Incentivized Testnets are the New Normal
Discovering the unexpected is more important than confirming the known.
George E. P. Box
2020 is the year of Proof of Stake. With large projects like Ethereum 2.0 and Cardano planning to launch fully decentralized Proof of Stake networks this year, the buzz around the consensus algorithm has never been bigger. Currently, all Proof of Stake coins, like Tezos, Cosmos, and Terra, collectively have a combined market cap of over $10 billion. That number is expected to more than triple with Ethereum and Cardano transitioning to a Proof of Stake model.
But that number doesn’t include other Proof of Stake networks that are planning to go live in 2020. Proof of Stake blockchains like Celo, Oasis, NuCypher, and Solana are scheduled to launch some time in 2020. That being said, you cannot just simply launch a Proof of Stake blockchain and hope for the best.
Before launch, a successful Proof of Stake blockchain needs a way to test the overall stability of the network. They also need a diverse set of node operators to test incentives and protocol features. This can be done, albeit in a centralized way, in house up to a certain extent, but to really test the capacity of a network and its decentralization protocols, a blockchain project needs to bring in an external set of validators and node operators.
The problem? Operating nodes cost money, and it’s not just the hardware or the power required to support these networks. All of these networks function differently, so setting up, maintaining, and running a node requires time and skill. Proof of Stake blockchains need a way to attract quality node operators to join their testnet. The answer is to incentivize the testnet process.
Incentivized testnets are competition based. Participants in the competition are rewarded in tokens for completing a variety of tasks. Tasks are designed to test the performance of the network, its features (such as governance), and to identify flaws within the network. Participants who perform the most tasks receive the highest reward.
This format brings to light the best node operators within the network. This also allows projects to establish relationships with validators before mainnet. Building trust and creating communication channels between validators and projects ensures a more successful mainnet launch.
Game of Stakes: The First Incentivized Testnet
The Cosmos Network was the first to implement an incentivized testnet into their testing process. Game of Stakes, as they call it, was widely regarded as a success, and it laid the foundation for future incentivized testnets. Figment took part in this competition, and we are currently operating nodes on the Cosmos mainnet, while also building validator tools for the Cosmos Hub.
As of February 2020, there are currently more than10 major incentivized testnets live and running, with Ethereum 2.0’s incentivized testnet planning to launch some time this year. Figment is currently active on 8 incentivized testnets. We choose to join incentivized testnets, not just for the reward. We choose to join testnets because of our belief in the future on the project, and on our ability to provide value to the network by building validator tools, such as Hubble, and through our expertise in governance. Below are some briefs on incentivized testnets that we are currently involved in and are excited about.
Celo (Baklava Testnet)
The Great Celo Stake Off started in December and is expected to end in late February. Sticking to the food verbiage, validators “chefs” are invited to participate, while being rewarded in Baklava Test Units (BTUs) for completing a variety of tasks.
The main goals of Baklava includes building validator experience and establishing security best practices. What’s unique about Celo is their validator group function, which is a main focus of the Baklava Testnet. There will only be 100 validator slots on the Celo Network. Celo Gold holders in turn vote for validator groups as opposed to individual validators. Validator slots are received by validator groups depending on how many votes they receive, which means not all validators in a group are guaranteed a slot to participate on the network.
Baklava is also focused on community participation. Technical contributions, answering questions on discussion boards, and producing educational content will all be rewarded with Celo Gold. Up to 500 thousand Celo Gold units will be distributed this way.
There are up to 2 million Celo Gold units up for grabs during this incentivized testnet, and they will be distributed at the end of the competition. Certain lockup periods on the mainnet may apply, but they are still being discussed.
The Quest started in mid-January with no definitive end date. Because governance of the network will exist off-chain, there is less of a focus on community development in this incentivized testnet.
The Quest is relatively simple and its main goals are stress testing the platform, and educating validators while giving them an opportunity to earn rewards. Top rewards will be given for best attacks, most staked, and most blocks signed.
1% of Oasis’ token supply will be distributed to winners of the contest. Oasis plans to run an incentivized testnet before every major release on the mainnet to test new features.
Come and Stake it (CASI) started in mid-January and has a timeline in place up to late February. There is no definitive end date. CASI is a little more complex and will have at least 4 phases throughout the competition.
The unique part about CASI is that it will be the first time NuCypher tests its WorkLock token distribution model. The main purpose of WorkLock is to incentivize participants to use the token for its intended purpose. This distribution model compliments the high reward rate for staking tokens for longer amounts of time.
1% of NuCypher’s token supply (NU) will be distributed to winners of the contest. The tokens will be subject to a 1 year lockup period on the NuCypher mainnet when it launches.
Tour de SOL started running in early February 5th. Solana will reward each participant 3,500 Solana tokens (SOL) for being active during the incentivized testnet.
Most of the rewards will be given to participants who identify issues and actively try to attack the network, which means that validator performance is less of a focus. They will reward participants for critical attacks on the network (30,000 SOL), identifying critical issues (30,000 SOL), and for other minor attacks/issues that are not considered critical (3,000 SOL).
Similar to Oasis, Solana’s incentivized testnet will be ongoing even after its mainnet launch. They will use the incentivized testnet to test network vulnerabilities before implementing any new feature into their Global Cluster (mainnet).
Value for Figment
Incentivized testnets are just as much of a testing ground for Figment as they are for networks. They allow us to get involved with projects early, which gives us the ability to contribute in ways outside of simply running a validator. Our Hubble software services Proof of Stake networks by providing communication, staking data, and governance tools for token holders, developers, and validators. These tools are paramount for a successful incentivized testnet, as well as a mainnet. We also heavily research projects before becoming involved in any incentivized testnet, and we are constantly publishing our findings and thoughts on projects.
Ultimately, we want to contribute at all stages as a partner of these networks. We build the tools needed to secure the chain, we validate the chain, and then we provide access to the chain via our infrastructure.
Feel free to join these project’s community channels if you would like to stay updated.