Staking-as-a-Service is not a commodity

A boom of "picks and shovels" companies catering to Proof-of-Stake cryptocurrencies has emerged as a leading market narrative for 2019. At the center of this burgeoning industry lies the Staking-as-a-Service model, a product of protocols like Tezos, Decred, and Cosmos mandating a minimum threshold amount for asset staking. Like pools aggregate hashrate across miners on Proof-of-Work networks, these companies allow smaller holders to delegate their stake in return for a commensurate share of the block reward.

Given this parallel, analysts anticipate that the Staking-as-a-Service industry will succumb to a race to the bottom as companies undercut each other's fees in providing a commodity service. Their commentary, however, fails to account for the role staking plays in the governance of these networks. We should expect that the political dimension of staking will result in a different outcome, in which Staking-as-a-Service companies evolve into special interest groups which then charge a premium for their sway over a protocol's direction.