We’re considering to implement a transaction to transfer bonded SCRT between accounts. We talked about it internally at SCRT Labs and we’d love to get community feedback on this as well.
The transaction will basically allow account A to transfer SCRT that’s delegated to a specific validator to account B. We’re pretty sure that it won’t mess up governance (we’ll research further if we eventually decide to implement it), but we’re unsure about market implications and want to hear more insights from the community.
I guess my biggest question would be if it is possible to make this functionality private? possibly using a mixer like contract and batch sending so that the sending and receiving address are not linked.
I imagine StakeEasy and Shade protocol both have an opinion on this functionality as well as its a core benefit to using their staking derivative solutions.
I love the idea. I always had to unbond my SCRT just to move them between different accounts.
This will especially be a great solution for the dedicated Secret Ledger app because everyone gets new addresses for the Secret BIP44 cointype (529 instead of 118) and would therefore have to unbond their SCRT to move them to the new ledger app.
With this solution everyone could easily move their bonded to the new account which makes the transition super smooth.
Something new, just creating a new transaction type to send bonded SCRT to a different address. It has nothing to do with replacing an account’s pubkey.
On first thought it would mainly be useful for personal purposes, but OTC would of course still be possible. As such I don’t think it would necessarily compete with staking derivatives, especially since they also autocompound the rewards.
Definitely need to think some more on it but at first glance it seems like a nice option to have.
What’s the goal?
Wouldn’t this make staked SCRT a lot more liquid? It’s only a matter of time someone builds a way to exchange staked SCRT if this is allowed. That would bring all of the staked secret back into the market and could amplify price swings.
I always thought one of the main features of staking was to lock tokens for a period so you could identify LT holders and take tokens off the market. This would nullify this benefit, no?
yes, but with that liquidity comes a higher bonded rate, safer network, and lower inflation. Furthermore liquidity of staked secret would likely be ample on Secret Network based dexes, but the underlying asset wouldn’t necessarily be more liquid on centralized exchanges as people would be incentivized to provide liquidity with the staked asset or sell it without enduring a 21-day unbonding. This means that the liquidity increase would be based on the ability for the network to drastically increase TVL.
Now the way Hydro.Finance is being set up (aka my bias for really wanting this in addition to it just being a plain cool network good) is that the liquidity will primarily be in staked L-1 assets, and some of the staking rewards from each will be directed through SCRT as purchasing power. If we onboard significant liquidity (which would be required for your concern to be warranted) then we’d have more utility for the token and codified purchasing power of it.
The real purpose of un-bonding periods is psychological, and set to reward those who are incapable of selling in order to incentivize that mindset. Even DEXes have unbonding periods now which are completely arbitrary, meant to do the same. If this is developed it would still certainly be optional if possible, but would bypass the scare and inconvenience of unbonding. More utility is good. Tokenomic models that rely on psychology are short-sighted in my opinion.
Edit to add: There is obviously a technical reason for unbonding periods in order to protect the network from attack, but we’re seeing a growing fad of networks lengthening their unbonding periods due to economic sentiment, and other applications adding them solely for that purpose.
I agree it would probably lead to a higher bonded rate, but you’ll need to explain how they would lead to a safer network and lower inflation.
I disagree that SCRT would not be more liquid on exchanges. I’m sure there will be an exchange created on secret that allows bonded SCRT to be exchanged for unbonded SCRT (with a fee). Users could easily go from staked secret to any exchange in minutes with minimal effort.
What’s the intended benefit of doing this? It undoes one of the core benefits of staking IMO. Maybe it’s better to allow staked secret to be traded, but I’m curious what benefits you expect this to bring.
a derivative based on this would be more liquid, but since that would be the case, there’s less reason for staked users to undelegate and go through a Centralized Exchange, where the native asset directly is staked.
The amount of tokens delegated to decentralized validators is what secures the network via dPOS. Also based on Cosmos-SDK our inflation ranges from 7-15% based on the bonded rate. The higher bonded rate directly affects the inflation rate. We’re currently at the 15%. Higher bonded rate will lower it from its current maximum.
It wouldn’t be best to lower the unbonding period to 0 days because then people could redelegate, or too many people could undelegate, to the point where an attack on the chain was possible. There IS a technical reason for having an unbonding period exist (on L-1s specifically) but this would keep that attack vector protected while still maximizing liquidity and utility.
I agree there is a reason to have an unbonding period. I think this in effect drops the unbonding period.
I disagree that it would make the network more secure. Rather than people committing for a mimimim of 21 days and having some sort of commitment to the network everyone will get benefits if bonding with no commitment. This will not lead to people being more thoughtful in their delegations because they will just pick the highest return validator since their interest in the network is not long term. Yes we will most likely get more people staking, but it will reward committed participants and day traders equally. This does not make the network more secure.
literally just having more scrt staked makes the network more secure. This bypasses an unbonding period in the sense that it’s like redelegating, but changing ownership address instead of validator. The tokens still have an unbonding period which protects and stabilizes the network.
because the user has to bypass the 21 day unbonding period. This would make it 3 weeks of no money easier on the users. Then that’s EXACTLY what they’ll do.
Edit: I totally misunderstood what you were saying and thought you were referring to autocompounding derivatives that have just been released. The native asset needs to not be automatically staked… for gas and whatnot. This doesn’t replace everything in the blockchain. It adds one useful feature.
I know. I was making the extreme case for incentivizing all tokens to be staked.
I’m open to the idea, but it is something that will have major affects on the entire network. We should be be considering how this could negatively effect secret network.
One concern I have that I posted in the Anon’s chat is:
“as I was doing research, one possible exploit I was/am concerned about is if bad-acting contracts hide a contract inside them that sends people’s staked secret to a different address as a malicious attack. I’d like to know that this isn’t practical or that we have some sort of safe-guards in place from malicious actors.”
I would definitely like confident closure that this isn’t a concern, or if it is, a solid process on how to protect our users from duplicate sites or bad actors. I don’t want somebody to mint an NFT and lose all of their money.