We offer a non-custodial staking solution for the leading proof-of-stake cryptocurrencies. Keep your assets under your control in a hardware wallet, and let us handle the rest of the job.
Check us out at https://MIDL.dev
The emergence of proof-of-stake networks
Today’s established blockchains establish consensus by wasting energy and resources, and they suffer from heavy centralization. Proof-of-stake opens a greener and safer chapter in cryptocurrency evolution. Tezos, Polkadot, and Ethereum 2.0 are, in our opinion, the most promising networks.
Proof-of-stake cryptocurrencies have inflation. Token holders must take action for their assets to grow: they must put them at stake on the network.
Unlike proof-of-work blockchains, the computing resources required to operate full nodes are small. But the intricate incentive systems in place to protect the network put your funds at risk of “slashing” if your node misbehaves or becomes offline.
Token holders are faced with a choice:
- they may operate full nodes themselves
- they may delegate to someone that operates full nodes using a mechanism built into the network
- they may give custody of their assets to a third-party
In practice, a majority uses custodial services, which carry high fees and bring back fears of centralization.
We offer a unique service that lets you directly participate in the network, keep all the staking rewards to yourself, and retain custody of your keys. We charge a monthly fee in fiat currency to operate the infrastructure.
Different approaches to staking
Alice is a token holder. She has overcome great pains, read documentation and chatted on staking forums, and has put a lot of time into deploying a validator node — a blockchain node that participates in consensus and generates blocks. She keeps the full extent of the rewards that the network allocates to her. But the network is self-governing, and frequent changes in the protocol require constant upgrades to the infrastructure, so Alice has unwittingly committed to spending a significant amount of time in the long run to keep her operations up.
Proof-of-stake networks have taken this into account and have introduced the concept of delegation. This may have different names (in Polkadot, it’s called nomination) but it boils down to the same: a special network operation lets you delegate your tokens to a separate entity, called a delegate, baker, or validator. This entity uses your stake to participate in the network, and in return it is responsible for sending rewards your way, taking a fee in the process. This fee can be substantial, especially if your token is worth more over time.
Some delegates are opaque entities, others are well-known cryptocurrency exchanges that take custody of your assets. Bob has his tokens in one such exchange. He sleeps comfortably at night knowing that his assets are taken good care of. His portfolio is growing over time. One year from now, even if Bob has forgotten everything about this specific token, he can still transfer or exchange it using a familiar UI. But that peace of mind comes at a price — 25% of the gains.
The MIDL way
MIDL.dev introduces a third way, suitable for people who have enough assets that they wish they could directly participate in the network — but not quite enough to mobilize the technological and human requirements to do so.
Charlene has been holding crypto for years and is comfortable being her own bank and storing her coins on her Ledger™ hardware wallet. But she is annoyed by the 10% fee that her validator is taking.
Charlene now wants to participate directly in the network, produce blocks and endorsements, and participate in governance. So Charlene gets in touch with the friendly team at MIDL.dev. They outfit her with a signing kit, and she connects her hardware wallet to it.
For a fixed monthly fee, Charlene can sleep at night. She needs not worry about downtime, protocol upgrades, or network partitions. She knows that her funds are growing to the maximum extent possible.
This method is strictly non custodial. We do not control Charlene’s funds. We procure the signing kit, but Charlene procures the hardware wallet. She alone configures it and transfers her tokens to it.
In case of emergency, Charlene can even (proverbially) pull the plug from the signer device for her funds to instantly return to a cold state.
Our approach
We have 10 years of experience building and managing reliable systems, and one year operating a Tezos baker: Hodl.farm. All our infrastructure is open-source and auditable.
Our approach is centered on two fundamental ideas:
- the most reliable blockchain nodes run in the cloud. Cloud providers invest considerable amounts of time, money and brainpower in keeping the operations up. A home setup does not even come close to competing. We use Kubernetes as an abstraction layer and replicable infrastructure principles so we can easily migrate cloud providers if need be.
- not your keys, not your crypto. The only acceptable storage for your key is a Hardware Security Module under your full, exclusive control.
A digital currency has many moving parts, but a fundamental building block is public key cryptography. The signing step is a simple process. Is it also the most critical in terms of operational security. Your keys need to be on a hot piece of silicon that takes unsigned strings and returns signed strings. Well-architected blockchain ecosystems have come up with a dedicated daemon that does just that — signing. This daemon typically interfaces with a hardware security module where the keys reside.
This is how we conciliate the two fundamental ideas: the bulk of the work is done in reliable, redundant, geographically distributed nodes in a cloud platform, but the critical signing operations are done on devices that you control.
The signing kit
A couple of Ledgers sharing the same secret seed are connected to a couple of credit-card-sized computers. They are not too needy — they just need power and Internet most of the time. A battery and 4G connection is ready to take over when power and/on Internet connectivity fail. And they are fully redundant — if one fails, the other one takes over.
The signing operations are simple enough that the physical setup remains relatively low maintenance. You may have to upgrade the firmware on the Ledger once in a while, but that is it. Everything else, including protocol upgrades, is handled by us.
We ship you the signing computers, batteries and 4G-LTE dongles. Plug them in your closet, hidden behind the wi-fi router, or in a skunkworks collocation somewhere. They do not have to be in the same place either. For increased reliability, you may geographically distribute them.
When turned on, the devices securely establish a connection to our infrastructure. When your turn comes to produce a block or endorsement, an message is tunneled to the signer, which signs it. It is then sent back for our infrastructure that broadcasts it to the network.
This is secure. The hardware wallet remains in your possession. It runs an application that can only perform staking operations. Anything else, including funds transfer, is impossible to do remotely — you need to physically interact with the device.
The signers themselves are being monitored, so if they ever loose power or Internet, you can expect a phone call from us.
The signer operating system is fully open source and auditable.
Interested ?
Do get in touch. We will:
- send you your signing kit
- guide you through the setup
- spin up your full nodes. You are now ready to start baking
- monitor your baking operations
We are currently supporting Tezos (XTZ). Polkadot and Ethereum 2.0 support is coming soon, and we are actively monitoring the ecosystem for other proof-of-stake cryptocurrencies that we deem interesting.
Image credits: Comicgen — CC-BY license
