Thanks for sharing your thoughts, @John_Galt. My reply is limited to addressing your concerns about ‘economic security’.
Some of the points mentioned (especially the way of putting them) are vague and presented without actual data to back them up.
These points are also blown out of proportion and done to propagate an incorrect and biased impression of ‘economic security’.
Is economic security the feasibility of carrying out a 33% or 67% attack on a PoS chain? Or is it the total value of tokens locked? Or is it the chain’s security source in the first place?
I would argue it is a mixture of all of the above.
Sound and Reliable Economic Security
Reverie’s thesis involves increasing the dYdX chain’s economic security by increasing the adoption of DYDX token staking, aka the chain’s bonding ratio. I completely agree with this take. A big part of how economically secure a chain comes from the total bonded ratio of the chain, which dictates token float, the feasibility of attacks, and more. This is the primary concern and the problem that this proposal tries to address.
The most vulnerable attack to PoS chains is the extremely dominant 67% Attack. If an attacker can accumulate that much stake, they could enforce hard censorship by not attesting to blocks produced by other validators. This would allow the attacker control over the chain.
In a recent research report titled “Breaking BFT: Quantifying the Cost to Attack Bitcoin and Ethereum", leading research professionals have found that an attacker (single or nation-state) would not be able to profit from attacking PoS chains like Ethereum, Cosmos Hub, Stride, or Persistence One due to the Total Cost Associated with carrying something on this scale out.
For your consideration, let’s assume an economic benefit exists for such a 67% attack to happen on Persistence One. The attacker would likely need to begin by buying XPRT.
The Persistence core-1 chain is one of the most resilient chains and has produced blocks since April 2021. Since its genesis, XPRT staking has provided sound and reliable economic security to the ecosystem, measured by the bonding ratio of the chain.
On average, > 70% of the XPRT tokens have remained locked in the chain’s staking module. Persistence One has remained in the top 5 PoS chains by bonded ratio. An event where a single attacker can amass such a vast stake is possible but highly unlikely due to XPRT’s float and robustly designed economic security mechanisms.
It is also important to note that in liquid staking, tokens are locked on the host chain, in this case, dYdX. In the unlikely scenario that an attacker gains control over the Stride or Persistence One blockchain, the attack would first be public. Bad actors won’t be able to benefit from this, thanks to the 30-day unbonding period, and it can be addressed with an emergency upgrade (3-day voting period on dYdX).
The economic security of the stake is critical, as you have highlighted very well. What matters more is the feasibility of overpowering said economic security.
Diversified Economic Security
I, like other Persistence One contributors, believe in the concept of hedging security. We should look at security from the perspective of ‘abundance’.
We should think about “How much security is enough”? vs trying to agree on “How much security is too little?”.
In that quest, here are two key ways the Persistence One ecosystem is doubling down on the above thesis:
- Persistence One will adopt the Bitcoin security solution Babylon offers to add to and strengthen its ecosystem. This integration enables unlocking multiple billions of dollars of economic security provided by BTC (if not trillions).
- Persistence One is building the Restaking Infrastructure of Cosmos, which involves bolstering its security first and then offering this security bundle to consumers. The Restaking of LSTs of Stride, pSTAKE, LP Tokens of Osmosis, Dexter, and Stablecoins will all add to the economic security of the ecosystem.
By not placing all eggs in a single basket, Persistence One will be a leading ecosystem for diversified economic security.
Liquid Staking dApp Security
One of the crucial things (and equally important) your reply fails to highlight is dApp security, which potentially (and practically) involves more risks than the Stride/Persistence blockchain in the current context.
pSTAKE Finance and Stride share the same ideology of security over everything. This is visible with the multiple audits, bug bounty programs, on-chain monitoring, and other security measures these protocols have set up.
Notably, pSTAKE Finance has also undergone a dedicated security audit for stkDYDX.
However, dApp security risks don’t always come from code.
It is important to have both layers of defense: economic incentives to discourage centralized cartels from acting anti-socially, and anti-centralization incentives to discourage cartels from forming in the first place.
As highlighted in the original post above, pSTAKE’s unique delegation model was developed to ensure that stkDYDX remains a true force of decentralization for the dYdX Ecosystem.
This prevents the risk of an attacker taking control of the protocol’s delegation model to redirect its entire stake to a malicious validator.
Final Thoughts
Overall, I agree with your point of ensuring high economic security. At the same time, I want to highlight again that the feasibility of overcoming economic security is more critical than economic security.
In line with the above, it is a fair ask for the dYdX Community to consider splitting the 20M DYDX tokens with Stride and pSTAKE.
Stride does have more $ value in economic security than Persistence One currently. I encourage the dYdX community to share thoughts on whether that warrants an unequal split of the originally suggested 20M DYDX tokens.
