Amit Gajjala is the CEO and Co-Founder of Stader Labs, a a non-custodial smart contract based staking platform that enables users to conveniently discover and access staking solutions
How did you initially discover cryptocurrency?
I was primarily inspired by my Co-founder and CTO Sidhartha and was fascinated by the alt coin mining, yield mining and smart contract development he was doing. That really got me excited and I spent half a year just absorbing content across Real Vision and other great crypto KOLs. This led to my investing in the space across PoS tokens and started staking, yield mining to get a real hang of the space.
Could you share the genesis story behind Stader Labs?
Sid and I were inspired by staking as a sustainable long term risk-free yield generating opportunity. As users, we faced several challenges while staking ourselves and there was lack of access to high quality staking solutions. That inspired us to build the infrastructure that enables the growth of an ecosystem of staking solutions on top. We started this journey by building these solutions on Terra blockchain and are expanding to multiple blockchains soon.
For readers who are unfamiliar, could you describe what staking is?
Staking is the process of securing a blockchain network with tokens, as the process of creating new blocks happens through staking rather than by a computer to solve a complex problem (proof of work). To incentivize stakers, the network offers rewards to compensate for locking the tokens.
That “locking” mechanism is a core part of stake pools. Users can earn rewards by “staking” them to a specific validator, who is then responsible for supporting the network and ensuring an up-to-date, uncorrupted shared ledger.
But locking tokens has a big disadvantage: you lose access to them. To solve that liquidity problem, there’s also liquid staking, where users mint liquid tokens and then can leverage it on DeFi protocols and across broader PoS ecosystems for additional DeFi strategies. These liquid tokens represent the underlying staked tokens, without cashing those tokens in, which means that the underlying tokens can earn rewards while the liquid tokens can be used elsewhere.
Why is Stader Labs a better option for staking than competing projects?
First and foremost, we make staking easy and simple. More importantly for the health of the PoS networks, we increase network decentralization by spreading stake among more validators. For users facing complexity in managing their delegations and discovering new validators, the Stader staking solution greatly simplifies this process.
With a single click, investors can stake across up to 10 validators in a single click. This reduces centralization by spreading stakes across multiple validators – and avoids the “cluster” issue where most people just choose the top 10 validators.
That causes another issue beyond centralization: it reduces rewards earned by smaller validators, and that decreases the appeal of running a node on the network. This in turn increases centralization, since there are fewer nodes incentivized to support the network.
Another benefit is our modular approach to building smart contracts, which will further enable the thriving Fantom developer ecosystem, so third parties can leverage our components to integrate staking solutions.
Could you discuss some of the threshold performance criteria that validators need to meet in order to be considered for Stader pools?
To further enhance decentralization of proof-of-stake networks, we need to have validators that are not only diverse but also trustworthy. With that in mind, we have 3 validator pools on Stader: Blue Chip, Community and Airdrops Plus.
In order to be a part of Stader pools, validators need to meet the below criteria during a given 30 day period:
- Uptime > 99.85% (averaged over a one month period at the time of selection)
- No slashing in the past three months
- Commission ≤ 5%
- 1–2 pool-specific criteria
We also want to further support decentralization in our Blue Chip pool, so we have not considered any validators that have >2% voting power, nor will we add any validator that’s already in the top 10 on a given network.
Our full validator selection criteria can be found here.
What tokens can currently be staked and what tokens will be added in the future?
We currently provide staking services on Terra, where we have over $300m locked. That’s been only since launching last November, so the growth has been strong.
We’ve also recently announced that we’ll support Fantom in the coming 6 weeks, with other networks coming soon after. We currently have plans to extend to Solana, Hedera, Avalanche, NEAR and Ethereum.
What will be the use case for Stader token (SD)?
The SD token provides various core utilities across the Stader ecosystem:
- Preferential delegations and insurance: Validators will stake a minimum amount of SD Tokens and a percentage of delegations to the pool will be proportionately allocated based on SD Tokens staked. Slashing insurance will be provided by validators via the staked SD Tokens.
- Rewards and discounts: Liquidity Pool Rewards: Rewards in SD Tokens for Liquidity Pool providers on DEXs, if elected by governance stakers
- Platform discounts: SD Token stakers may receive a discount on fees charged on Stader solutions, if elected by governance stakers
- Governance: Governance stakers can propose and vote on policies related to the Stader protocol strategy, expansion, validator pool selection, validator selection, changes in methodologies, and more.
- Development access to Stader infrastructure: Third parties, including developers, need to stake SD Tokens to access Stader smart contracts and product features such as customized staking smart contracts, validator intelligence tools etc.
What’s the revenue model?
We have three revenue streams currently:
- Commission on reward strategies: 3-10% management fees on staking rewards, if elected by governance stakers.
- Commission on liquid staking tokens: 5-10% commission on staking rewards, if
- elected by governance stakers.
- Distribution commission from validators: 10-20% distribution fees on validator
- commissions, if elected by governance stakers.
What are some other long-term opportunities that Stader Labs will be exploring?
Stader also aims to integrate with the top 7–10 PoS blockchains over the next 1–2 years. In the long run, we will be exploring several multi-billion dollar opportunities, such as enterprise-grade private staking solutions, including enterprise-grade staking derivatives infrastructure.
We’re focused on unlocking the platform approach with an API layer to connect mainstream fintech applications, as well as nurturing third parties to develop several staking-related applications on top of the Stader infrastructure. Additionally, multi-chain staking derivative ETFs that are a combination of yield generating PoS assets.
Is there anything else that you would like to share about Stader Labs?
We were pleased to see the immense interest in our CoinList sale. We actually became the most successful launch on the platform, with over 1 million wallets registered.
The investor interest underscores the rising awareness of both the importance and economic potential of staking infrastructure. As more projects increasingly choose Proof-of-Stake, there will be more need for exactly this type of technology.
Thank you for the great interview, readers who wish to learn more should visit Stader Labs.