Staking ATOM

Staking is a mechanism used to ensure the validity of transactions in a proof-of-stake blockchain. Blockchains incentivize users to stake by offering annual percentage yield (APY) in the form of more tokens - in the case of this dashboard, Cosmos offers more ATOM tokens to the stakers.

ATOM holders contribute to the decentralization and security of the Cosmos blockchain by delegating ATOMs into a validator or allocating ATOMs to stake pools, as each staking method finally either creates blocks by that validator or validates proposed blocks from other validators.

Staking is an usual way for ATOM holders to earn passive income.

Cosmos, like every other proof-of-stake blockchain, has a “base APY” for staking that is handed down from the protocol itself. For Cosmos, this base APY is 9.7%. Many exchanges and staking pools, however, offer a higher APY to encourage people to stake their Cosmos on their particular platform (source).

Image Credit : MercadoCrypto

General Overview

First, we'll gather some basic information about the staking process in Cosmos. This includes the number of stakers, the total amount of staked and unstaked tokens, the average amounts for staking and unstaking, and the net amount of staked ATOM tokens

Analyzing the ReStake Path: Winners and Losers Based on Transaction Volume

From looking at the ReStake path, we can see that

• A large portion of the token transfer volume was carried out by a validator to move the tokens to a new address.
• However, when we consider the number of ReStake transactions, the winners and losers are different. Imperator.co, PostHuman, and Prism had the most successful transactions while Stake Fish, Citadel, and Cosmostation had the least successful ones.

You can check the two tables provided for more detailed information on the top ten ReStaking routes based on the number and volume of transactions.

Final Words

In this article, we analyzed the staking activities in the Cosmos blockchain on a monthly basis, from March 2022 to February 2023. Through examining the number of stakers, volume of staking, restaking and unstaking activities, as well as the behavior of restakers and their validator choices, we have observed some interesting trends and patterns in the staking ecosystem. The data suggests that while the number of stakers has decreased over time, the amount of staking has recently seen a gradual increase. Additionally, the majority of stakers are ordinary users with low stakes, and there has been a noticeable decrease in the number of new staking users.

Finally, we examined the restake process in detail and found that most restakers chose to switch to a different validator, likely in search of greater rewards or incentives. Overall, this analysis provides valuable insights into the staking activities in the Cosmos blockchain and highlights some key areas for further investigation and improvement.

Key Takeaways from Monthly Staking Analysis

Based on our monthly analysis of staking, the following observations were made:

1. The number of staking transactions peaked at 135,000 in March 2022, but decreased to around 80,000 transactions by the end of 2022. However, since the beginning of 2023, we have seen a gradual increase in staking activity, and it is expected to surpass 100,000 transactions per month by the end of February.
2. While the overall volume of delegation remained steady across different months, restaking accounted for the majority of staking activity in some months (such as March, June, and November 2022). In contrast, unstaking activity significantly decreased in the third quarter of 2022, only to increase again in the following two months.
3. In terms of statistical measures, restaking had the highest average and maximum values in most months. This suggests that stakers were changing their stake validators in search of greater profits or incentive benefits.
4. The most concerning trend we observed was the significant decline in the number of new staking users on the blockchain, dropping from over 50,000 at the start of 2022 to only 14,000 in the first quarter of 2023. We may expect more users to start staking in Cosmos in February. With the recent resurgence of the cryptocurrency market, we may see a positive growth trend in this statistic going forward

Overall, our analysis highlights the dynamic nature of staking activity on the Cosmos blockchain, with fluctuations in staking volume, restaking, and unstaking occurring on a monthly basis. However, the decline in new staking users warrants attention and raises questions about the future growth of staking on the platform

Restaking or Redelagating Activities

Restaking or redelegating is the process of moving staked tokens from one validator to another. This can be done for a variety of reasons, such as seeking better rewards, improving network security, or changing one's participation strategy. In some blockchains, restaking can be done easily through the user interface of a wallet or staking dashboard, while in others it may require more technical knowledge and intervention.

In the Cosmos network, restaking is a common activity among stakers. Validators compete to attract delegations from stakers by offering attractive rewards, and stakers may shift their delegations between validators based on performance, fees, or other factors. Restaking can also have an impact on network security, as it helps to distribute stake more evenly across validators and prevent centralization. Additionally, restaking activity can be used as a metric for gauging the health of the staking ecosystem and the level of engagement among network participants

Work Description

the analysis of Cosmos staking was done using technical information from the Cosmos SDK guide and using the FlipsideCrypto database.
By filtering the messages of types delegate, unbond, and redelegate in the cosmos.core.fact_msgs table, information about the main staking actions was obtained. Additional details were gathered from the fact_msg_attributes table.

To view more complete information, you can easily view the queries written for each chart to get a better technical view of the analysis performed.

Please note that our analysis only covers staking related transactions made between 2022 and the first quarter of 2023. However, you can adjust the start and end date parameters in this dashboard to perform a similar analysis for a different time period if necessary.

Initial Insights into Cosmos Staking

From the data and graphs obtained in the first step, the following conclusions can be drawn:

1. Most staking users are micro or ordinary users with a small number of staked ATOM tokens, while institutional users or whales have an average volume of twenty times more than these ordinary users.
2. The median criterion (which in this case is preferred to AVG) shows that most regular users stake less than one ATOM, and the average amount of unstaking and restaking is about 10 ATOMs .
3. More than 75% of staked tokens have been removed from the staking mode, with 125 million tokens removed compared to only 35 million remaining.
4. The number of stakers during this period is about 550K, but only a quarter of that number have unstaked, which confirms that the majority of stakers are ordinary users with low stakes.

Monthly Trends in Staking Activities: An Analysis of Changing Patterns

This section analyzes the staking activities on a month-by-month basis, focusing on the changing trends over time. The following metrics are considered for each month:

1. Monthly stakers: the number of unique addresses that either delegate or redelegate their ATOM tokens to validators or staking pools during the month.
2. Monthly unstakers: the number of unique addresses that unbond or undelegate their staked ATOM tokens during the month.
3. Volume of staking: the total amount of ATOM tokens that are either delegated or redelegated during the month.
4. Cumulative amount of staking: the total amount of ATOM tokens that are staked on the network at the end of each month.
5. New stakers: the number of unique addresses that delegate or redelegate their ATOM tokens to validators or staking pools for the first time during the month.

By analyzing these metrics over time, we can gain insights into the adoption and growth of staking activities in the Cosmos network.

Single ReStake Transactions

Let's look at three statistical metrics on individual transactions: average/maximum and median restake volume

Restaking/ReDelagating Over Time

We can now analyze how staking changes monthly. The graphs below illustrate these changes in terms of the number and volume of restakers over time

Restake Analysis: Tracking Validator Changes and Delegation Patterns

Restaking is a common practice among stakers, which involves moving one's stake from one validator to another. In this section, we will analyze the restake path of stakers in the Cosmos blockchain, specifically looking at which validators they left behind and which ones they chose to delegate to. This behavior is important to understand because it can indicate which validators are performing well and attracting new stakers, as well as which ones are losing support and need to improve their performance or incentives to retain their delegators. By tracking the restake path over time, we can gain insights into the dynamics of the staking market and how stakers are responding to changes in performance, rewards, and other factors.

Our main focus in this section is on the ReStaking route, i.e., the origin and destination sets, so that we can perform a more detailed analysis of this process. As you will see, we find that a large part of this process is performed by a validator if we start from the ResTake route: To transfer the tokens to the new address.

Mojtaba Banaie

mojtaba.banaie@gmail.com

Discord Handle : smbanaie#5528

Twitter : @Cryptolizr