Skale (SKL)

Skale is a decentralized network of blockchains built on Ethereum, with a focus on running decentralized applications with speed and low cost.

Skale

Type	L2
Total supply	7.000.000.000
Website	https://skale.network/

Basics

• Founded in: 2017
• Mainnet release: 30-6-2020 (first of three phases). Phase 2 got live on 1-10-2020 with Over $80 Million USD in Total Value Locked.
• Based in:

History

• Skale Labs raised nearly $10M to develop a second layer scalability infrastructure for Ethereum. They were going to launch the first implementation on a Plasma chain since they had plans to go live at the end of 2018. In the end it took until the summer of 2020.

Audits & Exploits

• Bug bounty program can be found here (12-2020).

Governance

DAO

• From a commissioned Messari report (31-7-2023):

"At the end of Q2’23, SKL tokenholders passed a proposal to initiate token-based governance over protocol parameters using off-chain governance platform Snapshot. It allows SKL stakers to vote on governance proposals, whose scope will initially include network economic parameters such as subscription fees, inflation, slashing penalties, minimum stake requirements, and more. At the moment, the scope will not encompass more off-chain agendas such as grants, marketing, business development, etc., but it could be expanded to include these in the future."

Treasury

• Launched a new $100M ecosystem fund. The first $5M will go towards blockchain gaming projects (19-2-2022).
• Has a treasury which is subjected to lock ups (30-11-2020).

Token

Launch

• Deployment of Proof-of-Use for its token launch. From Formal Verification (24-6-2020):

"SKALE will be the first token launch on Consensys’ new Activate platform. Following on from Consensys’ Token Foundry standards, there is now a requirement for prospective token buyers to also become active participants in the network through its 90 days Proof-of-Use period."

• From Decrypt (14-9-2020):

"SKALE sold over 167 million tokens, worth over $5 million in a public token sale. Those tokens will be distributed on September 24, at which point owners can use them to generate staking rewards on the network. SKL buyers can stake the token on ConsenSys Codefi's Activate platform. The platform uses proof of use, which mandates that holders stake the token for a predefined period before they are unlocked for other uses."

Token allocation

• From their Tokenomics page (31-7-2020):

Validator rewards 33%

Delegator allocation 27.3%

Founding team 16%

SKALE Foundation 10%

Dev Fund 7.7%

Core Team 4%

Ecosystem 2%

Inflation

• According to a Messari report (Q3-2023) it has 5.9% inflation at that time.
• From a commissioned Messari report (6-10-2023):

"SKL has a fixed total supply, with one-third allocated to validator rewards. So far, around 42% of this validator allocation has been distributed. At the end of Q3’23, SKL’s annualized inflation was at 5.9%. This rate will continue to decline until all tokens are liquid."

Utility

• From a commissioned Messari report (31-7-2023):

"The SKL token has three primary use cases: SKALE chain subscription fees, network security (via validator staking), and, starting at the end of Q2’23, governance."

• From their Tokenomics page (31-7-2020):

"The SKALE token (SKL) is a hybrid use token which represents the right to work in the network as a validator, stake as a delegator, or access a share of its resources by deploying and renting an Elastic Sidechain or Elastic Blockchain for a period of time as a developer. Users pay SKALE in a subscription-based model to rent these resources (computation, storage, bandwidth) for a predetermined amount of time in the form of an Elastic Sidechain. Validators stake SKL into the network and then gain the right to run nodes and earn both fees and tokens via inflation. Delegators may delegate their tokens to validators and earn rewards."

Tech

• Whitepaper can be found here (7-2020).
• Code can be viewed here.
• Built on: Ethereum
• Programming language used:

Transaction Details

• Capacity (TPS): 2000m
• Latency:

How it works

• From a commissioned Messari report (31-7-2023):

"SKALE is a Layer-1 (L1) sidechain framework with pooled security. A set of Ethereum smart contracts manage several core network functions, including staking, validator orchestration, BLS key generation for each SKALE chain, and more. SKALE supports a network of configurable EVM-compatible, dapp, or general-purpose chains (SKALE chains). Each SKALE chain is secured by a rotating subset of SKALE’s pooled validator set. The SKALE V2 upgrade in Q2’22 brought interoperability between SKALE chains."

• From Formal Verification (24-6-2020):

"A network of interoperable proof-of-stake elastic sidechains. Chains are ‘elastic’ because they are highly configurable with regards to size, duration, VM, storage capacity, as well as the number of nodes securing the chain. SKALE utilises a work token model. SKALE tokens are staked by validators as well as used in its subscription model when chains are created.

When choosing chain size for example, developers are effectively determining how much of a single node’s resources they want securing its chain. Small chains (where a chain takes 1/128th of a node’s resources) can cater for smaller non-critical dApps while large chains (using 100% of a node’s resources) can target dApps that have larger user bases and require higher throughput capabilities. The number of validator nodes themselves is also customisable allowing any configuration of is 3n+1 where n>=1.

SKALE makes use of BLS signatures that provides a potentially fruitful alternative to scaling network transaction rates without requiring user monitoring, wait periods, or dispute resolution (which can be the case with certain Fraud Proofs set ups). But the most intriguing aspect to the addition of BLS Signatures is that it applies to many facets of the network - it can also facilitate fast but secure interchain messaging between SKALE chains through each chain’s group signature, providing the desired interoperability within the network itself.

• From Our Network #45 (30-10-2020):

"SKALE is rooted in the Ethereum Mainnet (EM) from which it is also managed. The entire $80M volume of SKL that is staked in SKALE nodes is held directly on the EM. The set of smart contracts that orchestrate the SKALE Network operates on Ethereum as well. This connection with Ethereum lets SKALE combine Layer 1 security with fully decentralized Layer 2 performance."

Fees

• SKALE differentiates itself by offering zero gas fees to end users. To generate fees, the protocol instead collects subscription fees from developers to create a new SKALE chain. The network collected $228,000 in chain payments after launching them in January 2024.
• Claims zero gas fees (12-12-2022). Gas fees were hinted at in 5-2024.

Upgrades

• From a commissioned Messari report (16-5-2024):

"The SKALE network updated to Release 2.2 and then Release 2.3. The upgrades brought improved network performance, with block times increasing by 30%; enhanced Ethereum compatibility; oracle response verification capabilities; and more. There was also an update to SKALE’s Interchain Messaging Agent (IMA Bridge) that sped up transfers from SKALE chain to SKALE chain. The speed increased by 561% to 33.2 seconds, and transfers from SKALE chain to Ethereum increased by 10,976% to 23.2 seconds.

The most significant upcoming release is Levitation and SKALE Ganymede (SKALE G), which were proposed in a SKALE Improvement Proposal in Q2’23. The Levitation protocol aims to enable ZK-rollups to connect to the SKALE Architecture with rollup connectivity to the Ethereum Mainnet. In addition, SKALE G will be a general-purpose ZK-rollup launched as a SKALE chain. These solutions will increase the amount of security on SKALE chains derived from Ethereum, further scaling capabilities. They will also introduce a different revenue model with gas fees."

• From a commissioned Messari report (9-2-2024):

"2023 featured several significant protocol developments, including the launch of a token-based governance system at the end of Q2 and the addition of chain pricing in Q4. With SKALE chain payments, SKALE will transition out of its loss leadership model and begin requiring SKALE chain owners to make monthly SKL payments to continue operating a chain starting February 1, 2024."

• Skale v2 launched in March 2022: "v2 will allow users to hop between Skale chains in under a minute and without having to pay high gas fees."
• From Our Network #45 (30-10-2020):

"On October 1, the SKALE MainNet Phase 2 launched into a fully decentralized state with over $80M Total Value Locked (TVL), over 3700 delegators from 90 different countries, 46 validator orgs, and 140 nodes; many well-reputed validators such as BlockDaemon, Chorus One, Figment, and others launched and ran nodes in the network."

Staking

• From a commissioned Messari report (31-7-2023):

"While the vast majority of validator rewards currently comes from inflation, SKL’s real yield has still been positive since not all tokens are staked. By the end of Q2’23, SKL’s real yield was 5%, a 34% QoQ increase. The increase was driven by the 14% QoQ decrease in the percentage of SKL tokens staked to 55%."

Validator Stats

• After remaining steady at 53 for most of 2023, the number of SKALE validators decreased to 45 in Q4’23 and remained there in Q1’24.
• From a commissioned Messari report (31-7-2023):

"The number of SKALE validators has remained steady at 53 in the past year with a current total of 125 active nodes in the network. SKALE validator nodes are segmented into up to 128 virtualized subnodes via a containerized architecture. A validator can have its various subnodes acting as validators for up to eight different SKALE chains. The pool of virtualized subnodes rotates among SKALE chains, with assignments set by the SKALE manager smart contract on Ethereum. In Q2’23, there was a large increase in the number of node rotations compared to previous quarters, with the number of DKG transactions almost doubling QoQ."

• Some got added as of 10-8-2020:

Stakin, Blockware, Ankr, Hashquark, Audit.One, 01 Node, Anonstake and WolfEdge Capital.

• 95% of token holder addresses have been staked by MainNet launch on October 1st.
• Early Skale Validator Partners are (31-7-2020):

BisonTrails, Blockdeamon, Certus.One, Chainflow, Chorus, Cypher, Dokia Capital, Figment Networks, #Hashed, Consensys Labs, NGC Ventures, Staked, StakeWith.Us and Stake.Fish

• 25 validators participated (30-6-2020) in onboarding, training, TestNet, and have completed qualifications to run in the Phase 1 and 2 Mainnet. 

Scaling

• From a commissioned Messari report (31-7-2023):

"At the beginning of June, SKALE developers announced a SKALE Improvement Proposal to bring zero-knowledge rollup technology to SKALE chains. The proposal includes both the Levitation protocol and SKALE Ganymede (SKALE G). The solutions will increase the amount of security on SKALE chains derived from Ethereum, further scaling capabilities, and introduce a different revenue model with gas fees.

The Levitation protocol aims to enable zk-rollups to connect to the SKALE Architecture with rollup connectivity to the Ethereum Mainnet. SKALE chains can use the existing gas-free SKALE architecture of Levitation’s zk solution in a configurable manner. Levitation proposes an arrangement where a decentralized sequencer is implemented as a collection of smart contracts deployed on a SKALE chain. The protocol features a modular design that facilitates the integration of various zk-rollups into chains that have implemented the Levitation Protocol.

Additionally, there are plans to launch a general-purpose zk-rollup called SKALE Ganymede (SKALE G). The Ganymede protocol plans to shift SKALE's cryptographic internals, like state root computation, to zero-knowledge cryptographic algorithms. This shift aims to "enable fast ZK-proof generation" and allow the verification of these ZK proofs on the Ethereum mainnet. Ganymede Protocol will also introduce weighted consensus, whereby each node in the system would have voting rights proportional to its total validator stake rather than an equal weight across all nodes.

Ganymede will also use aggregated BLS signatures with long-term BLS keys, eliminating the need for running Distributed Key Generation (DKG) rounds each time a node joins or leaves the chain. Transaction fees for Ganymede-enabled systems are expected to be non-zero due to its execution environment where multiple dApps interact on a single chain. However, the architecture aims to "minimize transaction fees" while maintaining compatibility with Ethereum transaction fee algorithms, particularly EIP-1559.

The development schedule for the Ganymede protocol includes the initial release of the source code in the following months, followed by the launch of a public testnet. The mainnet launch is expected in Q4 2023 but is subject to change based on execution by contributors to the SKALE Project. A successful on-chain vote will be required to push the source code proposal into production."

Interoperability

• From a commissioned Messari report (31-7-2023):

"The SKALE V2 upgrade in Q2’22 brought interoperability between SKALE chains. But the user and developer experience was not optimal. In Q2’23, the Metaport bridge launched, offering an easy-to-use interface on top of the underlying SKALE Interchain Messaging Agent (IMA) bridge. Metaport enables token transfers between SKALE chains as well as to and from Ethereum."

Oracle Method

• According to their blog (10-8-2020) Chainlink and Razor will be used.

Privacy Method

Compliance

• From Decrypt (14-9-2020):

"It says that over 14,000 people from over 130 countries wanted to participate in the launch and had indicated they were ready to purchase $43 million worth of the token—far more than total supply. SKALE used a “more compliant” know-your-customer process to pare down the list of potential buyers."

Roadmap

• Can be found [Insert link here].
• From this article (1-7-2020):

"Since this is the first phase of SKALE Network’s mainnet, staking and transfers are not yet enabled. However, SKALE’s incentivized testnet has been running smoothly with over 12 validators since May 20th with no downtime, to ensure that SKALE’s mainnet is secure and maximally performant when staking becomes available on Activate. You can read more about the phases of SKALE’s Mainnet launch here."

• From their blog (30-6-2020):

"Phase 1: A restricted Mainnet that does not have staking or transfers enabled. Live on June 30th.

Phase 2: A Proof of Use Mainnet with staking and bounty enabled, but transfers and exchange listings not active for a 90 Day period. Target early Q3. ConsenSys will announce the date their platform will be ready which is required for Phase 2.

Phase 3: Restrictions come off the network and unlocked tokens can be transferred. This will be 90 days after the Phase 2 Launch."

• From Our Network #45 (30-10-2020):

"SKALE is now getting ready for the MainNet Phase 3 launch on Dec 1st, which will mean a liquid release of the token. Dapps will commence onboarding over the next few months."

Usage

• Still has around 20 chains, most focused on games and totaling ~200k tx in Q2 2023.
• Says they have 18 SKALE chains (12-12-2022) with ~90k users over the last 30 days.

Projects that use or built on it

• From their blog (30-6-2020):

"48; The number of dApps signed up in the SKALE Innovator Program. In addition there are over 100 dApps at some point in the pipeline."

Team, Funding, Partners

Team

• Full team can be found here (31-7-2020).
• Jack O'Holleran; CEO & Co-founder
• Stan Kladko; CTO & co-founder

Funding

• Raised $100M and turned it into an ecosystem fund (19-2-2022):

"Instead of a single entity awarding the $100 million in funds, Skale will feature a number of different groups collaborating around the issuance process, which includes prominent corporations, DAO and nonprofits."

• From Decrypt (14-9-2020):

"SKALE sold over 167 million tokens, worth over $5 million in a public token sale."

• Has support from (31-7-2020):

Arrington XRP Capital, Acrew, BlockChange, Canaan, Consensys Labs, Floodgate, Galaxy Digital, Hashed, Multicoin Capital, MW Partners, Neo Global Capital, Spartan, Winklevoss Capital.

Partners 

• From EthHub #127 (17-8-2020):

"SKALE Labs, the core team behind the SKALE Network, has announced over 40 integration partners and validators, in addition to the Dapps that joined the SKALE Innovator program and are currently building on the platform."

• It mentions Synthetix, Maker, Connext and Threefold in its blog (10-8-2020) and says "over 50 Dapps  are currently building on SKALE".