March 6, 2023

Understanding the Role of Staking Culture in Blockchains

Find out the importance of staking culture in a blockchain and how it influences the overall course of the chain at large.

Understanding the Role of Staking Culture in Blockchains

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This blog is a part of the series around Naval Ravikanth’s podcast episode that featured Ethereum’s co-founder, Vitalik Buterin. You can access the links to all the blog posts written around the podcast episode here. In this blog, we talk about decentralization, staking, and how staking culture plays an important role in the success, or rather the sustainability of a blockchain network.

Staking is an integral part of any blockchain ecosystem, and is the building block for decentralization. Simply put, stakers are all the individuals acting as nodes in a blockchain ecosystem for verifying the transactions that happen on-chain.

When it comes to Ethereum, the philosophy behind the chain’s staking decisions is to make sure that the requirements or the bar to start running a node progressively decreases. And doing so works in favor of the blockchain because the more nodes verifying, validating, and approving transactions, the more transparent and secure the whole network is. Simply put, it is easier to manipulate or push changes to some fundamental rules on a blockchain when the number of nodes are low– fewer nodes to sway. The same is not true for a blockchain network that has several thousand nodes.

Let us dive a little further into staking. While running a node should ideally be possible on a laptop, the discussion doesn’t end there. It is also about the motivation to be a node and the incentives aligned with the activity. The Solana Foundation, for instance, has several initiatives around encouraging people to start running nodes. But what happens when these subsidies and incentives to run nodes disappear? It is then the stalking culture that would determine the course of the blockchain network.

And according to Vitalik, “staking culture is difficult to cultivate.” It is difficult because the people running these nodes must feel an ingrained responsibility and desire to do so. Which means that the ones running nodes must be philosophically or ideologically aligned with the principles of a certain blockchain.

A staking culture that places importance on running nodes will try to make protocol changes that make the process increasingly simple. Once it becomes easier to run a node, more people will be motivated to run one, and that paves the way for a healthy staking culture.

The impact of a strong staking culture has multiple benefits to a blockchain. It can, for example, help keep a blockchain heavily decentralized. Be it Blockchain or Ethereum, the staking culture at large is such that people are willing to make sacrifices for the sake of decentralization. Because it’s easy to ramp up the requirements for running a node by 5x or 10x. But doing so would mean less people can join in to run nodes. And the fact that Bitcoin and Ethereum staking culture actively resists raising requirements for running nodes speaks volumes.

In conclusion, the staking culture plays a key role in keeping a blockchain decentralized, transparent, and sustainable in the long run.

About Arcana Network

Built for Ethereum and EVM-based chains, Arcana is the web3 infrastructure to easily onboard dApp users and enable user data privacy and ownership. Web3 developers use Arcana’s SDKs for a seamless, familiar user onboarding experience via social authentication and passwordless login. All user data is encrypted, secured with data access fully controlled by the users, and powered by blockchain.

Arcana has raised 2.7Mn USD from some of the leading investors and founders in the ecosystem such as Balaji Srinivasan, Founders of Polygon, Woodstock, Republic Crypto, and Digital Currency Group.

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