Arithmic Network's Staking Model

One of the dominant narratives in crypto this cycle has been staking and restaking via protocols like EigenLayer. The move towards a dependable yield-based return has been an organic economic stabiliser for Ethereum and related networks. This evolution was inevitable and has evolved organically without a conscious goal to make networks aligned with incentives. What does network aligning mean? In this case, it denotes that yield or the return on a user’s stake which was previously a by-product of a robust consensus protocol is now rather a fundamental incentive mechanism that ties all network participants together. Does this mean that contemporary blockchain networks are misaligned due to fractured incentives? We claim that they are indeed. Most Layer-1 and Layer-2 networks today have misaligned incentives which result in fractured relationships. In the following subsections, we elaborate on the problem of fractured incentives in networks and the model we use to align various network participants to create a novel staking paradigm for the Arithmic Network.