How We Built Novel Staking Infrastructure For a Solana Validator

Understanding what you're investing in is one of the most crucial points of being a VC, and here at Moonfire, we put our money where our mouth is.

How We Built Novel Staking Infrastructure For a Solana Validator

Hello again and welcome back for another edition of the Moonfire monthly newsletter. It's our pleasure to be able to bring you all the latest news and exciting developments from within the Moonfire community, and this month we're jumping into something really juicy.

In our last newsletter, we teased the NFT-staking infrastructure and stake account management tooling we built together with Cogent Crypto at the Solana Hacker House event in June. While there may be the first and only tools of their kind in the Solana ecosystem, but know they won’t be the last. We believe it’s just the beginning for staking infrastructure and value distribution in the Solana space – and beyond.

Let’s take a deeper dive into what we built with Cogent Crypto, why we built it, and what it means for the future of Solana and the crypto universe more broadly.

We hope you enjoy.

Five Days of Hacking

At the five-day Solana Hacker House event Moonfire's Mike Arpaia and Jonas Vetterle partnered up with the Cogent team to build a decentralised app (dapp) that would allow Solana users to stake their Cogent NFTs for a share of the profits made by the validator.

Validators are the backbone of the Solana network. They keep the network secure by verifying transactions on the Solana blockchain, earning the network’s native cryptocurrency, SOL, in return. Cogent is one of these validators, and one of the best performing in the ecosystem at that, offering one of the highest annual percentage yields (APY) to its stakers.

Stakers in the Solana ecosystem delegate their SOL holdings to validators like Cogent and get rewarded with a share of the validator’s earnings in return. It can be tricky for the average person to become a validator – it’s relatively expensive and complicated to get started – so this staker-validator relationship allows the average user to get some of the upside of validation, without having to set themselves up as one.

For Cogent, staking and attracting stake is a way to get remunerated for the time, effort and investment they put into running one of the most reliable Solana validators and helping to decentralise the network.

Why build new staking infrastructure?

That’s why we and Cogent wanted to build tools that made this relationship more efficient and better for everyone – more stake for the validators, and more rewards and better staking account management for users.

More specifically, there were two things we were looking to solve. First, Cogent had previously released an NFT collection, Cogent Cogs, but it didn’t yet provide any utility to the holders. Second, there was no easy-to-use tool for managing Solana stake accounts. Each stake account can only be used to delegate to one validator at a time, so if you want to delegate to multiple validators, you have to create multiple stake accounts. And managing them – whether splitting one account, merging multiple accounts, or unstaking – can be tricky.

So we set about fixing these issues!

What we built and why it matters

The dapp we and Cogent developed allows Solana users to stake their Cogent Cog NFTs for a share of the validator profit, making Cogent the only validator to have an NFT-staking ecosystem in place which enables a profit-share scheme. Each Cog represents .01% of the validator revenue, including the maximum extractable value (MEV – the measure of profit a validator can make through including, excluding and reordering transactions within the blocks they verify), block rewards and commission.

With this new dapp, Cogent Cogs further bridge the value capture capability for the average user; they enable anyone in the Solana community to more easily share validator earnings without having to take on the risk of striking out on their own from scratch.

This is another step in further distributing the value available in the Solana network. In particular, it makes a share of the MEV – a reward traditionally only available to miners in other blockchains and validators – available to the average user through their NFTs, adding richness to the emerging ecosystem of MPSVs, or MEV profit sharing validators. And it allows Cogent to deliver maximum value to its stakers, bringing them along for the ride of their success.

We also created the first ever UI for advanced stake account management, allowing Solana users to easily manage, merge, split and unstake their stake accounts. This is a powerful change because it gives stakers in the Solana ecosystem more flexibility to delegate their crypto holdings to the validators they trust and to those that offer the best rewards. It makes the Solana ecosystem more liquid, benefiting all validators – and stakers – not just Cogent.

All for one, and one for all

This novel staking infrastructure and stake account management UI provides more visibility and reach for Cogent, already a top-performing validator, but it also enriches the whole Solana ecosystem. By experimenting with NFT staking and making staking more fluid, Cogent is giving all validators new ways to share their success with the community and giving the average Solana user more choice on how they deploy their holdings.

But it also opens up a realm of possibilities in crypto and beyond. The technology is now here for companies to create NFTs and distribute profits to whoever holds them, bringing the world of dividends to blockchains and creating a new way of building and doing business.

We’re really excited to be getting stuck into the Solana community and proud to have a hand in building in, experimenting with and pushing forward the ecosystem, all while creating tools that are useful for all players in the space. We can’t wait to see – and be a part of – what’s next.

Launch Announcement


CollabKit Goes Live

We've got some super exciting news this month as one of our portfolio companies, CollabKit, finally launched to much fanfare.

Setting out with the goal of adding real-time collaboration value to its customers' products, CollabKit is well on its way now to achieving this.

Taking clunky workspace tools such as screenshots and turning this into real-time comment box collaboration, no matter the tool, is just the start. With this launch, CollabKit can officially begin branching out its product to include live cursors, multiplayer APIs, and much more.

Having honed the skills and knowledge to create a best-in-class real-time collaboration product after its founders spent years at Expo and Meta, we're excited to see what's next.  

Podcast of the Month

The Metacast by Naavik: A Deep Dive into Web3 Game Publishing, Growth & UA

Going a little off-piste for this month's podcast pick, we really enjoyed this deep dive by Naavik into Web3 game publishing. Quinn Campbell, VP of Growth at Sky Mavis, and Jon Hook, CMO at PlayEmber, joined host Nico Vereecke for a conversation about:

  • Differences between Web2 and Web3 Game Publishing
  • How Web3 will change the Publishing Model
  • Growth for Blockchain Games
  • Lessons learned from getting millions of players into the Axie Ecosystem

For Web3 gaming fans, it's a must-watch.

Good Read of the Month

'How to Be a Founder: How Entrepreneurs can Identify, Fund and Launch their Best Ideas'— by Alice Bentink & Matt Clifford

An exciting new release that we've been dying to sink our teeth into, this fascinating handbook inspires aspiring founders. It provides essential guidance and advice for people who want to build a successful company.

This book answers the question “how do I get started?” It takes the reader from making the decision to plunge into entrepreneurship, through the process of choosing and developing an idea and team, all the way to raising capital and working with VCs and angel investors.

Thank you for tuning in. Not yet subscribed? You can sign up on our brand new blog page. If you know someone who’d love to read this newsletter, please feel free to share it. Wishing you a great September!

All the best,

Mike and the Moonfire team