Copy-Staking

Copy-staking works exactly as it sounds. Stride “copies” the delegation preferences of the host-chain’s community by delegating to all validators in the active set according to existing stake weight. For example, if the rank 1 validator has 5% of a chain’s existing delegations, 5% of all tokens liquid staked with Stride will be delegated to that validator. If the rank 2 validator has 4% of delegations, Stride will delegate 4% to that validator, and so on. As stake weight across the set changes over time, Stride’s delegations will also change accordingly.

Stride adjusts copy-staking delegation weights on a monthly basis. In a future upgrade it will be possible to rebalance delegation weights continuously.

Copy-Staking can be considered a truly neutral approach to LST delegations because it preserves the existing power dynamic between stakers and validators. If a validator consistently behaves in a manner that doesn’t align with a chain’s community of stakeholders, those stakeholders can redelegate away from that validator and reduce that validator’s vote power. In turn, Stride will reduce the allocation to that validator to match the validator’s new vote power.

In order to prevent unhealthy delegations and ensure a good liquid staking experience, Copy-staking with Stride is subject to some light limitations:

• Validators with greater than 10% commission will be excluded from delegations

• Centralized exchange validators will be excluded from delegations

• Delegations will be capped at 10% for validators with greater than 10% vote power.

• The bottom 5% of validators (by number, not by vote power) in the active set will be excluded from delegations

• All tokens delegated to a validator by Stride will be excluded when calculating existing stake weight

Committee Process

The Stride community has crafted a host-chain committee process that aims to accomplish the following dual mandate:

1. Delegations should support decentralization, by staking tokens with validators across the active set,

2. Delegations should support project health, by staking tokens with validators who significantly contribute to the project.

This process was first approved by Stride governance for use on the Cosmos Hub in November of 2022. As a result, the first ever Stride community-elected host-chain validator set was voted in on January 07, 2023 for the Cosmos Hub.

The host-chain delegation process is a multi-step process that spans several weeks and involves buy-in from both Stride's community and that of the host zone. Here's how it works:

• Step 1: Starting with a chain’s full validator set, exclude validators that are younger than six months.

• Step 2: Gather three data points for each validator: 1) up-time, 2) commission, 3) governance participation. Average these data over the past six months. Set a minimum threshold for up-time, minimum threshold for governance participation, and maximum threshold for commission. Exclude validators that do not meet the thresholds.

• Step 3: Rank remaining validators by delegation size. Using this ranking, divide the list into four cohorts. For example, the first cohort contains the top 25th percentile of remaining validators ranked by delegation size.

• Step 4: Within these four cohorts, rank each validator by technical and social contributions to the host zone. Validators are ranked on a relative basis within their cohorts. Only contributions made within the last six months are included. This requires subjective judgment, so this step is performed by an advisory council selected from amongst prominent and respected community members from the host zone. The advisory council is confirmed by a governance proposal on the host zone to ensure that the host zone's interests are adequately represented in the process.

• Step 5: At this point, determine how many validators are required for the host-chain set. Select the top validators from each cohort until the required number has been met. Remember the rank each validator was assigned in their cohort.

• Step 6: Once the full set has been selected, validators are assigned a stake weighting based on their cohort rank. There are four validators that were ranked #1 in their cohort, four that were ranked #2, and so on. The #1 validators will have the highest weight, followed by the #2 validators, and so on.

• Step 7: Repeat the curation process periodically to recalibrate host-chain validator sets.

Ultimately, Stride governance has the final say in this process, and may vote to alter it at any time or make specific chain by chain exceptions depending on the individual needs of the host-zone.