A Smart Delegation Router for Staking 📡

[SMOOVE]

Goal: To build a decentralised router that streamlines the staking process for users while also increasing the Nakamoto coefficient of the Sui network

Problem Statement:

• Sui network has a validator scoring system for selection and rewards, involving gas bidding, tallying rule and general performance.
• Users can participate in validator staking natively via Sui wallet
• Users often do not have the tools, time and know-how to delegate effectively, often relying on ‘wisdom of the crowd’ metric, total value staked, and commissions costs to make a decision
• Once staked, it is unlikely that user will adjust their delegation until they decide to unstake
• This may lead to concentration of stake amongst the top validators with resources to charge lower commission and have big backers
• Despite having voting power capped at 10%, there are still risks having user’s stake consolidated with a limited number of validators:
  • For eg, this may lead to cartel like behaviours amongst validators since operators are not limited to running 1 validator
  • pricing out of smaller but honest and proficient validators who would otherwise contribute to a larger and more decentralised validator set
  • higher risk of failure due to concentration risks
• Nakamoto score describes the minimum amount of effort it would take to disrupt any given blockchain. A high coefficient means that a blockchain is harder to disrupt because it’s more decentralised.

Motivation:

• The aim is to develop a delegation router that eases the decision-making process for users seeking to stake on SUI, while strengthening the decentralisation of the network, which will improve Sui network’s Nakamoto Coefficient.
• The goal is to minimise the variance of staking across qualified validators and minimise the hassle of validator selection to maximise staking on Sui network
• The platform will be created as a public good and is not designed to collect fees or generate any form of revenue

Implementation:

• Instead of calling sui_system::request_add_stake, which requires both the Sui intended stake and the validator address, we are proposing a nakamoto_router::request_add_stake which requires only the Sui intended stake
• The router will automatically select one validator from a Preferred Validator Set (PVS) and submit it when calling sui_system::request_add_stake
• The selection process uses proportional distribution (open to discussion) when choosing the validator for any specific call to stake, based on the intended stake amount
• The validators in the PVS are to be selected by a council and updated on an hourly basis
• Each council member can vote for 3 different validators to be added to the PVS every hour
• The selection of these validators should be done in a holistic manner, utilising a variety of metrics that ultimately achieve the goal of increasing the decentralisation of the Sui network
  • Each vote to a validator assigns a base weight of 1.0
  • If a validator is voted by multiple council members, the validator’s weight will be increased by a factor of 150% per vote
• Council members can be added and removed by a 66% vote of other council members
• The router is not a pool and it is not custodial, it only forwards a call to sui_system::request_add_stake and recommends a validator to stake on, the StakedSui objects are transferred directly to the user
• Numerical values used in this proposal are meant to serve as a guideline and open to discussion

We are looking for collaborators with strong understanding of the validation processes on Sui to form the initial council members. This will be done on a rolling basis as we look to expand the quorum

Council members should also have the means to independently design an algorithmic scoring matrix that best expresses their ideal stake distribution for a decentralised Sui network, as this would help to ensure the PVS is more holistic in nature.

We are also looking for community feedback on all of the above points in order to build a stronger and more robust network! Please reach out by submitting a reply to this post, or contact us at admin@smoove.finance.

SMOOVE Finance is building a StakeFi platform which includes liquid staking, DeFi vaults and validator operations. The Nakamoto Router is designed as a public good and will not have any form of fees or revenue generation tied to it. Although SMOOVE will spearhead the development and implementation of the router with the initial council members, all members will have a stake in the direction and approach.

[Tuvhain]

You make some good points and i am all for actions which further decentralise Sui. Interested in the liquid staking your project will do

[BartBricks]

Have been a user of liquid staking on Ethereum, Matic and ALGO, and this proposal seems like a great idea.

A good resemblance to staking on Algorand can be seen here. Despite ALGO allowing direct native staking, a significant number of users still opt for liquid staking platforms. At least in my case, convenience and better yields are key in my process.

Therefore, implementing a router to facilitate seamless staking would definitely be an interesting concept to reduce friction for users seeking fuss-free staking.

Looking forward

[SMOOVE]

For ease of understanding, we have prepared a schematic representation that illustrates the architectural modifications before and after the implementation of the router

Current

Proposed