tl;dr: Trustlines validators ensure the security of the Trustlines Blockchain by validating transactions and adding blocks to the Trustlines Blockchain. They are anonymous. To gain a validator slot, validator candidates take part in the validator auction and stake ETH on Ethereum. Their ETH deposit can get slashed for equivocation. Validators earn TLC through transaction fees and block rewards. They can additionally take part in the green field governance experiment of the Trustlines Blockchain.
Validators on the Trustlines Blockchain
By design, the Trustlines Blockchain needs validators. Unlike in ordinary Proof-of-Authority (PoA) blockchains, in the Trustlines mPoS (minimal viable Proof of Stake) system, validators are anonymous. Trustlines validators ensure the security of the Trustlines Blockchain by validating transactions and adding blocks to the Trustlines Blockchain in a round-robin fashion. They will be anonymous and will earn Trustlines Coins (TLC) through transaction fees and block rewards. A validator auction is used to determine the first set of validators for the Trustlines Blockchain. Validator candidates can gain a validator slot by participating in the validator auction and consequently staking ETH on Ethereum for the time of the validation period.
Why should you run a validator node?
Validators can expect to gain rewards by operating a validator node. Validator incentives and perks include:
- Block rewards: At Blockchain launch, validators will earn 3 TLC per sealed block as block reward. The block reward and connected inflation rate is adjustable using hard forks and can therefore be modified if the Trustlines ecosystem assesses it as too high or too low.
- Transaction fees: Validators can expect to earn transaction fees. The height of transaction fees will be determined jointly by the Trustlines community as part of the Trustlines Blockchain’s governance process.
- Gain by working together with (or becoming) a delegate: Delegates can pay for transactions on behalf of any user, thus improving the UX for users (no TLC needed anymore to send transactions). Users may pay transaction fees to delegates in IOUs. Validators and delegates might want to cooperate, as delegates will need TLC to pay for their users’ transactions, and validators will potentially want to sell the TLC they earn from block rewards. Trustlines validators therefore can either build their own business models around user on-boarding schemes, or they can collaborate closely with delegates on reimbursement models / profit sharing in exchange for investing the TLC they have earned.
- PoS validator experience: Validators gain experience of running a validator node in a PoS system. In light of Eth2.0 and other PoS-based systems emerging, this experience is of value for future staking efforts.
- Participating in a greenfield governance experiment: Validators can join the experimental greenfield governance process of the Trustlines Blockchain and are part of the technological forefront by running a validator node for the first mPoS blockchain system in production.
- Supporting a transformational idea: By running a validator node you help secure the Trustlines Blockchain, which will enable many transformational use cases around financial and economic inclusion for all people (read more about the people-powered-money vision here)!
How do you become a validator?
In order to become a validator, you need to participate and compete in the validator auction. During this auction, validator candidates stake ETH on Ethereum in return for validator slots. Only whitelisted Ethereum addresses can take part in the validator auction. The steps towards becoming a validator are:
- Sign up to become part of the validator candidate set (registration for the first auction closed on September 22)
- Whitelist your Ethereum address via an anonymous survey (until October 6)
- Take part in the validator auction and bid to stake ETH
- Once you have secured a validator slot, you can run a Trustlines Blockchain node to validate and earn TLC
What responsibilities does a validator have?
Validators earn TLC through block rewards and transaction fees in exchange for:
- Ensuring the security of the blockchain
- Validating transactions and adding blocks to the blockchain
- Monitoring the mono-directional token bridge from Ethereum to the Trustlines Blockchain
- Participating in the blockchain’s governance, e.g. discussing blockchain forks and resulting protocol changes with the Trustlines community
While running a Trustlines validator node is fairly easy, Trustlines validators should fulfill the following criteria to ensure successful operation of their node:
- Be technologically minded and able to run a blockchain node without a dedicated UI
- Have the necessary financial means to take part in the validator auction
- Understand the financial, operational and legal risks associated with the activity
- Understand the responsibilities of being a Trustlines validator
- Take responsibility to stay online as a validator and to operate the Trustlines bridge as long as they are included in the validator set
The following minimum technological setup is recommended to operate a Trustlines validator node: 50GB SSD (currently only ~5GB are needed to operate a validator node for the Laika testnet) and 2GB memory.
Validators can expect the following cost associated to the role of an active validator:
- Staking opportunity cost: Trustlines validators are required to stake Ether on Ethereum. Since this Ether can’t be moved for the time of the validation period, it results in opportunity cost of the staked ETH. Once the validation period is over, validators can withdraw their stake provided it didn’t get slashed due to equivocation.
- Operational cost of running a Trustlines node and the Trustlines bridge: If a validator uses their own equipment to run a Trustlines node, the costs are uptime costs (e.g. energy, internet). If a validator uses a 3rd party service, the costs/effort to run a Trustlines node will be initially less expensive than running an Ethereum full node. As the Trustlines Blockchain is intended to scale, the costs will likely increase over time given an increase in the amount of transactions and connected storage need.
Limited ⏬, big potential ⏫, join! 🚀
In conclusion, there is very little downside and a big potential upside, both in terms of potential rewards as well as looking at it as a greenfield governance experiment, an opportunity to gain experience and to support a bold and transformational vision.
If you are equally excited by the economic, social, and technical incentives to participate in the first mPoS sidechain to Ethereum, then make sure to not miss the first validator auction starting on October 8th 2019. In the meantime, feel free to read more about validators on the Trustlines FAQ page, check out the Trustlines Protocol codebase or join the discussions in the community Telegram and Reddit channels.
The Trustlines Foundation
Disclaimer: Note that receiving block rewards and transaction fees is dependent on a community of validators emerging and the potential users of the Trustlines Blockchain. The Trustlines Foundation cannot guarantee that a Trustlines Blockchain including the chain spec as proposed by the Trustlines Foundation actually emerges out of the actions of these third party stakeholders. Hence, participating in the auction and/or running a validator node does not entail a right or an entitlement in any way whatsoever to either becoming and/or remaining a validator or receiving block rewards and/or transaction fees.