The Flare network is transitioning to a staking model. The objective is to decentralize the validators from the currently closed set of 20 professional validators and further secure the data provision protocols.

The rollout of staking will occur in 3 phases. This document covers the key elements of the first phase of staking, referred to as Staking Phase 1. For technical details, please see the technical documentation that will be released shortly.

In line with Flare’s mission of providing data as a public good through building the network for data at scale, Flare will transition to a staking model whereby the validators of the network are also responsible for providing data to the network. As the role combines both validation and data provision, the name used to refer to an entity that undertakes this dual role is Infrastructure Provider.

The move to staking does not change the overall economics of FLR: no additional tokens will be created beyond that already detailed.

Currently, data providers that do not run an observation node only gain income through FTSO rewards. In contrast, staking will enable infrastructure providers to earn a base income, which will reduce the incentive to collude. The stake required to perform the infrastructure role vests the economic interests of the infrastructure provider to the network, increasing the incentive for an infrastructure provider to submit accurate data beyond the current data provision reward system.

In order to understand how staking will work, it is important to note that Flare consists of 3 chains:

• The C-chain, which is where the Ethereum Virtual Machine operates, and is the chain where the vast bulk of the community currently interact.
• The P-chain, which is where staking takes place.
• The X-chain, which is for fast simple monetary transactions, and is currently unused.

Staking Phase 1

During Staking Phase 1, there are no changes for token holders around the economics of participating in the FTSO or wrapping of tokens to gain the FLR distribution. During this phase there will be no incentive to stake as staking takes place on the P-chain. As such, there are no automated rewards for staking, and participation in the FTSO & FLR distribution will be impossible with P-chain staked FLR. This will change in Staking Phases 2 & 3.

Although staking is open to anyone, due to the lack of rewards, it is expected that the Flare Foundation will provide the majority of stake during phase 1. During phase 1 of staking, the foundation will loan 66.7% of its tokens dedicated to staking to professional validators for the sole purpose of staking, and the remainder of tokens dedicated to staking will be staked by the Flare Foundation to the infrastructure providers who operate FTSOs.

The first phase of staking aims to maintain the network position of the 20 professional validators, who are not currently obligated to provide data, above the liveness threshold of the network, whilst inviting existing data providers to now become full infrastructure providers. Initially, 33 FTSOs have been selected on a first come first served basis to receive stake from the Flare Foundation. This will be opened up subsequently in rounds, such that all FTSOs that want to be infrastructure providers can be. It is important to note here that the Flare Foundation is unlikely to stake to infrastructure providers that have had their FTSO chilled previously by the FTSO Management Group.

On Flare there are two types of stake: self bond, the stake put up by an infrastructure provider itself, and delegated stake, the stake delegated by token holders to an infrastructure provider. During phase 1, there will be a minimum self bond stake requirement per validator of 10 million FLR. This self bond will be staked by the Flare Foundation on behalf of FTSO validators. The FTSO validators will not be able to receive these amounts nor claim them at the end of the staking period.

During Staking Phase 1, professional validators, infrastructure providers and observation nodes run by FTSOs will continue to receive the same amount of incentives as during network Beta. The validators run by the foundation will receive no incentive.

The move to staking is designed in gradual phases to allow FTSOs to become infrastructure providers whilst continuing to acquire the FLR required for eventual self bond and to ensure no detriment to token holders.

Key Dates

• July 5th – Newly staked validators start producing blocks.
• Q3 – Additional validators from the infra providers (FTSO group) are staked by the Flare Foundation to become part of the chain infrastructure.
• Late Q3 or Q4 – Validators start receiving rewards according to validator up time and stake amounts.
• Oct 2023 – professional validators stop being key for securing the network.