NuCypher is building cryptographic infrastructure for privacy preserving protocols and applications. Their Key Management System (KMS) is intended to address the current limitations that consensus networks have securely storing/sending/manipulating private and encrypted data. On February 20th, 2020, Maclane Wilkison (CEO), and Michael Egorov (CTO) joined us to answer our NuCypher staking questions.
- Fees are paid in Ethereum (ETH), and staking rewards are paid in the NuCypher Token (NU)
- There is a 1:1 relationship between workers and stakers
- 15,000 staked NU requirement to be an active worker on the network
- No plan to slash for downtime at launch
- No planned on-chain governance model at launch
- Third-party custody solutions will be available at launch
- You can no longer “burn” your ETH to transfer your NU during the WorkLock token distribution
The team at NuCypher is designing their network to act as horizontal infrastructure for anyone building a dapp or decentralized protocol. NuCypher’s technology will be used for secrets management, dynamic access control, and secure computation.
Where are we most likely to see NuCypher’s tech in the near-term?
The team currently sees NuCypher as a developer tool or middleware that will compliment a decentralized applications’s tech stack. Managing secrets for cryptocurrency stakers, trading bots, deployments, and databases can all happen in the near-term.
Can the tech be used outside of Ethereum-based tech?
The network piggybacks on the Ethereum chain. Users pay fees in ETH and there is some light dependency on the Ethereum network regarding smart contracts. Cross-payment chains can, in principal, be developed.
What tasks are nodes compensated for on the network?
- Being available/active on the network (NU)
- Accepting policies (ETH)
- Enforcing any user-specified conditions associated with policies (ETH)
- Performing re-encryption in response to a valid request (ETH)
What is the relationship between a worker and a staker?
Workers, also known as Ursulas on the NuCypher network, are active node participants that carry out re-encryption work orders.
A Staker controls NU tokens, manages staking, and collects rewards.
There is a 1:1 relationship with workers and stakers, which means that one staker can only bond to one worker. With this in mind, it is recommended that worker teams implement pooling if they want to receive multiple delegations.
Are there requirements to be an active worker?
Technically there is no limit on how many workers can be active on the network, but there is currently a minimum stake requirement of 15,000 NU to be an active worker.
What do you have to do to be slashed?
Currently, NuCypher does not expect to slash workers for uptime/availability. Workers that are not available will however lose their inflation rewards for any period they are not available.
Workers will be slashed for incorrect re-encryption, but the NuCypher team believes this is highly unlikely under normal operating circumstances unless a node gets hacked.
Is there a governance model in place?
Governance is currently managed by NuCypher through multisig voting by team members, but this may turn into a decentralized autonomous organization (DAO) in the future.
There is no plan set in place for non-team stakeholders to participate in governance decisions, but they do conduct all of their development in public on Discord and Github.
Are there plans for third-party custody solutions?
There are several third-party custodians who plan to support NuCypher at launch. Self-custody options will also be available with hardware wallets such as Ledger.
Can you explain the WorkLock token distribution system?
Simplest description: The WorkLock distributes tokens to those who contribute to the network by running a node.MacLane Wilkison
There will be a period when anyone can contribute ETH to the WorkLock contract. The ETH will be escrowed on chain, and the stake-locked NU will be distributed pro rata once the contribution period ends. NU tokens become unlocked and ETH will be returned once contributors run a node.
Contributors can also cancel their claim, which will immediately refund their ETH and the claimed tokens go into the future inflation pool.
One major change is that you can no longer “burn” your ETH and transfer your NU. The only way you can receive your NU is if you run a node.
What has your incentivized testnet taught you?
The NuCypher team has a much better understanding of how the network functions at scale.
In Phases 1 and 2, there were >1,000 participating nodes at peak. We’ve actually been very pleased with how stable the network has been. The only hiccup was during a contract upgrade when ~10% of nodes were temporarily unavailable for a few minutes, due to a delay between us deploying a smart contract change and upgrading the contract registries.MacLane Wilkison
NuCypher is currently in phase 3 of their incentivized testnet, which will be testing the WorkLock token distribution.
From the very beginning of the project, all of our development has taken place in public/open-source and we’re very happy to engage with anyone interested in running nodes, building applications, or contributing to the protocol. We have a thriving community of stakers and node operators who are happy to help you get running on testnet as we gear up for mainnet.MacLane Wilkison
Special thanks to MacLane Wilkison and Michael Egorov for spending an hour with Staking Hub to answer all of our questions!
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