Today, Staking Rewards is pleased to announce the SR Rating for Verified Providers.
The SR Rating is being developed as part of the Staking Rewards’ Verification Program for Staking Providers. The aim of making the rating public is to increase the transparency behind the verification process and to further differentiate the Verified Providers based on our assessment of their operations.
Please note that all Providers with an SR Rating of AAA, AA, or A meet our verification criteria and are considered secure, reliable, and trustworthy to the best of our knowledge based on our due diligence process. We are therefore content in directing our user base to delegate to that staking provider.
It is, however, important to note that you should only ever use the SR Rating as a reference point. Ideally, investors should be taking multiple other factors into their decision making process when choosing a suitable provider. Also remember, by staking your assets with a Provider with smaller AUM, delegators can help contribute to network decentralisation.
The SR Rating is an incremental improvement made to the Verified Provider Program (VPP) to ensure a high level of transparency and comparability among all providers.
The Verified Provider Program and the SR Rating are ongoing processes. We work closely with Verified Providers to constantly improve the process and program to ensure we bring the entire PoS ecosystem forward. In the coming months, we will release VPP 2.0, an updated version of the VPP assessment and rating methodology based on feedback from the ecosystem.
Building Blocks of the SR Rating
To calculate the SR Rating, we take the Provider’s Security Setup, Reliability, and Business Operations into account. These categories are assessed according to predefined criteria and have individual weightings. The Value-Added Rating is not part of this calculation.
Security Setup:
This aspect is based on Staking Rewards’ assessment of the Verified Provider’s Security Setup in general. Predetermined criteria for key management, insurance, internal alerting, and many other aspects demonstrate the extent to which a provider meets our standards in offering a resilient and consistent service for delegators.
Reliability:
This aspect is based on Staking Rewards’ assessment of the Verified Provider’s Reliability.
The Provider’s uptime, slashing events, and other criteria demonstrate the provider’s track record of performance and their ability to maintain our performance criteria.
Business Operations:
This aspect is based on Staking Rewards’ assessment of the Verified Providers off-chain business operations.
We assess, among other things, the legitimacy of a provider’s business model, delegator protection and the sustainability of their services in a fast-moving environment like crypto. In assessing them, we especially focus on their business practices and the veracity of the information they provide. We see this as the cornerstone of a truthful relationship between delegator and validator.
How does the SR Rating process work?
The SR rating is based on a multi-stage process. We draw on various data sources to create our rating. On the one hand, we utilize information provided by Verified Providers. On the other hand, we cross-check this information with various external data sources. We differentiate between the following sources for provider information:
Self Attestation:
Providers who want to become a Verified Provider must complete our questionnaire. The questionnaire, which takes numerous hours to complete, contains questions on the above topics. The Providers answer the questions truthfully, as per signed agreement/NDA (for sensitive information), and submit responses to Staking Rewards.
Once the information has been submitted, our Research team conducts the due diligence process and evaluates the information based on a structured framework. In this process, inquiries are made and the given information is compared with publicly and socially available information.
On-Chain Data:
A major component of the rating is looking at the performance of the individual validators. We use various data sources for this purpose. First, we look into the Staking Rewards’ dataset and check the validators uptime, slashing events, and more. Furthermore, we draw on external data sources. For example, we use data from block explorers and other PoS indexing providers.
Community:
Active communities are a key factor for the relationship between providers and delegators. For this reason, we participate in these communities and gather feedback. If any, provider adverse behavior for delegators is identified and evaluated. Delegator claims and their overall level satisfaction are also reviewed. This also includes checking the customer support channels, etc.
How do you calculate the SR Rating?
The rating consists of the above-mentioned categories of Security Setup, Reliability and Business Operations. For each category, we have identified a set of attributes with predefined weights. Depending on how well the Provider attributes are fulfilled, points are awarded. We have drawn up a scorecard with maximum achievable points per attribute. At the end of the process, the points of all categories are summed together and the result is the SR Rating.
Why does my favorite Provider only have an A Rating instead of AAA?
Delegators may have different criteria for their own staking decision. So the SR Rating provides an excellent way to compare data that is not easily available. Any verified provider that meets our verification criteria is considered entirely secure, reliable, and trustworthy by Staking Rewards.
Based on our methodology, there can be multiple reasons why a provider does not receive the best rating. To achieve a AAA rating, the highest industry standards are applied and even exceeded. Especially for new and small providers it is difficult to get a AAA rating straight out of the box. Staking Rewards would like to accompany the providers and show where there could be potential for further improvement.
How can Providers improve their rating?
The SR Rating is reassessed on an annual basis. Already Verified Providers can request to go through the process again once the VPP 2.0 is launched.
Does Staking Rewards recognize providers who bring additional value-add to networks and delegators?
Yes, in addition to the SR Rating, we also determine a Value-Added Rating for Verified Providers. In this article you will find more information about this.
What are the next steps for the SR Rating?
We are still in the early stages with the SR Rating. Our first iteration of the program and all the associated data collected have given us food for thought on what is most important for the industry. For this reason, the VPP 2.0 is soon to be released. In collaboration with our partners in the Staking Industry, we will be able to present our new assessment and rating methodology of the Verified Provider Program in Q4 2022.
Conclusion
Staking Rewards is committed to providing transparent and reliable staking-related data to help Staking Providers, investors, and protocols alike. We are on a mission to increase trust and transparency in the staking industry while fostering decentralization as a core value. Our SR Rating is one part of this passionate mission. Join us on our journey to build a decentralized, open, and transparent financial community for all!