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Validator-Specific-Tokenization-Model.MD

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Delegation Tokenization Module

1. Problem

  • Each delegation has different
    • Accumulated rewards
    • Risk of double signing
  • How can we create fungible tokens from delegations ?

2. Processes

  • FToken(V) and YToken(D) for given validator V and delegation D

    • Delegators can tokenize their delegation into FToken(V) and YToken(D)
    • FToken(V)
      • Fungible token which has redemption rights on every BondedTokenAmount in TokenizedDelegation staking to validator V
      • FToken(V) is only fungible among delegations to the same validator V
      • All FToken(V) holders will be affected by slashing events from the validator V
    • YToken(D)
      • Non-fungible token which has redemption rights only on accrued rewards from the specific TokenizedDelegation of the delegation D

  • Delegation tokenization process

    • Definitions
      • TokenizationRatio(V) for validator V : the amount of FToken(V) minted or burnt for every 1 BondedTokenAmount in TokenizedDelegation on validator V
    • The module account mints FToken(V) and YToken(D) and sends to the delegation tokenization requestor
      • Number of FToken(V) minted : BondedTokenAmount(D) * TokenizationRatio(V)
      • The unique NFT YToken(D) representing the reward rights on this delegation D

  • Transfer ownership of YToken(D)

    • YToken(D) can be transfered to others via MsgSendYToken

  • Delegation redemption process for any TokenizedDelegation

    • Two redemption processes available

      ① By sending both FToken(V) and YToken(D) into the module account

      • Redemption requestor receives both the delegation ownership and accrued rewards of D
      • Both FToken(V) and YToken(D) are burnt after redemption
      • Available period : this process is available any time

      ② By sending only FToken(V) into the module account

      • FToken(V) sender only receives the delegation ownership without accrued rewards
      • YToken(D) owner receives all accrued rewards from the redeemed delegation
      • Both FToken(V) and YToken(D) are burnt after redemption
      • Available period : this process is only available after the maturity of targeted TokenizedDelegation

    • Number of FToken(V) needed for redemption of delegation D : BondedTokenAmount(D) * TokenizationRatio(V)

  • Slashing event hook

    • Definitions
      • TotalBondedTokenAmount(V) : the sum of total BondedTokenAmount in TokenizedDelegation staking to validator V
    • Update TokenizationRatio(V) upon every slashing event from validator V
      • TokenizationRatio(V) starts from 1
      • TokenizationRatio(V) is updated to FToken(V)Supply / TotalBondedTokenAmount(V) everytime when slashing happens from validator V

3. States and Messages

States

  • TokenizedDelegation
    • DelegationIndex
      • pointing the delegation object which is tokenized
    • BondedTokenAmount
      • the amount of token bonded for this TokenizedDelegation
    • YTokenOwner
      • the account address of YToken(D) owner
    • Maturity
      • the maturity of this TokenizedDelegation

Messages

  • MsgDelegationTokenization

    • TokenizationRequestor
      • the account address of tokenization requestor
    • DelegationIndex
      • pointing the delegation object to be tokenized

  • MsgSendYToken

    • Sender
      • the account address of YToken(D) sender
    • Receiver
      • the account address of YToken(D) receiver
    • DelegationIndex
      • pointing the delegation object which YToken ownership is being transfered

  • MsgRedeemDelegation

    • RedeemRequestor
      • the account address of redeem requestor
    • RedeemTokens
      • option1) sending FToken(V) and YToken(D) for redemption
      • option2) sending FToken(V) for redemption
    • DelegationIndex
      • pointing the delegation object which YToken(D) ownership is being transfered

4. Discussions

Governance Voting Rights

  • Problem

    • Because the ownership of delegation is transfered to the module account, governance voting right is unavailable

  • Discussion

    • Who should get the governance voting rights?
    • How we can effectively prevent vote buying?
    • How we can allow governance voting without any inconvenience?

Universally Fungible FToken

  • Problem

    • FToken(V) is only fungible over the same validator V

  • Suggested Solution

    • Hub AMM expansion to Curve.fi like pool model
      • A FToken pool where users can swap any FToken(V1) to any other FToken(V2)
      • The PoolToken which represents the share ownership of the assets inside the pool
    • This PoolToken can become the universally fungible FToken across the validators

NFT Compatibility over IBC

  • Problem

    • There exists no standard NFT object which is compatible over IBC
    • YToken cannot be transfered to different blockchains via IBC

  • Solution

    • After we have standard NFT object supported by IBC, this module can be upgraded so that YToken becomes IBC compatible NFT object

Marketplace for Trading YToken

  • Problem

    • There exists no way to trade YToken in fully decentralized way

  • Suggested Solution

    • NFT DeX
      • Hub AMM can be expanded to NFT DeX which allows fully decentralized NFT marketplace