January 8, 2021

Skale Network: All you need to know

Chapter One

What Is SKALE Network?

The world of blockchain keeps on getting intriguing and innovative solutions regularly. Some of them shake the blockchain verse, and others have little or no impact. The SKALE network falls under the former.

As a Layer 2 scaling solution designed to be used on Ethereum chain, skale network is crafted to ensure that smart contracts successfully scale. This network ensures that app-specific sidechains are created, which end up being kept safe by the validator set on SKALE.

On the first day of the seventh month in the year, 2020, SKALE launched its V1 mainnet.

What's spectacular about SKALE?

For this first chapter, we'll look at the overview of SKALE network briefly before we go further to touch more topics as the crash course continues.

SKALE is dedicated to ensuring that developers of decentralized apps can improve the speed of their smart contract development, while heightening performance. The fact that SKALE is EVM-compatible has made it quick easy for developers to utilize developers' tools that already exist on Ethereum.

SKALE Network: How Does It Work?

The main reason SKALE was created is to ensure that decentralized applications can effortlessly have access to independent app-specific chains that are made safe by the validator set run by SKALE. What this means is that the app-specific sidechains buy topnotch security features when they use the validator set run by SKALE.

SKALE NETWORK: Its Business Model

For someone that has utilized the SKALE network, there's a great chance that you won't mind qualifying it as Ethereum-as-a-service. It's quite easy to use. A decentralized app is expected to dole out the fees for the validator set run by SKALE, which are dependent on the amount or scale of resources that the dApp needs. The subscription fee paid is dependent on the bandwidth, storage, and computation.

What Mechanism will Users of SKALE Connect to Ethereum?

The app-specific chains that decide to use SKALE can be linked to the Ethereum chain using the SKALE Manager smart contract, which will function as the entrance and exit for the dApps. Before the app-specific chains can access it, they will slot in tokens to the SKALE Manager smart contract, while the latter will create new tokens that are designed to be used by the app-specific chain solely for this purpose.

What mechanism secures app-specific chains?

The app-specific chains will be secured by the SKALE Manager contract, while a pool of random and changing validators secure the latter. Some of the validators that have signed up at the moment are BisonTrails, ChorusOne, StakedUS, and so on.

What will the $SKL token do in the ecosystem?

The $SKL will be staked by the validators to be eligible for rewards, which comes as inflation rewards and fees. The staking happens on the SKALE Manager smart contract. $SKL holders can choose any delegator they want by delegating their tokens to that delegator.

Any decentralized app developers that have decided to utilize the SKALE network have to think about some things.

In what capacity do they need SKALE? How much extra capacity would they require?

They have to think about how long they would need the extra capacity.

Apart from the aforementioned, they are expected to pay the subscription fee to the SKALE Manager contract’s validators, if they want to use the network.

At the moment, the SKALE network is managed by the N.O.D.E. foundation, which is a nonprofit organization. As time goes on, the ownership and governance will be moved to the holders of $SKL tokens.

Chapter Two

What You Need To Know About SKALE Token

$SKL Token

The network has its utility token that allows users to have access to the features on the SKALE Network. The $SKL or SKALE network token acts as a hybrid use token that shows that one has the:

• right to act as a validator on the network,

• right to stake as a delegator,

• right to have access to a slice of the resources, as a developer, when they deploy, as well as rent either an Elastic Blockchain or Elastic Sidechain for a while.

The $SKL acts as the inbuilt method of transfer, thereby ensuring that the following functions are facilitated.

• Staking and Security in the SKALE network.

The delegators, who also doubles as the $SKL token holders stake their tokens with the validators. The validators, in turn, run the nodes that ensure that the SKALE network works effectively. This is done by ensuring that the blocks are validated, the smart contracts are executed, and the network is safe. The validators are eligible to earn SKL tokens as rewards for their efforts.

• The dApp developers on SKL network have to pay subscription fees with SKL tokens before they can access the elastic blockchains (S-chains).

• The rewards that are given to the delegators and validators are dependent on the amount paid by dApp developers monthly to utilize the chains, as well as the monthly inflation of tokens into the network.

• Governance and voting.

Before one can get involved in voting about what happens on the platform, he or she is expected to have SKL tokens. The voting will control every economic aspect of the network. To find out more about the N.O.D.E foundation, click here

The ERC-777 Will Support Delegation on the Token Level

Delegation of tokens is made possible because the network was crafted on the intriguing ERC-777 token standard. ERC20 and ERC-777 are compatible with each other. What this translates to is that every participant on the Ethereum chain can easily have access to it based on the ERC-20 support.

A great aspect of the token that we can't ignore is the fact that it contributes greatly to the security of the network through staking and delegation. ERC-777 is different from ERC-20 being that the former doesn't need the delegator to transfer the token to the delegation smart contract. In the case of ERC-777, the only thing needed is that the delegator shares the safe delegation key with the staking provider, while they keep their SKL tokens in their wallets. The tokens can either be stored in a hot or cold wallet.

SKALE Token on ConsenSys Activate

The N.O.D.E. Foundation decided to opt for the ConsenSys Activateplatform to launch their SKALE network for a number of reasons. One of the reasons is the way the latter deals with the legal and regulatory ambiguity that surrounds the utility token offerings, which decentralized projects use.

It's not news that Activate offers a token sale and delegation platform that ensures that token launches are done fairly.

Token holders can earn network rewards by using the token delegating and sharing that Activate offers. To find out more about this, check out the SKALE Delegator Hub.

SKALE network used the KYC policy on Activate, and in the end, the number of participants that were approved on the platform to take place in the SKL token sale was over four thousand.

The $SKL sale was done on 11th of September 2020. More than three thousand users from all around the world bought 167,139,884 SKL at a price of $0.03 USD/SKL. Currently, there are numerous participants globally and this will greatly improve the network security.

On 1st of October 2020, the mainnet phase 2 was live, and it had more than eighty million dollars worth locked. At the moment, about four thousand users in more than ninety countries staked their tokens to the 135 SKALE Network nodes with forty six validators, thereby improving the security of the network.

To find out more about the Token and Network information, you should consult the twentieth page of the Whitepaper.

Chapter Three

Uses of SKALE Network

By now, you know that the SKALE Network is an elastic blockchain network, which allows dApp developers to churn out topnotch dApps and sidechains that can work effortlessly on Ethereum. The SKALE sidechains are designed to carry out more than two thousand transactions in every second, while running full-state smart contracts. Apart from the aforementioned, it both acts as a machine learning in EVM, as well as a decentralized storage.

To a layman, this network acts as the decentralized cloud computing, as well as the storage provider that ensures that the Ethereum chain is highly scalable and performs incredibly.Currently, more than forty decentralized apps are being hosted on the SKALE network, from the decentralized financing world to games and much more.

Decentralized apps' developers can benefit from the decentralized cloud that SKALE network offers, which ensures that elastic sidechains are provisioned and deployed easily.

Conventional sidechains utilize a smaller amount of validator nodes before they can function, and this act leads to risk in the transaction integrity. This is because a smaller number of nodes usually leads to higher rates of bribery and collusion.

The SKALE Network counters this issue by utilizing a pooled validation model, which takes advantage of the benefits that a large set of validator nodes offer. It does this by frequently changing the nodes and introducing randomness in the assignment of nodes. To avoid collusion, random nodes are chosen and they are rotated regularly. What this means is that every sidechain is secured by the entire network.

Every validator is expected to stake a large amount of SKALE token to improve the security of the network. The tokens can also be used in provisioning the sidechains. To find out more about this, check out the SKALE network whitepaper.

The smart contracts manage the way the tokens are staked on the platform, as well as the token inflation. It also manages the payout to validators monthly, which usually includes the proceeds that come from the inflation.

The smart contracts are also involved in monitoring how the nodes perform, and deal out penalties when a node disappoints.

The SKALE Network act as a custodial execution layer, and it is different from non-custodial platforms that utilize the fraud proofs mechanism to ensure that funds are transferred on the chains. On the other hand, SKALE network uses mechanisms like deposit boxes in the Ethereum mainnet, BLS signatures, and so on to ensure that custodial ownership can be done in the network. Doing this allow SKALE to benefit from the safety features of the mainnet and bask in the performance common in Layer 2.
There are different reasons that decentralized apps like SKALE network. It is very easy to integrate into the system. With a few lines of code, you are good to go. The network offers perks like heightened transaction time, reduction in gas costs and so on. It's not news that developers fancy solutions that ensure their transaction time is quick and the gas costs are little.

Chapter Four

Staking The SKALE Tokens

For those that do not know what staking is, it is a process of locking one's token in a wallet, in a bid to improve the performance and safety of the network. This works in networks that operate under the Proof of Stake mechanism.

Those that stake their tokens are rewarded with the fats of the land. This encourages holders of tokens to stake their tokens.

Staking on the SKALE Network

We have already mentioned that the SKALE token is the native token of this platform. It's the utility token that acts as a means of payment and a right to work on the network. The token holders can decide to stake their tokens for rewards. When they do this, they are improving the security of the network, and validating transactions.

The developers of decentralized apps may want to rent and deploy an Elastic side chain. They can get a slice of the resources on the network by paying subscription fees based on what they need and the duration they need it for, by using the SKL.

There are two ways to stake on this network. It can be done by using a validator to stake one's token. The token holder can decide which validator that he or she wants to use. The second way to stake is to operate one's staking validator. Here, the holder decides to operate his or her own staking validator, where he can stake his own tokens and those of other token holders.

The stakers are rewarded for improving the security and performance of the network. This is done by giving them a slice of the DKL rewards pool monthly. The rewards pool comes from the decentralized app fees and by developers and the protocol reward issuance. The level of rewards that stakers have access to is dependent on the number of tokens that were staked and how long they were staked.

You can use Activate to calculate your expected staking rewards, dependent on how much you stake and for how long. We are going to analyze how one can become a stake holder.

Phase One: Become A SKALE Token Holder

Before you stake on the SKALE network, you are expected to be a token holder of the SKL. The early users can buy the tokens on the Activate platform. Before this can be done, they are expected to register and verify their identity.

It's quite easy to register for the token launch on the Activate platform.

The sales of the SKALE tokens was done on 17th of August 2020 by a Dutch auction. Those that participated in the auction, started by registering, then utilizing ETH, DAI, or USDC to get involved. Every participant that submitted their bid on that day were given their tokens in four weeks after the auction was done.

Every token holder that wanted to have access to the tokens when the mainnet was launched was required to agree and carry out Proof of Use. This means that fifty percent of the tokens held by the holder should be delegated for at least ninety days, before they can be transferred from the network.

What Proof-of-use does is to ensure that the holders of the tokens are in support of what happens in the network, while they restrict the level of speculation. During the Proof of use duration, the stakers can have access to staking rewards.

Phase Two: Staking Your SKALE Tokens

Immediately you get your tokens, you can now participate in what happens in the network. If you are a developer, you can pay the subscription fees to use the resources in the network. You can vote if voting comes up. Apart from the above, you can decide to stake your tokens to maintain the performance and security of the system, while earning rewards in the process. Activate permits users to have a great user experience when it comes to claiming, managing and staking their tokens.

If you want to benefit from the rewards that come with staking, do the following:

1. Start by combating the validator options that are available. You can have access to alternatives on the Activate participation portal

2. After analyzing the different validator alternatives, you can opt for a validator. You then type out the amount that you want to stake and for how long. It could be for three months, six months or a year.

3. You can then utilize your connected web3 wallet in submitting the staking rewards.

Immediately it is approved, the tokens that you staked will start the staking process at the beginning of a period. Immediately the request for delegation has been approved by the validator chosen, the tokens are then locked. You can't decide to undelegate it for any reason, until the period that was chosen elapses.

The validator is allowed to reject a request, and once this is done, you can choose another validator.

Phase Three: Receiving the Staking Rewards

Token holders usually get their rewards for staking throughout the chosen delegation duration. In the beginning of every month, they at shared to the different holders. The level of rewards that one can earn from staking are dependent on the following:

• The number of tokens that were staked by users. How many tokens you stake affects how much rewards that one gets.

• The delegation period affects it. The period of delegation is usually three months, six months or a year. The rewards that the durations get are 1x, 1.5x and 2x respectively.

• The network issuance rate affects the staking rewards.

The network issuance rate is the rate at which tokens are created by the platform. These tokens are then shared to every node existing in the network.

At the moment, the network issuance rate is 9.3% because this is the first year. As the years go by, it will have a decrease in rate of 0.55%, which will occur for the first six years.

• The total number of tokens staked in the SKALE network. The reward rate is usually inversely proportional to the tokens that were staked, dependent on the network issuance rate for that year.

• The Network Fee Generation also affects the staking rewards in a period. The reward pool shared to validators and delegators is usually dependent on the decentralized app s-chain rental fees. If the fees earned are much, there is a great chance that the rewards shared to delegators and validators will be much.

• The Validator Fee Cut affects it too. This is the percentage reward that the validator that you chose gets for delegating. The validators have to be paid for their services. The higher the charges of the validator, the lower the rewards that end up with the delegator.

• Reward Compounding:

This is linked to the holder's deciding to have their rewards compounded and re-delegated.

It is easy to find out the expectant staking rewards by using the SKALE calculator

Phase Four: Withdrawing The SKALE Tokens

Once every month ends, the staking rewards of users can be accessed and withdrawn. Immediately your rewards are withdrawn by you, you can decide to have them delegated again or transfer them for some reasons immediately you have ticked the requirements of the Proof of Use.

You can jump onto the Activate platform to buy the SKL tokens, find out how much rewards are available, and stake them.

Chapter Five

The SKALE Network Validators

In the last chapter, we spoke at length about how to stake using validators. It would be wrong if we left you on the lurch, without writing about the different validators that exist on the platform.

The truth remains that the SKALE network is filled up with intriguing validators that know their onion. Some of the validators are experienced network operations teams. Some are astute crypto miners, while the others are top notch developers on Ethereum. Some lay in between these groups. A lot of the SKALE validators that came on board initially end up supporting the ETH2 too.

Over seven hundred validator team's requested to be a part of the SKALE ecosystem, and this support has gone a long way to change the way things are done.

The network's Mainnet Phase 2 launched on the first day of October, 2020 by the approved validators.

The validators on SKALE are experiences in mining for PoW and staking for PoS networks like Cosmos, Celo, Near, Polkadot and so on. Their experience makes them understand how the network operates and the benefits that come with a decentralized network being reliable and working efficiently. They possess the knowledge of handling advanced infrastructure setup and orchestration. Apart from the aforementioned, they also understand how EVMs and the Ethereum chain work. The validators work globally, in numerous countries of the world.

Not minding that they have intense experience in mining and validating, the fact that they participated in the SKALE Testnet months back allowed them to have a detailed understanding of the SKALE Network.

An incentivized Testnet occurred a few months back to allow validators to understand how nodes are set up and operate on the SKALE network. The Testnet started in May 2020 and ended up in August that same year. It functioned in an accelerated manner, which can be likened to over seventy years of the life of the network. For one day, it didn't crash. This went on to show how effective the system is.

The Testnet made sure that the validators were familiar with what randomized node selection meant, as well as the regular node rotation. These are important aspects of the network, as it ensures that it is safe and possesses a top notch performance level.

Apart from the aforementioned, the validators also become familiar with important aspects of the network architecture, which are containerization and virtualization solutions. These solutions have made SKALE network better than its counterparts.

What was noticed from the validators during the Mainnet launch and the Testnet was out of this world. They showed that they were not ready to let the ecosystem down. With what was seen on ground, adoptability of the decentralized ecosystem will move quickly.

SKALE Delegator Hub

At the moment, it is live. You can have access to details concerning important things like the delegating resources, important links, and so on. If you want a thorough understanding of the Proof of Useprocess, use the SKALE Delegator Hub.

Who Are The SKALE Network Validators For The MainNet Phase 2?

The following validators are approved by SKALE and currently integrated with the network. Prospective token holders can use them.

01NODE

Audit One

Blockdaemon

Blockware

Chainflow

Chorus One

Cypher Core

Dokia Capital

Figment

FreshSkale

Staked

Stakin

Stake With Us

WolfEdge Capital

Ankr

Anonstake

Chainode

Hashed x DELIGHT

Hashquark

NGC Ventures.

As time goes on, new validators will be allowed into the system.

Chapter Six

SKALE Protocol
Next Gen PoS-Based Network

SKALE uses PoS to ensure that participants behave appropriately, whereby every node is expected to stake a number of tokens, which can be reduced if it is noticed that wrong activities are carried out on the network.

These wrong activities usually involve those activities that lead to a node not participating in its duties like maintaining uptime.

Delegation

SKALE holders can decide to delegate their SKL to any node/ validator that is not filled up. The tokens that are staked or delegated are rewarded after every period. To find more about the delegation, head to SKALE whitepaper.

Consensus

It's not news that an impotent aspect that should not be ignored when creating consensus algorithms is the threat to the consensus. There are issues like malicious firewalls, DDoS attacks and so on, that may affect the network if not handled.

Every network out there that focuses on a myriad of transactions will need to easily support high-throughput of messages. Apart from that, there will also be the need to account for the downtime of nodes that may occur.

To tackle the issues discussed above, the SKALE network utilizes a type of Moustefaoi et. al consensus. Using this protocol ensures that the network screams of decentralization and possesses high-throughput. It permits an asynchronous, leaderless, as well as a network tolerant of Byzantine faults.

Interchain Communication

The presence of group signatures on Elastic Sidechains has made it easy for other Elastic Sidechains to see if a block was truly signed, as well as done on a different Elastic Sidechain. This feature has opened the door for a lot of opportunities. This permits different smart contracts to be executed easily, and heightens the ease in transferring crypto-assets on different Elastic Sidechains.

The above is made possible via a number of smart contracts that are sited on the mainnet on Ethereum.

Conclusion

We'll look at the recap of what was discussed in this crash course. We've looked at SKALE network, what the token is, how to earn from stalking, the different validators in existence and the protocol. From what we saw above, it was shown that it is quite easy to stake $SKL tokens. Within a few minutes, you are ready to stake.

As this is only the crash course, we didn't go into details in a lot of aspects. If you want to find out more about the SKALE architecture, it won't be a bad idea to head to the Whitepaper

SKALE NETWORK PRIMER

SKALE Network Key Attributes

SKALE NETWORK TECHNICAL HIGHLIGHTS