ErgoPad

We’re pleased to announce that we’ll be launching our staking platform in the upcoming days. The smart-contracts are complete and currently being audited by some Ergo core developers. The post below will serve as an explanation and introduction to the staking platform and clarify how the staking tiers work, and provide an explanation for the un-staking fees and what purpose those serve.

Ergopad devs are now working hard to add dApp connector functionality so that staking can be done with Nautilus, Yoroi’s new dApp connector, and ErgoPay, eliminating the need to use the assembler service. The assembler service was a fantastic option to use before the dApp software was built, but it came with various issues, including the fact that it would miss transactions if too many came through per block. Staking and any new contracts we develop will be able to avoid that issue.

What is Staking?

Basically, staking any token means that you are locking your funds to support the network. In exchange for holding the token and supporting the network, you will earn interest which can be considered passive income, just by holding coins. Check out this article for more information about staking, however, since Ergo is Proof of Work, staking does not contribute to network consensus. This is merely an emission contract which gives bonus tokens in exchange for your support of the Ergopad platform.

The Staking Smart Contracts

Luivatra has been hard at work building and testing the staking contracts. They are the first of their kind on Ergo and to build them with eUTXO and Ergoscript has been a challenge. For those of you that know how to run the Scastie Ergoscript playground, you can test the smart contracts yourself. For all others, Lui has made a video explaining the theory behind the contracts.

Vesting and Staking in ErgoScript with Luivatra

The team will also be building new front-end code to help users interact with these smart contracts. This will generate the transactions that allow you to stake and un-stake your tokens, even though all the magic happens on the blockchain. If our website were to go down for any reason, users will be able to still generate the transactions and withdraw their tokens by directly sending the correct UTXO to the blockchain.

To help someone do that, we do share all our code and keep it open source. Anyone is able to view the code on our github repo, and experiment with it themselves. We will be splitting portions out into microservices that should be able to stand alone, making it easier for others to use the portions of our code that will help them launch their own projects, or just interact with the smart contracts. If you are a developer, come collaborate with us, there’s a development channel in the Ergopad Discord and we’d be happy to discuss what we’re working on behind the scenes.

Benefits of staking Ergopad

Staking provides a few utilities. Staking your Ergopad tokens will generate new tokens based on the number you have staked and the emission schedule. There are 321M tokens available for stakers, which will be distributed over 3 years time.

There are also staking tiers which give stakers an opportunity to invest early into new projects launched on Ergopad. These early staker seed rounds will provide new project tokens at a much lower contribution price to the public rounds after.

The number of tokens allocated to each staker will be determined on a case-by-case basis, as each project will have a different number of tokens reserved for this round. The staking snapshot date will be announced ahead of time, and anyone staking in a tier during that time will be eligible for the number of tokens based on their pool weight.

Example:

If only 3 people were staking with an allocation weight of 10, 10, and 20 respectively, the allocation is 10+10+20 so 40 total. Person A and B with weight 10 get 10/40 total percent of the supply, or 25%. Person C with weight 20 gets 20/40 or 50% of the allocation. So hypothetically, if $1000 worth of tokens are available at the staker reserved seed round, persons A and B can invest up to $250 each, and person C is allowed to invest up to $500. Any remaining tokens after the sale return to the treasury. Alternatively, the remaining tokens could be burned, which will be a decision for that specific project’s team.

Pool weight example

Unstaking Fees

You may have noticed there are fees to unstake early. The unstaking penalty, while annoying to an individual, protects everyone’s asset value. It prevents people from staking the day before a snapshot, then unstaking the day after. Without these fees, somebody could buy a bunch of tokens, get pool allocation to an upcoming project, then unstake and sell all the tokens the next day.

Since the intent is simply to prevent that type of exploitation, we decided to burn the unstaking penalties, and don’t reserve any for the Ergopad treasury. Furthermore, it prevents people from “FOMOing” in and “FUDing” out by encouraging an individual to stake for a few weeks; they have to be more conscious of their decisions and have a longer investment time frame, lowering the chance of making emotional investment decisions.

Savvy readers may also notice that burning these tokens will cause some deflation to the supply of Ergopad tokens, which will help mitigate at least some of the inflation caused by staking emissions.

Stay tuned for further announcements about staking with Ergopad. We’ll soon provide more information and tutorials about our staking platform, and will announce the start date ahead of time so everyone can get staking as soon we it’s live.