The Proof of Stake Alliance (POSA), in partnership with Paradigm Policy Lab, recently released an updated set of best practices for staking. The goal of these practices is to ensure customer protection and promote responsible innovation in the staking space. The new principles have been developed to improve the understanding of staking and treat related technical services similarly to any other technical service providers.
Setting Standards for Staking
The Proof of Stake Alliance, founded in 2019, is a nonprofit industry alliance that advocates for forward-thinking public policies in proof-of-stake (PoS) ecosystems. This update to the list of principles is the first since its publication in 2020. Over eighteen key industry leaders, including Coinbase, Rocket Pool, Lido, Blockdaemon, Luganodes, Obal Labs, and Kiln Finance, have partnered with the Proof of Stake Alliance to enhance the standards for staking.
“Amid rapid technological advancement, self-regulation from leaders of the proof of stake ecosystem is essential,” commented Evan Weiss, Founder of the Proof of Stake Alliance and Head of Business & Policy at Alluvial.
Key Principles for Staking
The best practices put forward by POSA and Paradigm Policy Lab consist of three standard principles:
- Effectively communicate relevant information to stakeholders: Service providers must ensure that users are well-informed about staking and associated processes.
- Enable users to have control over their assets: Users should have the authority to manage and control their assets in a secure manner.
- Have explicitly defined roles for service providers: Clear roles and responsibilities must be established for service providers in the staking ecosystem.
The document emphasizes that staking is distinct from lending and yield farming. Staking primarily focuses on securing PoS blockchains and their technology for security and accuracy.
The release of these updated best practices coincides with the ongoing discussions about the need for regulations in the wider crypto industry. Paradigm Policy Lab, which contributes to the development of the principles, brings together experts from various fields to produce cutting-edge research, commentary, and advocacy on policy issues relating to crypto and frontier technologies.
“Focusing on areas such as emphasizing security and participation, refraining from investment advice, using non-financial terminology, and not providing guarantees on rewards earned, these forward-looking principles are aimed at aligning organizations around best practices, fostering self-regulation, and effectively communicating with regulators to ensure a proper understanding of staking as a technical service, separate and distinct from financial activities,” concludes the document.
