Guide to Evmos

• Evmos enables decentralized interoperability between Ethereum-based applications and Cosmos’ ecosystem of independent decentralized blockchains, including Cosmos, Terra, Crypto.org Chain, Osmosis, and many more.  

• Evmos’ EVM compatibility and launch with IBC enabled allows developers to build with the desired features of Ethereum within a Tendermint environment, allowing users, and their assets, from across the Cosmos ecosystem to access the utility seen on Ethereum. 

• Due to its EVM-compatibility Evmos will likely be a hotspot in the Tendermint ecosystem for web3 development.

• Validator operators can earn participatory rewards in exchange for taking part in securing the network and adding new blocks to the chain, while any token holder can delegate their Evmos tokens to a validator to earn a share of rewards. 

An introduction to Evmos

Evmos is a decentralized proof of stake blockchain in the Cosmos ecosystem. It is Ethereum Virtual Machine (EVM)-based, meaning it is fully compatible with the Ethereum network. Evmos’ goal is to bring the world of Ethereum-based applications and assets to the interoperable networks of the Cosmos ecosystem, while aligning developer and user incentives and aiming to innovate in the space of EVM and interchain composability.  

Built using the Cosmos SDK with Tendermint Core consensus, Evmos offers the fast finality and high-throughput of Cosmos-based blockchains. By using Ethereum’s EVM, developers can deploy their Ethereum-based applications in the Tendermint consensus environment with lower transaction fees, faster transaction speeds, and security provided by proof of stake consensus. 

Evmos has also enabled Cosmos’ Inter-blockchain Communication Protocol (IBC), a protocol that allows for the direct sharing of tokens and data among the Tendermint-based chains that use it. Therefore EVM applications deployed on Evmos can also be accessed by participants in networks across the broader Cosmos ecosystem, including Cosmos, Terra, Crypto.org Chain, Osmosis, Cronos, Sentinel, and Secret Network, and many more. Users from all 28 IBC-enabled independent blockchains will be able to access the utility seen on Ethereum, including decentralized exchanges, marketplaces, lending protocols, NFT applications, gaming, and more, as developers deploy their mature application logic from Ethereum directly on Evmos. 

Evmos is an evolution of Ethermint, a proof of concept introduced in 2016 as a way to deploy EVM-based smart contracts on Tendermint in order to use proof of stake for their consensus. Ethermint had a vision of supporting all Ethereum tooling, just as Evmos does today, to create the same developer experience for Solidity smart contract developers on Tendermint as the developers had on Ethereum. Following the launch of the IBC in March of 2021, the Tharsis core dev team proposed pushing forward the Ethermint initiative via community governance in Cosmos’ Proposal #44. The proposal, now manifested as Evmos, passed quickly with 98.31% community approval in April of 2021. 

EVMOS, the native token on Evmos, is used for paying transaction fees, staking to secure the network, and for taking part in Evmos’ governance to determine the decisions for changing core protocol parameters, the distribution of the Community Treasury, and more. 

Any EVMOS holder can submit, or vote on, a proposal to use funds from the Evmos Community Pool using the protocol’s governance module. The Community Pool will receive 10% of the tokens minted in each epoch. 

For more info on the utility of EVMOS within the ecosystem, please refer to The Evmos Token Model.

Why does EVM compatibility matter for Evmos?

Deploying, and using, Ethereum-based applications on alternative blockchain environments has become a multi-billion dollar facet of the web3 ecosystem. The push for Ethereum-based applications to deploy in alternative environments is based on a number of factors, based around built-in interoperability and incentive alignment: (1) access to proof of stake consensus, (2) faster transaction speeds, (3) lower transaction fees, and (4) an expansion of available user base.  

Ethereum’s maturity and massive user base make it a great place to build web3 applications, but leads to congestion, which causes high operating fees and slow transaction speeds. An EVM-compatible layer 1, like Evmos, allows developers to launch these same applications to a broader set of token holders, who in turn can access the utility the apps have to offer. 

Though the Ethermint concept of EVM-compatibility on Tendermint’s consensus has been in the zeitgeist since 2016, Evmos is the first permissionless, proof of stake, EVM-compatibile environment to be launched in the broader Tendermint ecosystem.  

How to participate on Evmos

There are two types of nodes on Evmos: 

• Validator nodes are responsible for validating transactions and committing new blocks to the blockchain 

• Full nodes store the full state of the blockchain and retrieve blockchain data when called 

A validator must operate both a validator node and a full node, while read/write infrastructure only requires use of a full node.  

The Evmos active set is made up of the 150 validators with the most overall staked EVMOS (including self-bonded and delegated stake). A validator is chosen to propose the next block based on its total stake relative to the overall amount staked across all validators (i.e. if 10 EVMOS are staked to Validator A and 100 EVMOS are staked across all validators, Validator A will be selected to propose a block 10% of the time). 

Blocks can not be proposed for inclusion in the chain if they do not have at least ⅔ (66%) of precommits for the previous block, in the form of other validator signatures. To incentivize non-empty block proposals and better networking between validators, the percentage reward received by a validator for successfully proposing a block increases as the percentage of precommits included in the block increases from 66% to 100%. You can learn more about this in the ‘Rewards and economics’ section below. 

Delegation is enabled on Evmos, and there is no minimum to stake one’s EVMOS to a validator. Delegators who do not actively participate in Evmos governance automatically inherit the votes of the validator to which they are staked. Validators on Evmos charge a percentage commission rate fee to their delegators in exchange for providing the service of participation, which is deducted prior to delegators’ reward distribution.

When registering a validator on the network, referred to on Evmos as “declaring candidacy,” the validator operator must declare the validator’s initial commission rate, maximum daily commission rate change (the highest percentage by which a commission rate can be changed in one day), and the maximum commission rate. These parameters can never be increased once a validator has declared its candidacy, though the operator can decrease them at any time. 

Rewards and economics on Evmos

The target staking rate is currently approximately 50%, due to the use of EVMOSs for paying transaction/computation fees (gas). The Evmos team notes that if, in the future, liquid staking is natively implemented on Evmos, the target staking rate will likely increase. 

There are four types of rewards on Evmos:

• Transaction fees are distributed equally amongst active set validators in EVMOS, though the ability to accept any Cosmos-based token as a payment can be enabled in the future via governance. Application developers will also receive a percentage of all EVM transaction fees, split between the transaction’s validators and the Evmos dApp Store’s application developers. 

• Inflationary rewards (Block Provision) are the percentage of EVMOS’s inflation distributed pro-rata to all active participants in the network.

• Proposer rewards are a bonus 1-5% reward for a validator successfully proposing a block in consensus, with the reward increasing based on the number of precommits included for the previous block.  

• Usage incentives make up 25% of the block emissions as an additional incentive, including deferred gas rebates and liquidity mining, with additional incentives possible via governance. 

Source

As mentioned earlier, to encourage non-empty block proposals along with networking between validators, the proposer rewards increase from a 1% to 5% bonus as the block increases its inclusion of precommits from 66% to 100%. Therefore, a validator can optimize its participation by waiting long enough to include validator signatures in the proposed block but not so long as to miss out on proposing the next block.     

A validator’s commission rate is applied to all of a delegator’s rewards before the rewards are called by the delegator from the protocol.

Risks of participation on Evmos

Slashing is enabled on Evmos. If a validator does not behave as expected in the network, both the validator’s self-bonded stake and any delegators’ stake can be slashed, incentivizing delegators to stake their EVMOS to validators who operate safely. 

There are a number of poor validator behaviors which result in slashing on Evmos: 

• Double-signing: Signing two blocks at the same block height will lead to slashing on Evmos, though the punitive parameters for double-signing have not yet been defined. 

• Downtime: A validator missing more than 95% of the preceding 10,000 blocks will result in a slashing of 0.01%.  

• Unavailability: A validator being offline for a set number of blocks will lead to slashing, and if the validator passes an upper limit of missed blocks it will be unbonded and removed from the active set, though the parameters for unavailability have not yet been defined. 

• Poor security resulting in malicious behavior: A validator’s total stake may still be slashed if it is the victim of a distributed denial of service (DDoS) attack, if its private key is compromised, or if its other poor behavior is similarly unintentional — highlighting the importance of choosing secure, highly-available participatory infrastructure.

 It is expected that Evmos will implement Cosmos’ jailing parameters, with validators that have been slashed automatically entered into a jailing period before they are eligible to rejoin consensus. On Cosmos, this jailing period is currently 2 days, following which time the validator may submit an unjail transaction to rejoin the active set. 

Governance on Evmos

Governance will be a feature of the Evmos protocol, though it has not yet been fully defined. Validators will play an outsized role in governance as it is likely that delegators who do not actively participate will inherit the vote of the validator they are staked to; further, validators on Evmos can be slashed by a small, but undefined, amount for neglecting to vote on governance proposals. 

EVMOS tokens are the primary tool for participating in Evmos’ governance. Any EVMOS holder will be able to submit proposals for protocol upgrades or to use funds from the Evmos community treasury. 

It is expected that Evmos will implement Cosmos’ governance parameters. Cosmos utilizes a ‘one token, one vote’ system, meaning that any EVMOS holder can vote on governance proposals with no extra weight given to certain votes — though, because delegators inherit the vote of the validator they are staked to if they do not actively vote themselves, validators naturally have an outsized vote if there is limited participation. Users on Cosmos can submit governance proposals with a deposit, and the proposal enters its voting period once a minimum deposit is reached. If the proposal is accepted or never reaches the minimum for a voting period the deposit is returned; if the proposal fails, the deposits are claimed by the Cosmos treasury. 

Why run Evmos nodes?

• Validators have an outsized say in the governance votes affecting network parameters, rewards rates, transaction fees, units of accepted transaction fee currencies, and more, because delegators who do not actively participate in governance automatically inherit the vote of the validator they are staked to. 

• Evmos is expected to become a hot-spot for web3 applications and asset transfers, due to its ability to connect Ethereum-based and EVM-compatible applications to the interoperable Tendermint and Cosmos ecosystem — making it a great fit for developing blockchain-backed web3 applications.