A Strategic Update to the SKALE Growth Manifesto
Hi everyone,
Building on the foundation of the SKALE Growth Manifesto, I am sharing a critical update on our progress and strategy. Our strategy can be summarized in three distinct phases: Expand, Contract, and Grow.
In this post, I will address:
- SKALE Expand: The success of our multi-chain deployment.
- SKALE Contract: Optimizing the original Ethereum network for Validator ROI and efficiency.
- SKALE Grow: The explosion of AI and Privacy on Base.
1. Expand: The Multi-Chain Success
SKALE Expand began as an innovative experiment: deploying the SKALE Manager to new EVM chains and L2s to extend our reach into established ecosystems. Our first implementation—SKALE on Base—has moved beyond a trial to showing real signals of product market fit and success. The positive momentum and technical stability we are seeing have convinced the builder collective and core team to aggressively double down on this mechanism.
Here is a quick snapshot of the SKALE on Base Expand traction:
- 50+ new partner, application, customer deals since commencing Expand strategy
- 6 x402 Facilitators have been integrated with 2 integrating BITE Protocol Natively
- PayAI, Koraru, RelAI, x402x, Corbits, ICPay
- Numerous Unique Infrastructure Providers have implemented to SKALE on Base
- HTTPayer, 1 Shot API, 1 Shot API, Zauth
- Numerous x402 Merchants including Functionland, Xyber, Meson.Fi, and Meta War
- Agentic Applications: Xona, AstraSync
Here are some stats from the SKALE on Base dashboard: SKALE Base stats - SKALE Base network insights | Blockscout
In short, we are seeing great early signs of success. The next step will be converting early adopters into SKL credit buyers which in turn results in SKL burned per the last governance proposal. Additionally, the SKL token has been fully mapped into SKALE on Base and can now move back and forth between ETH to Base to SKALE on Base. It is an exciting time, and we now need to double down efforts to grow the SKL burn momentum.
2. Contract: Optimizing for Efficiency and ROI
As we expand outward, we must look inward at the original SKALE on Ethereum Network.
Currently, the network comprises roughly 800 nodes and 16 chains, with a capacity to process over 2 Billion transactions per day. While we represent a top 10 network globally with 50M monthly transactions, we are utilizing less than 1% of our total capacity.
Simply put: The network is currently larger than it needs to be.
This excess capacity dilutes Validator ROI. Validators are currently forced to run extensive infrastructure to capture rewards, leading to unnecessary operational costs and sell pressure on tokens. To fix this, we are working with ecosystem partners/validators to propose a “Smart Contraction” to align resources with actual demand with smart contract changes through governance.
The Proposal: Progressively Increased MSR
Engineers in the community have proposed altering the Minimum Stake Requirement (MSR). Currently, the MSR is flat (20M SKL per Supernode). We propose an escalating MSR model where the requirement doubles with each additional node run by a validator organization (e.g., 2nd node = 40M, 3rd = 60M).
The Result:
- Large validators can support the same amount of stake with fewer nodes.
- Operational costs decrease dramatically.
- The network footprint contracts to approximately 45 high-efficiency SuperNodes.
- Increased decentralization as larger validator operators will run a smaller percentage of the network as a whole. The nakamoto coefficient improves through this mechanism.
- The stake rate stays the same while improving ROI for validators.
Here is a visual summary of the new MSR Mechanism
Consolidating Chains We also propose consolidating active applications onto the 5 most prominent chains, sunsetting underutilized ones. Industry leaders like Nebula will continue to drive our gaming and web-social verticals, serving as the thriving “CORE” of SKALE Ethereum, while we shift unused resources to support our expansion on Base.
3. Grow: AI + Privacy on Base
AI is eating the world. The sectors that are set up to win are AI infrastructure (Chips, Data Centers, Power) and crypto+stablecoins (chains, stablecoins, agent frameworks).
We see this as a once in a lifetime opportunity to get in front of one of the biggest changes in human history. This is why we are focusing SKALE agent efforts into agent commerce powered by optimized performance, stable pricing, and privacy.
We believe that for crypto payments to truly become mainstream, you must be able to keep balances and personal information private. The barista doesn’t see your bank account balance when you buy a cup of coffee, so why should they see it if you use crypto? And for that matter, why should someone be able to see your balance when your agent is buying resources on your behalf through x402? The problem and value of privacy grows exponentially in an agentic world.
If we execute well, this will be the defining chapter for SKALE. There is a lot of work to do and this is a very competitive market. The community of builders, devs, business developers, and marketers must really execute well for us to win. That said, we are seeing great signs of success thus far.
The appetite for SKALE’s privacy technology was proven last week during the SKALE Agent Hackathon, hosted alongside Google, Coinbase, Vodafone, Virtuals, and Edge & Node. The results were phenomenal: over 89 submissions, with groundbreaking implementations utilizing the BITE protocol in the SKALE on Base Sandbox.
Check out the hack submissions to see some amazing examples of BITE in action: https://dorahacks.io/hackathon/x402/buidl
The Path Forward
We are working to make significant changes to the current state of the network, but needed changes that help align resources to where we see growth. We want to ensure our resources are not just “running,” but working and ultimately creating a revenue mechanism that burns SKL tokens. By optimizing the SKALE core, we can all ensure that SKALE is lean, profitable for validators, and ready to support the massive wave of AI growth on the horizon. I hope to see a follow-on governance forum post and governance proposal be released soon so we can take action as a project.
Last note to the community - This is a very tough market for crypto builders and holders. We understand and have empathy for those that are frustrated. There are many things outside of our control. What I can do is assure everyone in the community that the core team, validators, and contributing developers are working their hardest every day.
Crypto is going through a major evolution. We believe the next winners will be the ones that win the AI battle and that is where we are focusing. I am excited about the path forward and we will keep trucking. We can’t control the markets, but we can control how hard we all work and where we put our focus. We need to keep building through the winter.