What is SKL? The SKALE network and token explained
The rise of decentralized finance brought a myriad of applications to the Ethereum network, resulting in increased block demand and a rise in transaction fees. This challenge eventually had developers looking for alternative solutions for scaling the network efficiently.
One of these solutions was proposed by the SKALE network, which enables developers to bypass the congestion on Ethereum. SKALE introduced innovative concepts like “elastic blockchains” to bring the power of Ethereum smart contracts to billions of users around the world.
Let’s have a brief look at how the SKALE network works, including how staking works on this protocol and what the SKL token is used for.
What is the SKALE network?
Founded in 2017 by Jack O'Holleran and Stan Kladko, the SKALE network is an open-source, decentralized Layer-2 Ethereum bridge that enables developers to build their own blockchains while avoiding the high gas fees associated with Ethereum.
Thanks to its modular architecture and the innovative application of node containerization and virtualization, the SKALE network is said to process transactions up to 1000 times faster than the Ethereum network. Additional benefits include greater storage capacity and transaction processing control.
What is the SKL cryptocurrency used for?
The SKL cryptocurrency is the native token of the SKALE network and it uses the ERC-777 standard. ERC-777 tokens are backward-compatible with ERC-20, meaning that the SKL token is supported by all Ethereum network participants with ERC-20 support.
The token is used to:
- Secure the network and enable staking rewards for delegators and validators,
- Pay SKALE Chain subscription fees,
- Grant access to governance and on-chain voting.
How does SKL staking work?
With the help of the SKL token, holders can:
- Stake as a delegator
- Earn the right to work in the network as a validator
- Access a share of the network resources by deploying and renting an Elastic Chain as a developer
Holders can store their funds in an SKL wallet, such as any Ethereum-compatible wallet, and use them to stake with specialized validator networks. For investors with comprehensive performance and compliance needs, Finoa has developed a regulated custody solution that provides premium security while also enabling staking rewards.
How can SKL holders receive rewards?
Those who participate in the SKALE network as validators can earn rewards from fees and tokens via the network’s inflation mechanism.
To act as a validator, you must be able to run a validator node and stake SKL in order to process network transactions. The minimum staking requirement for a validator node is 20 million SKL and validators can lock up funds for 3, 6, or 12 months.
SKL holders who can’t or otherwise don’t want to run nodes, can still delegate their SKL to validators and earn a share of the rewards.
Who can deploy a blockchain with SKALE?
Anyone who wants to create a public or private blockchain can use the SKALE open-source network. As a security and execution layer to Ethereum, SKALE sidechains enable developers, vendor networks, DAOs, and other organizations to deploy their DApps on Ethereum with lower transaction costs and higher processing speeds.
How to stake SKALE for an organization
Institutional SKL holders like corporations, fund managers, and professional investors have lower fault tolerance and therefore need dedicated crypto financial services. From high-grade security needs to personalized access management, sophisticated investors require a regulated product in order to tap into the potential of the SKALE network.
At Finoa, we run an in-house staking service and partner with multiple industry-leading validators like Blockdeamon, Figment, and Chorus One. This enables us to provide our customers with regulated in-custody staking for SKL tokens directly from the main account, eliminating friction and helping institutions safely engage with the crypto ecosystem.