StakeNet: Revolutionizing Decentralized LSTs on Solana

In a groundbreaking episode of the Mid-curve podcast, hosts Justin and Andrew sat down with Evan, the lead architect of Jito's StakeNet, to discuss this innovative protocol set to revolutionize Liquid Staking Tokens (LSTs) on the Solana blockchain. The conversation delved deep into the mechanics of StakeNet, its potential impact on the Solana ecosystem, and the future of decentralized finance.

What is StakeNet?

StakeNet is an entirely on-chain protocol designed to manage Jito SOL, Jito's liquid staking token, in a fully decentralized manner. Unlike traditional LSTs, which often rely on centralized management, StakeNet aims to create a truly unstoppable and transparent system for stake delegation and validator selection.

Evan clarifies a common misconception right off the bat: "StakeNet is not restaking. I think that gets a lot of people confused." Instead, StakeNet is a sophisticated protocol that will take over the management of Jito SOL, ensuring that all stake-related operations occur on-chain and are visible to all participants.

The Problem with Traditional LSTs

To appreciate the innovation of StakeNet, it's crucial to understand the limitations of current LST systems. Evan explains that stake pools traditionally have two main responsibilities:

1. Selecting a set of validators to delegate stakes to
2. Delegating the stake received from users to those validators

On Solana, these actions typically occur every two days, coinciding with the network's epoch. The challenge arises from the need for a centralized authority to execute these actions consistently.

"It gets really impractical to turn that into a thing that's owned by a DAO or even a multi-sig," Evan points out. "So what it ends up being in most cases is just this centralized like hot wallet on some server that is just running some private code base and delegating stake."

This centralization introduces risks and lack of transparency, issues that StakeNet aims to address head-on.

The Architecture of StakeNet

StakeNet's architecture is designed to decentralize every aspect of LST management. It comprises several key components:

Validator History Program

This program collects and stores on-chain data about validators from various sources, including:

• The Solana vote program
• The Solana gossip protocol
• RPC methods

This data is amalgamated into a single account per validator, supporting up to three years of history. This comprehensive dataset forms the foundation for informed, data-driven validator selection.

Steward Program

Evan describes the Steward program as "this on-chain brain that then takes in the validator history program and then decides what validators do I actually want to stake to." It's the decision-making component of StakeNet, using the data collected by the Validator History Program to select validators and delegate stakes based on predefined criteria.

Keeper Bots

To ensure the system remains operational without centralized intervention, StakeNet employs permissionless keeper bots. These bots can trigger all necessary instructions to keep the system running smoothly. Importantly, as Evan emphasizes, "anyone can run the software. The programs are designed such that there's no special authorities to get the main functionality working, which is really important. And that's what makes this like actually decentralized."

JTO DAO Governance

While the system operates autonomously, the JTO DAO retains control over critical parameters. This includes setting scoring criteria for validator selection and determining operational details like the number of validators in the stake pool and the frequency of set reselection.

Transparency and User Experience

From a user perspective, the process of converting SOL to Jito SOL remains straightforward. However, the backend operations become significantly more transparent and decentralized with StakeNet.

Evan contrasts this with traditional systems: "That used to be a pain point, right? Like, maybe for other systems who that SOL actually gets with and who your validator is. It's like who's friend was with the founder of the project, right? That it's sometimes based on systems of trust and business development relationships."

With StakeNet, the selection process is based purely on on-chain statistics and predefined rules, eliminating bias and enhancing transparency.

Novel Data Utilization

One of the most exciting aspects of StakeNet is its potential to utilize novel data sources for validator selection and stake management. Evan highlights the possibility of using IP address information from the gossip protocol to estimate validator locations.

"If you could somehow use that information, the multiple data points you're pinging from to like triangulate a location, I think you could get a pretty good estimation of where it is in the world, at least probably down to like the country," Evan explains.

This geographical data could be instrumental in ensuring network resilience. For instance, if crypto regulations change unfavorably in a particular country, StakeNet could potentially adjust stake distribution automatically to maintain network stability.

Visualizing StakeNet

For those interested in exploring the data and functionality of StakeNet, Jito has created a user-friendly interface accessible at jito.network/StakeNet. This platform allows users to view detailed information about validators, including historical performance data pulled directly from the on-chain Validator History Program.

Evan encourages community engagement with this tool: "You can go in, look at any given validator, see all of these stats going back, uh, like dozens of epochs, and then you can just check out what's happening with these validators."

Community Involvement and Development

StakeNet is not just a closed system for Jito; it's designed as a public good that other projects can build upon. Evan invites developers and other stake pools to explore the StakeNet GitHub repository and consider how they might adapt the system for their own needs.

For the broader Jito community, StakeNet represents a significant opportunity for increased participation in governance. "This is now a huge leap in the amount, the ability for like, DAO participants to control, um, the, the delegation and the, the, like how Jito SOL works," Evan notes.

He encourages community members to familiarize themselves with the validator scoring mechanisms and the various parameters that can be adjusted through governance.

Long-term Vision for StakeNet

Looking to the future, Evan envisions StakeNet as a long-lasting, low-maintenance system that could potentially run for decades. "Hopefully it's just something that, that runs doesn't require a ton of maintenance or ongoing development and just, you know, 20 years from now, we're all still on Solana. It's still running and working perfectly," he muses.

This longevity is particularly crucial for foundational DeFi assets like LSTs. Evan argues that users should demand more from the assets they interact with in terms of reliability and sustainability.

StakeNet and the Broader Blockchain Ecosystem

StakeNet's approach of bringing off-chain data on-chain in a verified manner and then computing on that data represents a broader trend in blockchain development. Evan draws an interesting parallel with projects like Helium, which also bring real-world data on-chain for reward distribution.

"The general formula is you get this like off-chain data or outside of the, you know, outside of the blockchain data about some real world economic thing. You put it on chain into verified way and then you create this on chain brain that can then compute on that data, do some logic and then do what, uh, blockchains are best at, which is just managing, moving around digital assets in like, in response to that," Evan explains.

Synergies with Restaking

While StakeNet and restaking are distinct concepts, there are potential synergies between the two. Evan suggests several ways in which restaking principles could enhance StakeNet:

1. Implementing missing on-chain data fields, such as total validator stake
2. Ensuring the execution of necessary transactions to keep StakeNet operational
3. Developing a decentralized system for estimating validator locations based on IP addresses

These ideas showcase the potential for further innovation and integration within the Solana ecosystem.

The Road Ahead for StakeNet and Jito

As StakeNet prepares for its mainnet launch, Evan and the Jito team are focused on ensuring a smooth rollout. Post-launch, Evan anticipates a period of observation and potential refinement before fully transitioning Jito SOL to the new system.

Looking beyond StakeNet, Evan expresses enthusiasm for continuing to improve the Jito SOL user experience and potentially exploring new applications of restaking technology. His commitment to smart contract development and solving complex blockchain problems bodes well for the future of Jito and the broader Solana ecosystem.

Conclusion: A New Era for LSTs on Solana

StakeNet represents a significant leap forward in the decentralization and transparency of Liquid Staking Tokens on Solana. By moving critical decision-making processes on-chain and providing unprecedented levels of data accessibility, Jito is setting a new standard for LSTs in the blockchain space.

As the crypto community continues to demand greater decentralization and transparency from DeFi protocols, innovations like StakeNet are likely to play a crucial role in shaping the future of blockchain finance. With its robust architecture, community-driven governance, and potential for expansion, StakeNet is poised to make a lasting impact on the Solana ecosystem and beyond.

Evan's parting advice to the community encapsulates the ethos behind StakeNet: "Check the chain, see what's actually happening out there. Check the chain mistake. It goes live and, uh, make sure it's working." This call for active participation and verification aligns perfectly with the core principles of decentralization and transparency that StakeNet aims to uphold.

As Solana continues to grow and evolve, projects like StakeNet demonstrate the blockchain's capacity for innovation and its commitment to creating a more decentralized, efficient, and user-centric financial ecosystem. The launch of StakeNet marks an exciting chapter in Solana's journey, one that promises to bring increased stability, transparency, and decentralization to the world of liquid staking.

Facts + Figures

• StakeNet is an entirely on-chain protocol designed to manage Jito SOL in a decentralized manner.
• The protocol will be managing Jito SOL within days of the podcast recording.
• StakeNet is not restaking, but a separate innovation for LST management.
• Traditional LSTs often rely on centralized hot wallets for stake delegation.
• Solana's epoch, the time for bonding or locking up stake accounts, is approximately two days.
• StakeNet comprises several components: Validator History Program, Steward Program, and Keeper Bots.
• The Validator History Program supports up to three years of validator data history.
• StakeNet requires over 10,000 transactions every two days to keep all aspects running.
• The JTO DAO will have control over parameters for scoring and selecting validators.
• StakeNet could potentially use IP addresses to estimate validator locations for better geographical distribution of stake.
• The jito.network/StakeNet interface allows users to view detailed validator information pulled from on-chain data.
• Evan envisions StakeNet as a system that could potentially run for 20 years or more without significant maintenance.
• StakeNet's approach is compared to other blockchain projects like Helium in terms of bringing off-chain data on-chain.
• The development of StakeNet took most of the past year, according to Evan.
• Potential future developments include creating an AVS (Application-Specific Validation System) for geographic location estimation based on IP addresses.

Questions Answered

What is StakeNet?

StakeNet is an entirely on-chain protocol designed to manage Jito SOL, Jito's liquid staking token, in a fully decentralized manner. It aims to create a transparent and unstoppable system for stake delegation and validator selection on the Solana blockchain, replacing the traditional centralized management of LSTs with an autonomous, on-chain process that anyone can verify and interact with.

How does StakeNet differ from traditional LST management?

StakeNet differs from traditional LST management by eliminating the need for a centralized authority to manage stake delegation. Unlike conventional systems that often rely on a centralized hot wallet running private code, StakeNet performs all operations on-chain through smart contracts. This approach enhances transparency, reduces single points of failure, and allows for community governance of key parameters through the JTO DAO.

What components make up the StakeNet architecture?

The StakeNet architecture consists of several key components. The Validator History Program collects and stores on-chain data about validators from various sources. The Steward Program acts as an on-chain brain, using this data to select validators and delegate stakes. Permissionless Keeper Bots ensure the system remains operational by triggering necessary instructions. Finally, the JTO DAO retains control over critical parameters, allowing for community-driven governance of the protocol.

How does StakeNet enhance decentralization in LSTs?

StakeNet enhances decentralization in LSTs by moving all critical decision-making processes on-chain. This includes validator selection and stake delegation, which are performed autonomously based on predefined criteria and on-chain data. The use of permissionless Keeper Bots ensures that no special authority is required to keep the system running, allowing anyone to participate in maintaining the network. Additionally, governance through the JTO DAO allows for community input on important parameters.

What potential future developments are planned for StakeNet?

Future developments for StakeNet could include integrating more sophisticated data sources, such as using IP addresses to estimate validator locations for better geographical distribution of stake. There's also potential for creating Application-Specific Validation Systems (AVS) for various functions, like ensuring transaction execution or developing a decentralized system for estimating validator locations. Evan also mentioned focusing on improving the overall Jito SOL user experience and exploring new applications of restaking technology.

How can community members get involved with StakeNet?

Community members can get involved with StakeNet in several ways. They can explore the data and functionality through the jito.network/StakeNet interface, which allows users to view detailed validator information. Developers are encouraged to explore the StakeNet GitHub repository and consider how they might adapt the system for their own needs. Additionally, JTO token holders can participate in governance by familiarizing themselves with the validator scoring mechanisms and voting on parameter adjustments through the JTO DAO.

What is the long-term vision for StakeNet?

The long-term vision for StakeNet is to create a sustainable, low-maintenance system that could potentially run for decades without significant intervention. Evan envisions it as a foundational piece of DeFi infrastructure that provides reliability and longevity to the Solana ecosystem. The goal is for StakeNet to continue operating efficiently and transparently, adapting to changes in the blockchain landscape while maintaining its core principles of decentralization and community governance.