Quicksilver Protocol

The Quicksilver protocol will provide liquid staking for the entire Cosmos ecosystem — Let’s take a look at how Quicksilver will improve upon existing liquid staking models to both benefit stakeholders and foster increased decentralization.

As most other liquid staking protocols, Quicksilver will provide qAssets in the place of delegated tokens that will allow stakeholders to increase their returns. It does not require unbonding periods nor a minimum stake. Quicksilver also allows for existing stakeholders to transfer their stake directly onto Quicksilver, without having to go through an unbonding period first.

Rewards earned by native tokens delegated via the Quicksilver protocol will be automatically collected and compounded on a epochly basis. The collection of these rewards is added to the ‘delegated supply’, and increases the redemption rate of the representative qAsset. The redemption rate is what is used to determine how many qAssets you receive when bonding Assets, and vice versa on exiting the protocol.

Slashing risk, or the risk of a validator being penalized for its behavior, is socialized across validators so that, if a slashing event were to occur, the impact would be minimal. For example, in the event of a 5% slash on a validator with 1% of the pool, the redemption rate shifts -0.05%. If this were a downtime slashing, the rate would shift by -.0001%, which is virtually insignificant. In the event of a malignant validator, stakeholders would have the power to ban it through Quicksilver protocol governance.

Quicksilver stakeholders — holders of bonded QCK tokens — play a critical role in governing the Quicksilver protocol. They are able vote to onboard new zones, distribute airdrops and incentives, blacklist validators, tweak tokenomic parameters, and more, thereby acting as a DAO that controls the running of the protocol.

When delegating tokens via Quicksilver, Quicksilver maintains stakeholders’ governance rights as if they were staking natively. This occurs through a proxy mechanism in which zone votes are reflected on Quicksilver. The protocol mirrors governance proposals of the native chain on Quicksilver, qAsset holders can then vote on these mirrored proposals and their vote will be reflected on the native chain.

Most liquid staking models have a whitelisted set of validators, making any given chain less secure and more centralized. Via Quicksilver, there is no predetermined list of validators. All the validators of a given zone can be delegated to unless they have been excluded by Quicksilver governance. Furthermore, stakeholders are rewarded with Quicksilver (QCK) tokens for delegating to performant and decentralized validators.

Over 50% of the QCK token genesis supply will be allocated to airdrops, which will occur every time governance onboards a new chain. Governance will also decide the amounts allocated to each onboarding event.

Most liquid staking modules are designed to service a single blockchain, and to onboard new ones, they must go through a tedious process. Through interchain accounts and the liquid staking model, we are able to seamlessly onboard any zone that has been built on Cosmos SDK, putting our scalability completely in the hands of our community.

Cosmos is the second largest proof-of-stake ecosystem, with 50 zones and almost $25 billion worth of assets currently staked. Considering the amount of Zones about to deploy and in development, this number is set to dramatically increase in the coming year.

Within most Cosmos zones, only 5% of staked assets are actually slashable, leaving a whopping 95% of staked tokens completely unused. Because most tokens are locked in staking, this represents a serious barrier to DeFi on Cosmos.

While existing Liquid Staking protocols allow users to participate in DeFi, unbonding periods make the experience unappealing for existing stakers. Furthermore, most existing protocols offer a white-listed set of validators to choose from, which in turn negatively impacts network security and decentralization.

Finally, going through a tedious onboarding process for both validators and zones can hamper the growth of liquid staking on the zones.

Through a combination of Interchain Accounts and the Liquid Staking module, both due to be part of the Cosmos-SDK’s Theta release in march 2022, Quicksilver will be able to seamlessly onboard any Cosmos-SDK based zone using these modules in a permissionless manner — All that is required is the community’s approval. As a sovereign zone, Quicksilver is controlled by its token holders: All decisions are determined by the voting power of the Quicksilver community.

Thanks to our interchain design, Quicksilver will be able to provide staking on any Cosmos SDK zones that our community votes to onboard. Anyone staking on these zones will be able to switch to a liquid staking model without having to unbond their assets. Lastly, onboarding new zones will require little to no effort from neither these zones nor their validators.

Decentralization and security of all onboarded zones are paramount. Through a permissionless validator set, Quicksilver will allow anyone to become a validator, or stake with any validator of their choosing. Users will be rewarded with the QCK native token for using Quicksilver, including bonuses for choosing performant and decentralized validators. Lastly, users will maintain their voting rights through our unique governance mechanism, which will make it possible for them to continue voting on the networks they are invested in, while taking full advantage of the benefits of Liquid Staking. We believe that inter-chain liquid staking without inter-chain governance is incomplete.

Enabling users, zones, and interoperability is central to Quicksilver’s vision. With this project, we aim to redefine staking on Cosmos and provide a platform where users can maximize returns on their assets.