A recent slashing of Ethereum from different validators has reignited the debate around staking models, with many pointing to Cardano’s more resilient structure as a key differentiator. While Ethereum’s system penalizes validators for downtime or misbehavior, Cardano’s staking approach avoids such risks, offering delegators security without the fear of losing funds.
Why Simplicity And Resilience Are Cardano’s Key Advantages
On September 10, a slashing of 11.7 ETH from 39 Ethereum validators highlights the advantages of Cardano’s staking structure. Crypto analyst Dori has highlighted on X the fundamental differences in staking requirements and risks between the two networks. On Ethereum, it is structurally impossible to stake 0.1 ETH directly on ETH, but an individual must stake a minimum of 32 ETH and operate a validator node themselves.
However, platforms have been built on Ethereum to allow staking with as little as 0.1 ETH, and liquid tokens are issued. The critical difference is that, due to the slashing mechanism, Ethereum’s structure carries the risk of a cascading collapse. This has given rise to platforms like Ankr and Lido Finance, which pool ETH from many users, run validators, and issue liquid staking tokens such as ankrETH and stETH to solve the problem of locked-up funds.
In this incident, an operational mistake by the operators of 39 validators led to a slashing penalty of 11.7 ETH, which is worth approximately $52,000. If a larger slashing event were to occur, it could lead to the de-pegging of the liquid staking tokens, potentially triggering a cascading collapse as DeFi ecosystem protocols built upon them.
On Ethereum, iquid staking platforms were developed to remove obstacles to staking, and liquid tokens were distributed to address the issue of lock-ups. In contrast, Cardana’s staking model allows anyone to stake as little as 10 ADA in a stake pool without worrying about slashing. There are no lock-up periods, and a user’s staked funds are never at risk of being lost, even if their chosen stake pool misbehaves.
Fundamentally Different Approaches To Staking
Cardanians (CRDN) also stated that a critical flaw in Ethereum’s staking model has been exposed, highlighting the fundamental advantages of Cardano’s design. The data shows that the Ethereum staking exit queue has hit an all-time high, forcing users who unstake their ETH to wait an estimated 46 days to get their funds back.
However, Cardano’s ADA staking model offers a fundamentally different experience, with liquid staking and no entry or exit queues. When a user stakes their ADA, the funds remain in their wallet and are always available for use or transfer, and earn rewards without being locked up. “The design is fundamentally better,” the expert noted.
]]>
- Programmable slashing deters malicious acts in shared security blockchain models.
- SatLayer enables custom slashing rules for diverse decentralized applications.
- Bitcoin restaking enhances security while offering flexible incentive structures.
At the heart of many modern-day crypto protocols lies a powerful yet nuanced concept called ‘slashing.’ In its most basic terms, it can be viewed as an economic line of defense helping establish a delicate balance of incentives to encourage proper behavior while deterring malicious activities.
To be more elaborate, slashing conditions offer up financial guardrails within blockchain networks, imposing monetary penalties on participants who violate protocol rules. As a result, they create a system where operators must have skin in the game (i.e. put their capital) before being entrusted with network validation responsibilities.
This is particularly vital in shared security models, where the same set of validators secures multiple chains or applications, as misbehavior in one area can trigger penalties across the entire ecosystem.
For instance, a validator considering double-signing (producing conflicting blocks at the same height) must weigh the potential short-term gain against the guaranteed loss of staked assets – a calculation that typically makes malicious behavior economically irrational.
The economics of trust
Without quality slashing conditions, restaking protocols would lack the necessary financial deterrents to prevent malicious behavior, potentially leading to catastrophic security failures and loss of user funds. However, the implementation of slashing conditions requires careful consideration of numerous factors, including the severity of different offenses, the appropriate penalty levels, and the mechanisms through which violations are detected and proven.
Too lenient, and the rules may fail to deter malicious behavior; too harsh, and they might discourage participation altogether. This delicate balance is essential for creating a system that maximizes security while remaining attractive to potential validators and stakers.
One project that achieves this equilibrium well is SatLayer, a shared security platform leveraging Bitcoin as primary security collateral while offering unprecedented flexibility in slashing condition implementation.
By deploying as a set of smart contracts atop the popular BTC staking platform Babylon, SatLayer enables Bitcoin restakers to secure any type of decentralized application as a Bitcoin Validated Service (BVS) — all while maintaining full Turing-complete programmability with minimal trust assumptions.
Differentiators galore
What truly distinguishes SatLayer from the rest of the fray is its ability to allow each BVS to implement its own specific slashing conditions tailored to its security requirements.
Unlike one-size-fits-all approaches that apply identical penalties across different contexts, SatLayer recognizes that various applications may have distinct security needs and threat models. A bridge service connecting multiple blockchains, for instance, might require different slashing conditions than a decentralized exchange or an oracle service, each facing unique attack vectors and security considerations.
This customizability extends not just to the conditions that trigger slashing but also to the consequences of those violations. BVS developers utilizing SatLayer have considerable flexibility in defining what happens to slashed assets – they can be redirected as protocol revenue, permanently burned by sending them to a null address, or distributed according to other parameters defined by the service.
Basically, different services can experiment with different incentive structures to find the optimal balance between security assurance and participant attraction.
Lastly, it bears mentioning that SatLayer’s approach to slashing creates a three-sided marketplace where Bitcoin restakers, BVS developers, and node operators interact within a self-regulating economic ecosystem. For instance, restakers can enhance the crypto-economic security of the ecosystem by staking their Bitcoin assets and delegating them to trusted operators, earning rewards in return.
BVS developers, on the other hand, can address the cold-start problem – where new services initially lack sufficient security – by launching with the backing of Bitcoin’s massive economic weight.
Lastly, node operators can provide the computational resources necessary to run these services, taking a portion of rewards as their fee while facing the prospect of slashing if they violate established rules — all within a permissionless system where market forces can determine which services gain the most support and which operators earn delegation trust.
A rapidly evolving security horizon
With each passing year, the importance of sophisticated slashing mechanisms (within shared security protocols) seems to be becoming increasingly apparent, especially since traditional approaches to blockchain security often rely on simplistic models with limited flexibility, unable to adapt to the diverse requirements of modern decentralized applications.
In this regard, SatLayer represents a significant advancement, leveraging Bitcoin’s massive security potential to a diverse range of services through flexible, programmable slashing conditions.
Spot Bitcoin ETF applicants have set low fees to attract fund advisors with experts highlighting that custodians will be forced to lower fees to remain competitive in the near future.
The race to attract institutional clients to invest in spot Bitcoin Exchange-Traded Funds (ETFs) has trickled down to the specific sponsor fees. With investors having a wide variety of fund managers to choose from, the back-end detailing of the spot ETF will determine the winner. In addition, advisors to most investors in the United States will be evaluating the spot Bitcoin ETF liquidity to determine the best-fit fund manager. As a result, the dozen spot Bitcoin ETF applicants have been working with traditional financial institutions to ensure ample liquidity access.
Spot Bitcoin ETF Fee Wars
With the decision for the spot Bitcoin ETF applications expected later today, all the involved fund managers – led by Grayscale Investments, Ark Invest, and BlackRock Inc (NYSE: BLK) – have already filed their detailed sponsor fees. According to re-filings with the United States Securities and Exchange Commission (SEC), the Bitwise Bitcoin ETP Trust (NYSE: BITB) has the lowest fee of 0.20 percent and a waiver of 6 months or until the fund hits $1 billion.
The Ark 21Shares Bitcoin ETF (CBOE: ARKB) has the second lowest sponsor fee of 0.25 percent and a six-month waiver until the fund hits $1 billion. Blackrock’s iShares Bitcoin Trust (NASDAQ: IBT) has set its sponsor fee between 0.20 percent and 0.30 percent with a 12-month waiver or until the fund hits $5 billion. The VanEck Bitcoin Trust (CBOE: HODL) has set its sponsor fee at 0.25 percent without any waiver detailing.
Updated Fee war for the #Bitcoin ETF Race. Was missing Wisdomtree’s waiver that was added this morning! Looking for potential approvals tomorrow and potential listings on Thursday pic.twitter.com/7WCTUO95nf
— James Seyffart (@JSeyff) January 9, 2024
Notably, the spot Bitcoin ETF fees are expected to remain unchanged as it would tarnish the reputation of the respective fund managers in case of future alterations. As a result, experts argue that Bitcoin custodians – led by Gemini Custody, BitGo, and Coinbase Global Inc (NASDAQ: COIN) – will be compelled to lower their fees in a bid to remain competitive in an open market. Moreover, every fund manager could develop its infrastructure to facilitate secure Bitcoin custody and further cut fees.
Market Picture
Today’s anticipated approval of spot Bitcoin ETFs in the United States has increased the crypto volatility significantly in the recent past. In the past 24 hours, more than $216 million was liquidated from the crypto market following a false alarm that the US SEC had approved the spot Bitcoin ETFs. Notably, the US SEC Chair Gary Gensler clarified that the agency’s X account was hacked, thus resulting in the false alarm. Meanwhile, Bitcoin price reached a new multi-month high of around $47.9k but has since retracted to trade at about $46k during the early Asian session on Wednesday.
Dogecoin (DOGE) Becomes Third-Fastest Crypto at Decreasing Carbon Emissions, Slashing CO2 by 25% in 2022: R… The Daily Hodl
Source link ]]>
As a result of the coordinated efforts of chain developers and billionaire Elon Musk, the annual carbon emissions of Dogecoin decreased by around a quarter in 2022, making the meme token one of the quickest crypto assets at reducing carbon discharge.
According to a recent research by foreign currency data aggregator Forex Suggest, Dogecoin is currently the third-fastest digital asset in terms of reducing its carbon footprint, having slashed its emissions by 25% in 2022. In 2022, the blockchain emitted 1,063 tons of CO2, compared to 1,421 tons in the previous year.
While Ethereum saw the largest drop in CO2 emissions in 2022 after switching to a proof-of-stake consensus mechanism, its annual emission was 8.3 times that of Dogecoin.
The Dogecoin network’s yearly electricity consumption decreased to 1,416,731 kWh in 2018 from 1,897,990 kWh in 2021, according to statistics from Forex Suggest, which has evaluated the global impact of crypto trading on carbon emissions.
Dogecoin And Elon Musk Team Up
Musk stated in May 2021 that he was working with Dogecoin developers to increase the system’s transaction processing efficiency.
During that period, Dogecoin powered 10,544,431 transactions, using 0.12000 kilowatt-hours (KWH) of energy every transaction, whereas in 2022, it powered 11,806,084 transactions without requiring a single KWH per transaction.
Elon Musk and Dogecoin. Image: Getty Images
Musk also said in 2021 that his electric vehicle company, Tesla, will cease accepting Bitcoin (BTC) payments, citing environmental issues linked with Bitcoin mining.
In addition, he suggested in December 2021 that Dogecoin is a preferable payment alternative than BTC. The next day, he announced that Tesla will begin taking DOGE for merchandise purchases.
Forbes lists Musk as the wealthiest individual in the world, with a net worth of almost $120 billion. Musk cofounded the rocket manufacturer SpaceX.
Image: Black Enterprise
Bitcoin Cash (BCH), a hard fork of BTC, is the second crypto currency that is exceeding Dogecoin in terms of how quickly it reduces the environmental impact.
Bitcoin was followed in terms of carbon emissions by Polygon and BCH. BCH uses 18.96 kWh every transaction, while Polygon uses 90.18 kWh per transaction.
On Global Adoption & Goin Green
Dogecoin is a digital currency that was invented as a “joke” by software engineers Billy Markus and Jackson Palmer.
In its early years, the meme currency has not seen many technological updates. Among prominent meme currencies, it is the sole proof-of-work (PoW) blockchain.
DOGE total market cap at $11.6 billion on the weekend chart | Chart: TradingView.com
As of the time of writing, DOGE is trading at $0.0871, up 3.5% over the past week, according to data provided by Coingecko.
Meanwhile, several major organizations that have criticized cryptocurrencies have highlighted the energy-intensive nature of crypto transactions and mining as a contributing factor to the indifference.
As cryptocurrencies become more sustainable, global use is projected to increase.
Featured image by Geographical Magazine
New data reveals that meme token Dogecoin (DOGE) is one of the fastest crypto assets at decreasing carbon emissions.
According to a new report by foreign exchange data aggregator Forexsuggest, Dogecoin is the third-fastest digital asset at lowering its carbon footprint as it slashed its emissions by 25% in 2022.
“Dogecoin has seen a 25% decrease in its annual CO2 emissions. Throughout 2021, the cryptocurrency emitted 1,423 tons of emissions. This has now been reduced to 1,063 tons in 2022.”
The report finds that awareness of the environmental impacts of trading crypto assets has risen recently, highlighting the high-profile case of Tesla CEO Elon Musk, who flipped his stance on Bitcoin (BTC) after investing in it, announcing that the electric vehicle giant would no longer accept BTC for payments.
The report also finds that Ethereum’s (ETH) switch from a proof-of-work consensus mechanism to a proof-of-stake system reduced its environmental impact as it dropped from the second-most pollutant crypto in 2021 to sixth place in 2022.
“In 2021, [ETH] was creating a huge 21.95 million tons of CO2. This has now been decreased to just 8,824 tons. By doing this, there would now only need to be 44,121 trees planted in order to offset Ethereum’s annual emissions, compared to a huge 109,751,315 trees the previous year.”
While it was found that DOGE is quickly shedding its pollution levels, other prominent crypto assets, such as king crypto Bitcoin, layer-2 scaling solution Polygon (MATIC), and smart contract platform Cardano (ADA), have gone the other way, increasing their carbon emissions.
The only two digital assets outpacing Dogecoin in terms of how quickly they are reducing their environmental impact are Ethereum and Bitcoin Cash (BCH), a hard fork of BTC.
Don’t Miss a Beat – Subscribe to get crypto email alerts delivered directly to your inbox
Check Price Action
Follow us on Twitter, Facebook and Telegram
Surf The Daily Hodl Mix
 
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Generated Image: Midjourney