Portfolio Spotlight: Skale

Staking Facilities
5 min readNov 30, 2020

We are excited to announce our commitment to the Skale ecosystem as a node operator.

Staking Facilities joins Skale Network as Validator

We are still far away from realizing the vision of Web3 reaching mainstream adoption. Blockchains today still haven’t reached their full potential, this also holds true for Ethereum. This is mainly due to the so called “Blockchain Trilemma” — trade-offs have to be made between scalability, decentralization, and security.

The ‘Blockchain Trilemma’

There are many blockchains out there who promise to have solved this trilemma. While we have some of them in our portfolio and believe in a future in which different blockchains co-exist and cross-pollinate each other, one fact remains true today:

Ethereum has the largest, most active ecosystem and has seen the widest adoption so far.

Skale is not just another “Ethereum Killer”, but rather dubs itself as an “Ethereum-as-a-Service” platform with full on-demand configurability that runs alongside Ethereum and empowers it to serve millions of users. It is natively connected to Ethereum and its ecosystem.

With this post, we would like to announce our commitment to the Skale ecosystem as a node operator and want to provide some insights into Skale as well as why we are supporting the network.

What is Skale and how does it work?

Skale is an open-source, Proof-of-Stake security and execution layer 2 network connected to the Ethereum public mainnet. Skale enables decentralized applications (dApps) to scale through highly configurable, elastic sidechains that are instantly compatible with Ethereum and its ecosystem. The network is connected to the Ethereum mainnet through a set of smart contracts, referred to as ‘the Skale Manager’, which live on Ethereum.

Skale leverages different technologies and approaches to overcome the blockchain trilemma. Most notably:

Containerization & Virtualization

Each node can be dynamically containerized into up to 128 virtualized subnodes. Subnodes are BLS-secured containers that run the Ethereum virtual machine, facilitate interchain communication, storage and, participate in consensus. They can be configured to serve different needs. Subnodes are the constituents of the elastic sidechains, which in turn make up the Skale network. Subnodes can participate in different, separate sidechains depending on the size of the respective sidechain (small, medium, and, large). E.g. a large sidechain requires a validator to devote all of its resources to it, whereas a medium or small chain allows devoting part of the subnodes to other sidechains.

Random Rotation Incentive Scaling

Skale works with a leaderless consensus and supports an uncapped number of nodes that provide their resources to the elastic sidechains. Unlike in other networks, not every node has to process the same information for every dApp running on top of the blockchain. Nodes are randomly selected to a subnet consisting of 16 nodes that secure a specific sidechain. Nodes within the subnet randomly rotate so that the subnet can utilize the security of the entire network. Hence, elastic sidechains never run on the same, predictable set of nodes.

dApps can purchase access to elastic sidechains with SKL tokens. They pay a subscription fee based on the resources they need (bandwidth, storage, computation). This is done by depositing SKL token into ‘the Skale Manager’.

The Skale Token (SKL)

Besides being used as a payment method for dApp developers to access elastic sidechains, the SKL token will be used for on-chain voting and governance. Furthermore, the tokens incentivize validators to provide resources to the network and to do so in an honest manner, which ultimately affects the security of the network. Delegators can contribute to the networks’ security and earn part of a validators’ profits by staking their SKL.

What’s interesting about SKL tokens is that they are built with the ERC-777 token standard. This means that delegators only need to share the secure delegation key when staking and do not need to transfer their tokens to a validator. Delegators remain in full control of their tokens. ERC-777 are fully backward compatible with ERC-20, hence they are supported by all participants of the Ethereum ecosystem with ERC-20 support.

During the public token sale, 3,736 people from 90 different countries purchased 167,139,884 SKL at $0.03 USD/SKL. Once the initial Proof-of-Use period of 60 days is concluded on December 1st, we expect the first SKL tokens to hit the market.

Why Skale?

For Web3 applications to find broader adoption and hit the mainstream, they need to provide a “Web2-like” experience. Skale achieves this through sub-second finality and zero/near-zero transaction fees. dApp users do not have to pay every time they are using an application, instead dApp developers pay node operators a flat fee for the resources they need. Furthermore, Skale does not have to bootstrap its own ecosystem of developers and users, but can instead build upon Ethereums’. While the fairly recent surge in gas-prices demonstrates that Ethereum finds more and more adoption, it also shows the bottlenecks for mainstream adoption of the protocol in its’ current state. As everyone is eagerly waiting for Ethereum 2.0 to fully ship (beyond Phase 1.5), Skale provides solutions already today, which empowers dApp developers to serve millions of users. The team behind Skale does by no means plan to replace Ethereum or make Eth2 redundant, they much rather envision it to provide the base layer of security for Skale. Konstantin Kladko, CTO fo the Skale Network, is quoted on Cointelegraph:

Our token lives [on Ethereum]. When you register nodes on Skale, you register [them] through ETH. We probably have the largest ever set of smart contracts on ETH mainnet.

We believe Skale will play an important role in bringing blockchain technology to the masses and neatly integrates into our portfolio of next-generation Proof-of-Stake blockchains.

Staking on Skale

Staking in Skale is pretty straightforward and utilizes a delegated Proof-of-Stake model in which token holders who do not want to run a validator node but still want to contribute to the security of the network, can simply stake their SKL token through a validator of their choice. At network launch, the Activate platform by Consensys provided a seamless staking experience for any token holder. In the near future, further staking platforms will offer a similar experience.

We are excited to be listed on the Activate platform and are ready to accept delegations. For our staking services, we offer a commission fee of 8%. The inflation rate for the first year is set to ~ 9,3%.

You can find a reward calculator here and more information about the tokenomics here.

Please note that there is ‘Slashing’ on Skale, so make sure to choose your validator wisely and do proper due diligence. However, slashing is not activated for the first 3–6 months after launch.

Useful Links for Skale

Website: https://skale.network/

Docs: https://skale.network/docs/

Github: https://github.com/skalenetwork

Discord: https://discord.com/invite/gM5XBy6

Telegram: https://t.me/skaleofficial

Let’s connect

In case you have any questions, need more assistance or simply want to chat, always feel free to reach out to us via Telegram, eMail, Twitter or LinkedIn!



Staking Facilities

We operate industry-grade architecture and offer non-custodial staking services. We’re advocates for web 3.0, set to accelerate its’ adoption!