as do other L1s. DeFi leaders like AAVE have staking, and – eventually – so will Uniswap. Other rollups like Arbitrum also have staking plans, too.
Staker
At Tally, we’ve been spending a lot of time thinking about different ways to build staking. We’re contributing to Staker, a configurable staking contract compatible with tokens governance. It also works with e.g. validator staking or prover staking.
Staker is the web3-native answer to aligning protocols with token holders. Protocols distribute rewards from revenue sharing or new issuance. The rewards can optionally depend on eligibility criteria. e.g. Eligibility could depend on the tokens being active in governance.
Next steps
I’d be excited to hear more from other parties about staking for ZKsync. When and to what end? What goals and features should the Association consider?
I like the idea that users could stake ZK and still delegate their tokens to an active delegate. However, before we move this idea forward, I would like to see results from ARB staking. When can we expect to have results so we can view some KPIs? This will help us set some expectations.
Is staking meant only for locking ZK tokens to remove them from circluating supply?
Or is there more to it, e.g. using it to run zkSync validators or sequencers? (I know this is not available yet, just talking about potential future usecases)
Personally I’m in favor of the latter. I don’t see much value in just locking tokens to remove them from circulation. I know it could help the price action, but I think that won’t be an issue in 2025 when we expect the whole market to do well
Are there more concrete examples where staking could be used as utility? (besides for validators/sequencers?)
This is an important thing to consider and I look forward to seeing other delegates participate in this discussion.
I’m generally in favour of using staking for stabilizing the price and reducing volatility, but also as a sign of (long-term) commitment to the chain by investing, locking, and holding. We should have token value accrual in mind when designing this, regardless of what market conditions indicate at the moment. The additional utility is welcome too.
Standard idea: adjustable APY based on the length of tokens locked.
I like the idea of being able to receive staked rewards only if 1) being an active delegate or 2) delegating to an active delegate. But I’m looking forward to seeing more utility around combining this with governance mechanisms.
Similar to @TempeTechie.eth, I would caution this DAO from thinking of staking purely as a way of locking tokens via some extra inflation.
Some of the more successful staking schemes are tied to real protocol needs and provide economic guarantees such as selecting validators. At the current time I am unsure what else this could be used for.
Would love to see a staking system but it should be more like a veCRV-style system imo. This could potentially work well with elastic chain as those chains will want a way to boost their tokens’ liquidity. . . I’d also prefer if only tokens that are vote-escrowed would have voting/delegation power as this is more likely to deter governance attacks… . .
Thanks for posting this. I think it’s generally an interesting concept, but as @Tekr0x.eth I would be curious on how it’s going on Arbitrum (and whether there are other DAOs that are following).
Thanks for the great points everyone. Based on this feedback, I am planning to turn this idea into a more structured proposal. I’ll share an early draft during tomorrow’s Proposal Review Call.
Replying below to some of the questions:
The ARB staking contracts are going live in the next few weeks, but it will take months to get results. I think blocking ZK staking on ARB staking will slow down ZKsync too much.
I think there’s value to moving quickly here. The ZKsync roadmap includes staking for decentralized provers, but it won’t be ready until the second half of 2025 at the earliest. The initial staking plan can be compatible with that one, but live sooner. The goal of the intial program is to get ZK tokens staked and active in governance. Governance, just like proving, secures the protocol.
ZKsync could certainly condition staking rewards on participating in governance or actively using the network, as other rollups like Abstract, Rari and Arbitrum plan to do.
I like veCRV too, although it comes with two big challenges:
ve-style governance tokens create a big opportunity for an LST (e.g. Convex) to accrue a huge amount of power in governance. I think the solution here is to pre-empt any non-aligned LSTs with an aligned one. The aligned one distributes its governance power among many delegates instead of auctioning it off. Tally has built such a system that might be useful here.
Liquid staking tokens of lockups have duration risk, which can blow up. I think the best way to avoid LST centralization is to avoid lockups.
There are several other DAOs moving ahead with staking, most notably Uniswap, AAVE, and Rari. There are a few more who haven’t launched yet.
Thanks for all the feedback. Looking forward to discussing more on the call tomorrow!
Hey @rafso, as we discussed on the ZKsync Proposal Review call, let’s shift the debate more towards usecases and the benefits they bring to ZKsync.
If I understand correctly, when a user will stake their ZK tokens, they will be required to choose an active delegate (as the delegate of the user’s staking vault). Is that correct?
The desired outcome in that case would be that a higher amount of ZK tokens are used in governance, which is great.
I think another desirable outcome could be empowering smaller delegates. I imagine there will be a staking frontend where users can choose between active delegates. Preferably, smaller active delegates would have a more visible position on the site.
Btw, any screenshots of how the staking frontend looks like would be greatly appreciated!
Yes, although the staker isn’t required to choose an active delegate. They’re also allowed to choose an inactive one. Other versions of Staker do require an active delegate. ZKsync staking could also set that up, but I’d suggest keeping this proposal simpler. We can always add more criteria in v2.
Agree that giving new delegates a path is a big win. Eligibility criteria could help here, too, especially if existing delegates are not active and up-and-coming ones are more active.
I’ll include a video walkthrough in the proposal when I post it on the forum!
