Native Delegation

Staking vs Restaking

Staking is a process in which cryptocurrency holders (validators) lock up a certain amount of their coins as collateral to participate in the network’s consensus mechanism. Instead of using computational power (as in proof-of-work), PoS blockchains use a participant’s staked tokens to validate transactions and secure the network. Validators are rewarded with additional cryptocurrency tokens for their participation in the network. These rewards are typically a percentage of the total staked amount.

Restaking is the practice of reinvesting or redelegating the rewards earned from staking back into the network by staking them again. In other words, instead of withdrawing and spending the rewards, you choose to stake them once more. The primary motivation behind restaking is to maximize the potential returns on your cryptocurrency holdings. By continuously staking not just your initial stake but also staking the rewards you earn again, you can compound your holdings and potentially earn more rewards over time. This process can be automated in many PoS networks, where you can set up your wallet to automatically restake the rewards you receive.

What is Native delegation

Native Delegation is indeed a crucial concept in the world of Proof-of-Stake (PoS) and Delegated Proof-of-Stake (DPoS) blockchain systems. Let’s expand on this concept and provide more information:

Native Delegation refers to the ability of validators and node operators in PoS and DPoS networks to participate in restaking without requiring a separate withdrawal credential or process. It simplifies the process of staking and restaking for various participants, emphasizing the ethos of solo staking and ensuring that consensus is not unnecessarily burdened by complex withdrawal mechanisms.

One of the key advantages of Native Delegation is its inclusivity. It allows various stakeholders, including solo stakers, Delegated Validator Tokens (DVT) holders, and node operators with the signing key, to participate in the restaking process. This inclusivity promotes broader participation in securing the network and earning rewards, making the PoS or DPoS ecosystem more decentralized and democratic.

Participants in Native Delegation share many attributes with those who utilize Locked Staking Tokens. These attributes may include:

Native Delegation participants often enjoy the same level of protection for their staked assets as those with Locked Staking Tokens. This ensures the security of their holdings and rewards.

Native delegation key features:

1. Withdrawal credentials: Withdrawal credentials refer to the mechanism by which a delegator can securely withdraw their delegated tokens. It involves authentication and validation to ensure that the tokens are returned to the rightful owner.
2. Yield: Yield in the context of native delegation represents the rewards or returns that delegators can earn by participating in the network. Delegators often receive a portion of the rewards earned by validators in proportion to the amount of tokens they have delegated.
3. No additional software: This feature suggests that native delegation can be accomplished without participants needing to install or use additional software beyond what is provided by the blockchain network itself. It simplifies the delegation process.
4. Slashing at pool level: This refers to the penalty imposed on validators or pools for malicious behaviour or protocol violations. “Slashing at pool level” implies that penalties for misbehaviour are applied collectively to the entire pool of validators rather than individual validators.
5. Same business logic: This feature implies that the delegation process and rules for validators within a network follow the same business logic or protocol rules, ensuring consistency and fairness.
6. Accepts all validators: This feature suggests that the native delegation system is open and inclusive, allowing any validators who meet the network’s criteria to participate and accept delegations from token holders.
7. Smart contracts: Smart contracts are self-executing agreements with predefined rules. In the context of native delegation, smart contracts may be used to automate and enforce delegation rules, rewards distribution, and governance processes.
8. Passive and protected: “Passive” suggests that delegators can participate in the network passively by staking their tokens and receiving rewards without actively managing or operating validator nodes. “Protected” implies that delegators’ tokens are safeguarded, and mechanisms are in place to protect them from potential misbehavior or security risks.

Benefits of Native Delegation:

• Simplified Staking: Native Delegation streamlines the staking and restaking process by eliminating the need for additional withdrawal credentials, making it more accessible to a broader audience.
• Decentralization: By allowing various participants to engage in restaking without unnecessary complexity, Native Delegation contributes to a more decentralized network where multiple stakeholders can actively participate in securing the blockchain
• Efficiency: This approach enhances the efficiency of the PoS or DPoS ecosystem, as it reduces friction in the restaking process and encourages participants to continually reinvest their rewards, compounding their holdings over time.

Understanding K2 Native Delegation

• Automatic Network Detection

One of the standout features of the K2 Protocol is its ability to automatically detect the connected Ethereum network. This is achieved through an intelligent querying process that interacts with the configured beacon node, thus removing the need for manual network selection and simplifying the setup process for validators.

• Comprehensive Validator Management

K2 Protocol excels in handling multiple validators efficiently. It automates the registration of validators in batches, a critical feature for those managing numerous validators. This automation extends to setting gas prices, where users can cap their spending to avoid unexpected costs due to network congestion.

• Seamless Integration with MEV Boost

The native delegation module is fully compatible with MEV Boost, a popular Ethereum staking tool. This compatibility ensures that validators using both MEV Boost and K2 can continue their operations without any disruptions. The integration requires minimal configuration, highlighting the user-friendly nature of K2.

• Validator Registration and Management

K2 handles validator registrations and status checks at every epoch. This involves signing registration messages and performing necessary transactions automatically. Such automation ensures that validators are always registered and active, without requiring constant attention from the users.

• Relay Registrations Unaffected

An important aspect of the K2 Protocol is its non-interference with PBS relay registrations managed by MEV Boost. This separation ensures that validators can use both systems without any conflicts, maintaining the efficiency and effectiveness of both processes.

• User Interaction and Security

While K2 automates most of the process, it still allows for manual interaction when not using the native delegation module, specifically through the K2 SDK. In terms of security, the protocol does not require access to validator signing keys, thus maintaining a high level of security and integrity.

• Node Configuration and Smart Contract Interaction

The protocol advises connecting directly to the validator node, aligning with Ethereum’s security recommendations. It comes pre-configured with the necessary smart contract addresses, eliminating the need for users to manually set these up.

• Adaptive to Validator Key Changes

K2’s module can detect and adapt to changes in validator keys, ensuring that new keys are registered promptly. This feature is crucial for maintaining up-to-date validator lists and ensuring uninterrupted staking operations.

• The Role of the Representative Address

The representative address plays a crucial role in the native delegation process. It acts on behalf of the validators, managing the staking and delegation processes. This address is distinct from the fee recipient address, underscoring the module’s flexibility in managing different aspects of staking.

• Diverse Payout Configurations

For validators who wish to have different payout arrangements, K2 provides the flexibility to configure separate fee recipients. This is particularly useful for staking pools and decentralized validator technology (DVT) platforms, where rewards distribution may need to be tailored to specific requirements.

• DVT Node Operator Participation

DVT node operators can fully participate in the K2 Protocol, provided their nodes meet the Ethereum specification. This inclusion ensures that a wide range of validators can benefit from K2’s native delegation features.

Conclusion and Resources

K2 Protocol’s native delegation module represents a significant step forward in Ethereum staking. Its user-friendly interface, coupled with powerful automation and security features, makes it an attractive option for both experienced and novice validators. For detailed guides and further information, visit K2’s documentation and GitHub repository at K2 Native Delegation SDK and K2 Contract Deployments.