Native Staking on the Hedera Network

In July 2022, Hedera announced the first phase of introducing native staking to its proof-of-stake network. Paolo Tasca, Founder and Executive Director of the world’s largest research center on blockchain technologies at UCL Centre for Blockchain Technologies sat down with Gossip ABOUT Gossip podcast host Zenobia Godschalk, SVP of Communications at Swirlds Labs, to discuss the organization’s move to native staking and how it will support Hedera’s decentralized network.

Tasca is an expert in the cryptocurrency space having a wide breadth of experience that goes back to when crypto became popular. In addition to his work at UCL (University College London), Tasca is Co-chair of the Treasury Management and Token Economics Committee at Hedera as well as an Executive Board Member at the DEC Institute (DLT Education Consortium). He also spent eight years at The London School of Economics and Political Science and was a visiting scholar at the University of Zurich.

The conversation opened with a discussion of why staking is important for a proof-of-stake network. “It aligns network security with individual incentives… There is a fundamental difference between the incentives in a proof-of-stake system and in a proof-of-work system. The proof-of-stake system is able to work with low block rewards,” noted Tasca.

Incentives are one side of the staking equation. The other side is security. “Basically, the proof-of-stake is a mechanism that forces every node and every stakeholder to commit some level of collateral in order for them to not break the rules. So, they put their skin in the game, right?” Tasca explained.

Tasca and Godschalk continued to discuss why this move is important to Hedera’s journey and path to decentralization which has typically had all of the nodes run by council members.