Staking is considered a safe way to make money, but there are actually risks involved. Firstly, you may miss out on income if the staking provider does its job poorly. Secondly, you could lose it if the provider is dishonest or works illegally.
This feature explains how to choose a reliable staking provider and what metrics to consider. Be prepared to use Google, as not all information can be found on one website.
TLDR
On-chain metrics show the technical quality of the provider's work, while off-chain metrics show the validator's concern for its delegators and the community.
The most important on-chain metrics are uptime, number of delegators, and slashing history. If they are fine, you don't run the risk of under-earning.
Social media subscribers, blockchain diversification, and value-added services are the most important off-chain metrics. If they are fine, you do not risk waking up and finding out that the provider has shut down.
Where to Find Staking Providers
First, you have to decide what token to stake. Then go to Staking Rewards and select the one you had in mind to open the list of available providers. For this example, we chose Solana.
Scroll down the page to the list of providers and select a few to compare. Find the relevant blockchain explorer to view the on-chain validator metrics.
If you google "Solana validator details," resources like Solana Beach will come up. In the explorer, find the selected provider and start exploring the metrics.
The Most Important On-Chain Metrics to Check While Choosing a Staking Provider
Depending on the blockchain and browser, the set of metrics may vary. The main ones are slot success rate (or uptime or skip rate), the number of delegators, and slashing history.
Uptime, Slot Success Rate, or Skip Rate. Uptime is the time a node is active on a network. Slot Success Rate indicates the number of blocks created and confirmed. Sometimes, Skip Rate can be displayed instead, indicating the number of skipped blocks. Uptime or Slot Success Rate should be as high as possible, ideally 100%. In the case of Skip Rate, it should be as low as possible. For example, according to Solana Beach, the Slot Success Rate of Everstake is 99%, meaning delegates get almost all the profits possible.
Number of delegators. Unlike other indicators, this is more of a psychological metric. A vast number of people delegating their assets to the same provider suggests that the community trusts it. Everstake has over 625k delegators, making it one of the most popular staking providers.
History of slashing. In PoS blockchains, slashing is an automatic penalty a network imposes on a delinquent node that fails to validate transactions or tries to fraud the others. Slashing rules vary with blockchains, but usually, it implies that the node’s stake is forcefully decreased with the subtracted amount going elsewhere. For that reason, if a staking provider has a track record of slashing, it may imply that its reliability is, in fact, dubious. You can usually check the history of slashing online, especially large cases like Terra. If you can’t google the info on the slashing history of a particular validator, it means that the validator doesn’t have it!
Less Important but Still Valuable On-Chain Metrics
Longest outage time. This is an inverse uptime in a sense. Nodes can remain faulty for some time, and the shorter it is (i.e., the faster the validator takes the nodes back online), the better. For instance, the centralized exchange Kraken’s nodes were offline for several days in 2018.
Governance participation. This parameter is essential to understanding the extent of influence the given provider has on the blockchains it works with. Obviously, it varies with networks and needs to be checked for all of them. Governance enables the provider to steer a blockchain's direction. It should be checked with the use of governance portals of the selected blockchain or advanced blockchain explorers. For example, here’s Everstake voting history on Tezos.
Unbonding period. The unbonding period is the time one must wait for their tokens to be withdrawn from staking. For technical reasons, it usually lasts several days or even weeks, depending on the blockchain. Some staking providers develop solutions for an instant unstake, such as Everstake’s Eversol.
Off-Chain Metrics to Check While Choosing a Staking Provider
Off-chain metrics signify the reliability of a provider and show whether it’s a responsible organization concerned with the development of the blockchain and the community around it.
Community participation. A responsible validator should be involved in community life since often it falls to staking providers to vote on the future development of an entire ecosystem. Knowing the community sentiment is paramount here. In a manner of speaking, a validator is pretty much like a parliament member who supports or rejects bills on behalf of their voters. Doing so efficiently without communicating with the voters is impossible. You can check Everstake's community participation on Discord.
Insurance. Even though it’s rare, some validators, such as Everstake, have insurance in case of any slashing or a loss in ETH. Everstake works with Nexus Mutual and has insurance against the loss of property, where the partner company is also covered in case of double signing.
Geographical jurisdiction. Since national legislation and regulations vary, it’s crucial to have nodes located in different countries to minimize the risk of tampering with nodes on the side of authorities or hackers. This is also important to avoid attacks from regulators. Ideally, different companies should manage nodes for the same reason too. Everstake’s infrastructure is fully distributed, which means fault tolerance and disaster resistance.
Blockchain diversification. A validator’s involvement in many blockchains is another sign of trust, this time from blockchain teams. Everstake, for instance, works with 70+ blockchains and adds five more on average every three months. That is why many delegators choose us.
Customer support. Efficient and continuously available customer support is an obvious sign of a reliable service provider. The easiest way to confirm this is to contact them and see how they work with your own eyes. To ensure the customer support works properly, try to contact them and see when a real person contacts you.
Value-added services. Besides doing their immediate job, a reliable staking provider is often involved in other activities that benefit the community and their business. For instance, Everstake is the absolute leader in the number of exclusive guides and educational materials about staking and the blockchain economy. If, in addition to services, a provider also creates products, it may signify a higher degree of dedication to the industry and the public. Everstake, for instance, is developing an open-source balancer—extrnode—to connect to RPC nodes on Solana and participates in the development of Metaplex.
How Everstake Secures the Crypto Assets of Delegators
The metrics discussed above are universal in their nature. Still, they are not exhaustive. Another important notion that one should consider while choosing a staking provider is the security measures in place to protect user assets, the server infrastructure, and blockchain nodes. This is how Everstake handles the task:
Threat modeling. When a company acquires a new server, kicks off a new service, engages in a new project, or launches a new node, it creates a new threat vector. Threat modeling allows us to prevent potential attacks by anticipating their course. To do so, Everstake scans our entire infrastructure manually and automatically, including, but not limited to, checking for any misconfiguration of nodes, servers, and front end.
Preventing the typosquatting vulnerability. Typosquatting, or URL hijacking, is a form of cybersquatting targeting people that accidentally mistype a website address directly into their web browser URL field. Cybersquatters register domain names slightly different from the target brand (usually using a common spelling error) and use a phishing website to steal personal and financial data. Everstake prevents that by registering all possible variations of its target names, thus blocking potential typosquatting.
Incident response management. Everstake’s incident response management system allows us to respond quickly to incidents to fix and protect our system and users. In particular, it allowed Everstake to maintain normal operations even after the onset of the war in Ukraine.
Security management strategy and keys management. All keys on Everstake’s servers are encrypted, and credentials are stored in dedicated password managers. This excludes a successful attack even on a shutdown server. On top of that, the data is protected by multi-signature locks that exclude any form of tampering with sensitive information on the side of the hosting provider.
Server management. The most common problem with hosting providers is rate limiting, where a server with 10 GB/s NIC gets only 200 MB/s or even less. Everstake has a provider that uses Intel Optane NVMes with read/write speeds slightly lower than RAM. The team cares a lot about the servers.
Conclusion
Choosing a staking provider for your assets requires thoroughly researching the above-mentioned metrics. This way, you can be sure that you’re dealing with a reliable partner. Yet, in any case, the final decision must be weighed appropriately.
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