Key Insights
- Ankr provides a plethora of developer and staking infrastructure services. These include liquid staking, RPC services, advanced APIs, appchain deployment, and blockchain gaming SDKs.
- ANKR token holders can stake their tokens to earn 70% of rewards from all Ankr network fees — 49% to individual stakers, 21% to node providers.
- As of December 12, Ankr’s liquid staking derivatives have accrued over $170 million in total value locked (TVL) across seven blockchains.
- In its current state, Ankr can improve on the centralized nature of the load balancer in its quest to decentralize.
- A revitalized whitepaper increased the ANKR token utility, introduced DAO governance, and set plans for further decentralization.
Ankr’s Background
Beginning in 2018, Chandler Song and Stanley Wu founded Ankr. The network’s initial goal was to harness cloud computing power across the globe to power Bitcoin mining, node hosting, and the internet-of-things (IoT). Through this goal, Ankr accumulated a globally distributed supply of dedicated servers that positioned it for the upcoming industry shift to Proof-of-Stake (PoS) blockchains. As PoS blockchains began to offer smart contract capabilities, Ankr shifted its focus to providing developer and staking infrastructure by running full nodes and validator nodes.
This pivot proved successful, as Ankr now plays a critical role for development teams working in Web3. Today, Ankr services 21 blockchains handling over 2 billion RPC requests daily. Competing with the likes of Infura, Alchemy, and Pocket, Ankr’s unique pay-as-you-go model and plethora of services are its unique differentiators. Additionally, revamped ANKR tokenomics and the introduction of the Ankr DAO have elevated Ankr as a key Web3 infrastructure provider.
What Problem Does Ankr Address?
Maintaining the infrastructure for a decentralized economy is arduous. Every transaction and smart contract interaction relies on the underlying infrastructure most users never consider. Theoretically, anyone can run a node and support the ecosystem, but the time and expertise needed to set up and manage a node make it cumbersome.
Ankr aims to address this pain point with its suite of blockchain infrastructure tools. While entirely focused on infrastructure, Ankr offers five different products:
- RPC Service – Users can connect to a globally-distributed infrastructure of full nodes, allowing users to interact with 21 blockchains.
- Advanced APIs – Is a single point of reference for multi-chain requests. Advanced APIs are a collection of JSON-RPC API endpoints that support the most popular EVM blockchains.
- Appchains – Enables developers to quickly spin up a blockchain dedicated to their dapp.
- Liquid Staking – Allows users to stake PoS assets and earn rewards for assets such as ETH, AVAX, and MATIC while maintaining access to liquidity.
- Mirage Gaming – Ankr provides Web3 SDKs for the two most widely-used gaming engines, Unity and Unreal Engine. This allows developers to enable their game to interact with Web3 wallets, blockchains, and smart contracts.
These products aim for developers to not worry about the management of underlying infrastructure when building their product. Whether developers wish to build a dapp or deploy a new layer one blockchain, Ankr can offer the infrastructure to make it happen.
RPC Service
Ankr’s RPC service, enables users to connect to Ankr’s distributed network of full nodes. An RPC is an application programming interface API interaction that enables dapps to communicate with blockchains. For example, an RPC request can be used for retrieving wallet balances or interacting with liquidity pools. Ankr abstracts away the complexities for the end-user.
Node operators in Ankr’s network must stake 100,000 ANKR to their node and actively maintain the node to avoid slashing penalties similar to validator penalties on Ethereum. Maintaining the node means ensuring the node is synced, updating the node as network upgrades come out, and any other general maintenance.
The node operators are then indexed and RPC request traffic is assigned through a load balancer. The load balancer takes into account the node health, geographic location, and workload to determine which node is best suited to handle a user’s RPC request. Nodes that are not synced with the current state of the blockchain, geographically distanced from the user, or overloaded with requests from other users would not be selected. In this event, the load balancer will automatically reroute to a node that can handle the RPC request. To ensure that transactions are processed, the Ankr team relies on the load balancer. In its current state, the centralized nature of the load balancer is an area where Ankr can improve on its quest to decentralize.
For the end user, there are three different payment plans:
- The free community service allows up to 250k RPC requests per day.
- The premium service allows unlimited requests and additional features on a pay-as-you-go basis.
- An enterprise RPC service that can be tailored specifically to the users’ needs after meeting with the Ankr team.
Given the volatile nature of network usage, it can be difficult for developers to estimate the number of RPC requests to be made on any given day. The pay-as-you-go payment plan benefits developers by ensuring they only pay for what they use. Additionally, requiring users to deposit ANKR to pay for RPC requests creates an inherent utility to the token.
Liquid Staking
The second most popular feature Ankr offers is its liquid staking service for PoS assets. Given the ever-increasing number of PoS blockchains, and Ethereum’s recent switch from PoW to PoS, the desire to stake assets for a yield has increased significantly. Since launching the liquid staking derivative (LSD) product on Dec. 1, 2020, Ankr has reached over $170 million in deposits, with the vast majority deposited in the BSC and ETH liquid staking contracts.
In the liquid staking arena, Ankr previously operated slightly differently from the competition by offering a dual token liquid staking derivative. In Ankr’s case, upon depositing a PoS token, users had the choice to receive two different types of liquid staking tokens: aETHb (a reward-earning token) and aETHc (a reward-bearing token). This dual token model was recently deprecated and now Ankr offers ankrETH, an updated version of the reward-bearing token.
Prior to officially moving to a single liquid staking derivative, Ankr fell victim to an exploit where a hacker was able to mint aBNBc without actually depositing into the Ankr staking contracts. This allowed the attacker to drain liquidity pools paired with aBNBc, resulting in Ankr pledging $15 million to compensate liquidity providers.
Ankr currently provides liquid staking derivatives for the following chains: ETH, BNB, MATIC, KSM, DOT, AVAX, and FTM. The fees charged by Ankr for this service vary depending on the token, but generally these fees are between 5-10% of the yields earned. A variety of PoS tokens made available for staking has proven to be beneficial, as shown by BNB liquid staking climbing to 55% of Ankr’s total LSD TVL in recent months.
Appchains
A unique feature of Ankr is offering developers the ability to spin up a dedicated appchain for their dapp. With crypto evolving and more users transacting on-chain as opposed to through a centralized exchange, the competition for blockspace has increased dramatically. During the previous bull market, on-chain transactions caused gas prices to increase significantly, at times costing users hundreds of dollars to perform a simple swap.
This pain point gave rise to the idea of a multichain future where many dedicated appchains serve one or a few dapps. By running a dedicated appchain, developers can offer their users low gas fees and fast transactions. With Ankr, developers receive support with the six main technical features for any blockchain: validator nodes, RPC endpoints, block explorer, testnet token faucet, cross-chain bridge, and a staking UI. For each appchain, the process is entirely customizable and can be tailored to what best suits each dApp. Currently, developers can choose to deploy an appchain on Polygon, Binance Smart Chain, or Avalanche.
Mirage Gaming SDK
Ankr is well positioned to take advantage of the burgeoning blockchain gaming ecosystem by providing SDKs for the two most well-known gaming engines – Unity and Unreal Engine. This enables developers to build and scale Web3 games on all EVM-compatible blockchains. Using these SDKs, developers can integrate Web3 wallets and smart contract interactions into their game. Combined with the appchain product, a Web3 gaming developer has all the tools required to build a successful game with Ankr’s product offerings.
ANKR Tokenonmics
After reaching the maximum circulating supply and a recent tokenomics redesign, the ANKR token’s utility can be best described through the lens of the different Ankr network participants: users, node providers, and stakers. Users accessing Ankr’s RPC service pay a base fee per RPC request they make. With this pay-as-you-go pricing model, $0.10 gets users 1 million API credits, creating utility for the ANKR token as it is required to access the RPC service or API.
Node providers are required to stake 100,000 ANKR tokens to their node as collateral to help ensure optimal network participation. This requirement drives further ANKR token utility, but this stake can potentially be slashed if node operators fail to properly maintain their node. The disincentive forces node operators to act in the best interest of the network.
As an incentive for running a node, Ankr node operators receive 21% of the total Ankr network fees. In addition to the 21%, more efficient node operators can earn more by handling more requests, which further emphasizes optimally maintaining a node.
The final utility for ANKR is the ability to stake tokens to earn network rewards. Users who hold ANKR can delegate their holdings to node operators in the Ankr network by staking for 90 days. This enables users to earn 49% of the total Ankr network fees along with the ability to vote on DAO proposals. Although, there have been no DAO proposals to date. Currently, 732 users are staking ANKR for a roughly 8.59% APY.
Competition
With their RPC and API services, Ankr competes with Infura, Alchemy, and Chainstack. Comparatively, Ankr has a few key advantages. One advantage is the unique pay-as-you-go pricing model. Most competitors charge a flat rate per month, with additional fees if you exceed a certain number of requests per month. With Ankr, you can use the service as you need and spend only what you need to.
Moving forward, competition for RPC services and liquid staking derivatives is likely to heat up in the level of decentralization they adhere to. While Ankr plans to onboard individual node operators, this has not yet become a reality and continues to pose a centralization risk to the protocol. However, this risk is not unique to Ankr. The vast majority of RPC service providers and liquid staking derivative providers face similar centralization issues. In this sense, Ankr has made a clear step forward, as it partnered with Pocket to expedite decentralization efforts. This partnership allows Ankr to move traffic through Pocket’s distributed network of nodes.
On the liquid staking front, Ankr competes with several, most notably Lido, Rocket Pool, and Stakewise. Comparatively, Ankr is the fourth largest for liquid staking protocols by TVL and the tenth largest when centralized stakers like exchanges are considered. Ankr’s roughly $170 million in TVL is only 2.65% of Lido’s $6.4 billion in TVL. Considering Ankr charges a fee in line with the competition, the question arises of why Ankr does not compete with larger staking providers such as Lido or Rocket Pool in terms of TVL. Several factors could account for the discrepancy, such as not offering a competitive APR, not being known as an LSD provider, low liquidity on DEXs, or possibly confusion on the difference between the two liquid staking tokens.
Challenges and Opportunities
Further decentralizing the network will be a challenging, but rewarding, process. As previously mentioned, running a node is not an easy task, and finding individuals who can do this optimally may pose an issue. Furthermore, the competition in the liquid staking sphere is strong. Competitors such as Lido and Rocket Pool focus solely on liquid staking derivatives, while Ankr focuses on multiple verticals. Additional difficulties may also arise for Ankr in their attempt to gain a greater market share in the liquid staking derivative space due to the recent exploit of aBNBc.
Following the Ankr 2.0 whitepaper, there is a newfound excitement for the network. Most recently, the highly anticipated Aptos blockchain went live, and Ankr was one of the first major infrastructure providers to bring RPC services to the chain. This is a testament to the strength of the development team and their ability to adapt to new market trends. Moving forward, business development will be critical to onboard new developers and users into the Ankr network.
With many in the crypto ecosystem awaiting a breakthrough gaming dapp, Ankr has a unique opportunity to onboard dapps and gaming projects with the appchain and gaming SDKs. Although usage of these products is currently limited, Ankr is in a position to benefit from the opportunity, as similar products are not offered elsewhere.
Final Thoughts
Ankr has built an important infrastructure network for the Web3 ecosystem. A large product offering for Web3 developers, a pay-as-you-go payment plan, and an updated whitepaper should keep Ankr in the conversation for Web3 infrastructure providers into the foreseeable future. With further work to be done on the decentralization of the project, this can be a critical area to differentiate Ankr from the competition. Decentralization aside, business development remains the most important aspect for Ankr. Onboarding an ever-increasing number of development teams into the Ankr network will be crucial for Ankr’s continued growth.
