SafeStaking

SafeStaking refers to HOPR's design for on-protocol staking. The long-term plan for the protocol has always been a fully incentivized and decentralized privacy mixnet, where the incentive mechanism functions directly through the HOPR protocol. It is similar to a PoS setup, but with an additional layer of security to protect node runner funds from compromised nodes.

HOPR provides decentralized incentives for node runners through proof-of-relay. However, it needed to implement a staking setup that secures staked funds while allowing node runners to access their funds according to their individual risk tolerances. This is exactly what SafeStaking is designed to do.

How does SafeStaking work?

Node runners can store their funds within the HOPR Safe, a separate, extremely secure smart contract account developed using Safe. They then create a HOPR node and associate it with their "HOPR Safe".

The funds staked on the node are used to determine the distribution of traffic the node will receive (allowing it to earn more tickets/HOPR). The funds stored in the HOPR Safe also need to be accessed by the node in limited amounts to allow it to open and fund payment channels.

The owner of the HOPR Safe must sign and approve transactions for the node to use its funds. The private key, which signs transactions for the HOPR Safe, is referred to as the "admin key".

The node also needs to make on-chain transactions to use the funds in its payment channels or redeem tickets. For this, it uses a separate key that can be accessed locally, referred to as the "chain key".

The bulk of a node runner's funds are separated and secured within the HOPR Safe, which can only be accessed via the admin key. Funds stored on the node can be accessed by the node using the chain key. What makes this design special is the addition of a smart contract that allows the node runner to customize access to their node and HOPR Safe as they see fit.

You can choose for your node to have complete access to the HOPR Safe using just the chain key, allowing it to manage all the funds stored within the Safe. Alternatively, you can require that every action the node takes be approved by the admin key, or by both the admin key and the chain key, or any combination in between. You can pick and choose which keys are needed to send messages through your node, redeem tickets, open channels, or use any of the functionality of the HOPR node. You can even give your node complete access to a set amount of funds within the HOPR Safe before it needs to request a signature from the admin key.

This compartmentalization of funds, governed by a customizable hierarchy of keys, allows you to begin with the default enhanced security of having your funds completely separated and isolated from your node, and then choose the exact level of risk you're comfortable with as a node runner.

How to set up SafeStaking?

SafeStaking is the process of onboarding users to stake and operate a node. For a detailed walkthrough, please watch this instructional video:

Why is HOPR using Safe?

Safe (previously known as Gnosis Safe) is a smart account wallet that provides a secure and customizable solution for storing funds.

Signing Account vs. Smart Account

When you think of a crypto wallet, you usually think of a standard signing account, like MetaMask. Your account is generated using a private key, which you keep safe and use to sign transactions and approve the movement of funds from your account.

The main problem with these wallets is that if you ever lose your private key, your funds are gone forever. So, people go to great lengths to make multiple copies, store them safely, and never let anyone see them. But even by doing all this, you can never put the cat back in the bag. If a key was even once in local browser storage or accessible by third parties, it can never again have the lower risk profile of one that never left your trusted device.

Smart accounts solve these issues by creating fully customizable accounts controlled by code rather than a private key.

What is a Smart Account?

A smart account (AKA a smart contract account) is, as the name suggests, an account that is controlled by a smart contract. This means you can program in any set of rules you want for your account. Common examples include:

• Multi-sig accounts
• Spending policies
• Roles & Permissions
• Hierarchies
• Transaction batching
• Recovery mechanisms

Why Does HOPR Need a Smart Contract Wallet?

To move staking directly onto the protocol, HOPR needed a secure solution for storing node runners' funds. In web3, nodes are not as secure as people might think. Although HOPR makes every effort to maximize your security, we also want node runners to interact easily with their nodes.

HOPR nodes are designed to be accessed remotely, sometimes by multiple people, as developers might require. Node runners often expose certain APIs to allow services to use their node, such as entry/exit nodes for RPCh relays.

A setup like this will never be as secure as a cold wallet only touched by you, whose private key you take every precaution to secure. So, to offer the highest level of security while providing all the features and customizability HOPR wants to offer its node runners, we needed to compartmentalize node runner funds from their nodes. To achieve this, we needed a top-quality smart contract wallet.

Why Does HOPR Use Safe?

Safe (previously known as Gnosis Safe) is the most secure smart contract wallet setup on the market. It already secures billions of assets with complete security and offers all the tooling developers need to create customizable solutions for their project.

It also comes with an ecosystem of other projects whose services HOPR can leverage to provide node runners with an even smoother experience. When such an ideal off-the-shelf solution exists for exactly what HOPR needs, it didn't make sense not to use Safe, and it is now a key component in HOPR's SafeStaking setup.