Flare Launches Staking Phase 2, Empowering Community and Boosting Security

Flare Network's staking transition enters Phase 2, enabling all network participants to become validators through self-bonding on the P-Chain. This phase introduces the role of "infrastructure providers" who provide both validation and decentralized data, with a minimum self-bond requirement of 1 million FLR and uptime of 80%. Community participants can delegate stake to validators, with a minimum delegation of 50,000 FLR and a lockup period of two weeks.

Flare Initiates Staking Phase 2, Empowering Community Participation and Amplifying Network Security

September 12, 2023

Introduction

Flare Network, an industry-leading blockchain platform, is poised to embark on the second phase of its highly anticipated staking transition. This phase marks a significant milestone in Flare's evolution, opening up validator staking to all network participants and merging the roles of validation and decentralized data provision.

Staking Phase 1 Recap

In July 2023, Flare successfully commenced its transition to a proof-of-stake consensus model. This initial phase witnessed the Flare Foundation strategically staking a predetermined FLR self-bond amount to validator nodes of 33 independent FTSO data providers, onboarding them as the maiden official infrastructure providers. This initial cohort joined the existing 20 professional validators, expanding the total validator set to a robust 53.

Flare Improvement Proposal 05

To facilitate the implementation of Staking Phase 2, the Flare Foundation proposed a comprehensive array of updates regarding key staking services, staking parameters, rewards distribution, and Management Group extension via Flare Improvement Proposal: FIP.05.

The community resoundingly endorsed the proposal on September 8, 2023, with an overwhelming 92.02% of the votes cast in favor. Consequently, the network will proceed with a hard fork later in September—the precise date to be confirmed—to incorporate these crucial changes.

Inflation Adjustments

Presently, 80% of the inflationary rewards on Flare are distributed to participants within the FTSO system (FTSO providers and community delegators). The remaining 20% is allocated to network validators.

FIP.05's approval subtly modifies this ratio, increasing validator rewards to 30%, thereby establishing a new ratio of 70/30. This adjustment serves to further incentivize P-Chain staking participants while compensating for the mandatory lockup periods.

The third aspect of the infrastructure provider role is attestation provision for the State Connector. This role, along with any concomitant changes to the allocation of inflation, will be introduced at a later date. Any potential modifications to the inflation apportionment associated with the State Connector attestation role will be subject to a subsequent governance vote.

Staking Phase 2

Phase 2 unlocks validation for any existing FTSO data provider on Flare or any entity aspiring to become a validator after establishing an FTSO data service on the network and earning FTSO rewards. This prerequisite serves as a critical requirement before an infrastructure provider can qualify for validation rewards.

Understanding Staking Mechanics

It is pivotal to comprehend that Flare comprises three distinct chains:

1. C-Chain: The host of the Ethereum Virtual Machine (EVM), where the vast majority of the community currently interacts, including WFLR delegation to FTSO providers.
2. P-Chain: The locus of staking for both Infrastructure Providers via self-bonding and general participants through delegating stake to validators.
3. X-Chain: Facilitates swift, straightforward monetary transactions and remains unused at this time.

Infrastructure providers must post a minimum self-bond of 1 million FLR tokens on the P-Chain to their validator(s) and maintain an uptime of at least 80% to remain eligible for the validator reward pool. The minimum lockup period for their self-bond amount ranges from 60 days to a maximum of one year.

Infrastructure providers will levy a fee for their validation services and distribute the remaining validation rewards among other participants who delegate stake to their validator(s). The maximum delegated stake per validator is capped at 15 times the self-bond amount. For instance, with a self-bond of 5M FLR, the maximum delegable stake is 5M x 15 = 75M FLR. Even with larger self-bond amounts, the combined total of self-bond and delegated stake cannot exceed 200M FLR per validator. No new stake positions on P-Chain surpassing this 200M FLR threshold can be created.

Infrastructure providers are permitted to operate up to four (4) validator nodes linked to their single FTSO entity.

Community participants can delegate FLR stake to any chosen validator, subject to a minimum stake delegation amount of 50,000 FLR and a minimum lockup period of two weeks for delegated staked tokens. Each infrastructure provider will specify a staking fee and associated lockup period when their validator is added to the system. Stake delegators can define their own lockup period within the validator's self-bond window. Stake delegators must re-delegate their stake upon the expiration of a lockup period or when their preferred validator's self-bond expires, whichever occurs first. Initially, the staking fee set by infrastructure providers will be fixed and cannot be altered until the validator's own self-bonded stake parameter expires.

In summary, the community retains the flexibility to continue delegating to FTSO data providers on the C-Chain to earn FTSO rewards or opt to delegate stake to validators on P-Chain to earn validation rewards. However, it is not feasible to utilize the same tokens to earn rewards on both systems concurrently during Phase 2.

Community Participation in Staking

The community can initiate staking transactions on P-Chain via a user interface currently under development and scheduled for release upon the public launch of staking in October.

Staking rewards in Phase 2 will be calculated off-chain using an algorithm script publicly available for community review and verification. Validation rewards will be distributed through the validator rewards contract on C-Chain.

Eligibility for FlareDrops and Governance

Participants who delegate stake to validators on P-Chain will have their amounts reflected on C-Chain through a mirroring service (smart contract), allowing staked token amounts to continue qualifying for monthly FlareDrops and participation in governance voting matters. This will also apply to validator self-bond amounts throughout Phase 2.

Infrastructure Provider Management Group (IPMG)

Formerly known as the FTSO Management Group, this network body comprises infrastructure providers and serves as an invaluable network security layer and community protection mechanism.

The network is designed to withstand significant collusion attacks, but the IPMG further mitigates these risks by proactively identifying potential data collusion or cloned algorithms, facilitating open and transparent discussions with all involved parties, and voting on resolutions in a decentralized manner.

The community approved the extension of the IPMG throughout Phase 2 as part of FIP.05.

Staking Phase 3

Once secure communication between the P- and C-chains is established, staking rewards will be managed entirely on-chain. The ultimate objective is for funds staked on the P-Chain to enjoy the same privileges as wrapped FLR on the C-Chain, enabling the potential to earn FTSO rewards, FlareDrops, and participate in governance.