Milkyway is a platform that addresses the inefficiencies and limitations of traditional financial systems. By leveraging blockchain technology, Milkyway offers a seamless, secure, and user-friendly platform that democratizes access to financial services.

What is Milkyway?

Source: Milkyway website

Milkyway is the first modular staking portal that offers both liquid staking and restaking solutions, unlocking the potential of modularity in the blockchain ecosystem. The platform is designed to make the staking experience as seamless as possible by abstracting away complexities and providing added value to its community, known as Milkers.

Milkyway developed by JayB Kim began its journey by pioneering an enhanced liquid staking solution for the Celestia ecosystem in December 2023. This initial phase empowered TIA holders to unlock their staked positions and participate in various DeFi protocols to maximize their returns. The receipt token, milkTIA, represents the staked TIA and is now listed across numerous DeFi protocols, providing liquidity and flexibility for staked assets. As the platform evolves, Milkyway is expanding to include a multi-asset restaking protocol designed to address fragmented trust and crypto-economic security issues in blockchain networks. This expansion supports the rapid growth of the modular ecosystem while generating greater yields for users.

Key Features and Functionalities

One of Milkyway’s primary features is the liquid staking solution, which allows users to stake their assets while maintaining liquidity. This means users can continue to use their staked assets for other financial activities, maximizing their potential returns.

Another significant feature is the modular restaking protocol, which offers flexibility and efficiency in managing staked assets. This protocol enables users to restake their rewards automatically, compounding their earnings over time. Additionally, Milkyway’s platform is built on a robust technical architecture that ensures security, scalability, and transparency, making it a reliable choice for managing digital assets.

Milkyway also integrates seamlessly with various decentralized applications (dApps), providing users with a wide range of financial services and opportunities.

How Does Milkyway Work?

Milkyway, a liquid staking protocol, is designed to bridge the gap between traditional staking and the need for liquidity. It leverages a fusion of CosmWasm contracts, a multisig custody system, and the Cosmos SDK authz module to introduce a liquid staking derivative for the Celestia ecosystem on the Osmosis blockchain.

A CosmWasm staking contract on Osmosis facilitates TIA deposits, issuing stTIA tokens, and handles withdrawals along with the claiming of TIA with accrued staking rewards. The interaction between the staking contract and Celestia is managed by the Milkyway daemon, an off-chain program responsible for monitoring IBC transfer transactions originating from Osmosis. This daemon listens to relevant events on both Osmosis and Celestia, assisting Milkyway operators in verifying and signing IBC and staking transactions. It ultimately generates a multi-signed transaction by aggregating signatures from the operators.

To oversee and validate this process, Milkyway initially launched with nine trusted validators, including Stake.fish, Everstake, Chorus One, Allnodes, 01node, DSRV, Cosmostation, Hex Trust, and Keplr. These validators secure $5.86 billion across Ethereum, Cosmos Hub, and Osmosis ecosystems. As the staking pool grows, the number of validators in Milkyway will increase, enhancing the network’s security and reliability.

Milkyway Security Measures

The security of the Milkyway Protocol is paramount. It is ensured through thorough testing and auditing smart contracts and off-chain programs before launch. The protocol’s open-source code allows experts and the community to review and improve it collaboratively, enhancing security through collective scrutiny. Additionally, Milkyway is powered by a team of seasoned blockchain professionals from renowned projects like Tendermint, Osmosis, Cosmostation, Crescent, Oak Security, Composable Finance, and Crypto.com.

Milkyway’s Technical Architecture

Milkyway’s technical architecture is designed to provide a robust, secure, and scalable platform for liquid staking and restaking within the Celestia ecosystem. The architecture leverages a combination of CosmWasm contracts, a multisig custody system, and the Cosmos SDK authz module to deliver its innovative staking solutions.

Core Components

1. CosmWasm Contracts: These smart contracts are deployed on the Osmosis blockchain and are responsible for managing TIA deposits, issuing stTIA tokens, and handling withdrawals. They also facilitate the claiming of TIA with accrued staking rewards. CosmWasm contracts ensure that all transactions are automated, secure, and transparent.

2. Milkyway Daemon: This off-chain program plays a crucial role in the interaction between the staking contract and the Celestia network. It monitors IBC transfer transactions originating from Osmosis and listens to relevant events on both Osmosis and Celestia. The daemon assists Milkyway operators in verifying and signing IBC and staking transactions. It ultimately generates multi-signed transactions by aggregating signatures from the operators.

3. Multisig Custody System: Milkyway employs a multisig custody system to enhance security. This system requires multiple signatures from trusted validators to authorize transactions, reducing the risk of single points of failure. Initially, Milkyway launched with nine trusted validators, including Stake.fish, Everstake, Chorus One, Allnodes, 01node, DSRV, Cosmostation, Hex Trust, and Keplr. These validators collectively secure billions of dollars across various blockchain ecosystems.

4. Cosmos SDK Authz Module: This module is used to introduce liquid staking derivatives for the Celestia ecosystem. It provides the necessary authorization mechanisms to ensure that staking and restaking operations are performed securely and efficiently.

Data Flow and Processes

Milkyway’s architecture includes several key processes that ensure the smooth operation of its staking solutions:

Staking Process

Users deposit TIA coins into the CosmWasm staking contract on Osmosis, receiving stTIA tokens in return. These tokens represent their staking position and can be used in various DeFi products. The staking contract ensures that all deposits and withdrawals are securely managed, and users can claim their staking rewards through the same contract.

Withdrawal Process

Users can withdraw their staked TIA by redeeming their stTIA tokens through the staking contract. The Milkyway daemon facilitates this process by verifying and signing the necessary transactions. This ensures that users can access their staked assets and accrued rewards efficiently and securely.

Exchange Rate Updating Process

The exchange rate between TIA and stTIA is periodically updated to reflect the accrued staking rewards. This process is automated through the staking contract, ensuring that users always have an accurate representation of their staking position.

Validator and Operator Management

The system includes mechanisms for managing the validator and operator sets, ensuring that only trusted entities participate in the network. This includes processes for adding or removing validators and operators as needed. The multisig custody system ensures that all transactions are authorized by multiple validators, enhancing the security and reliability of the network.

Slashing Incidence Process

In the event of a slashing incident, where a validator is penalized for malicious behavior or downtime, the Milkyway protocol has mechanisms in place to handle the situation. The staking contract automatically adjusts the stTIA supply to reflect the slashing penalty, ensuring that the impact is distributed among all stakers.

Compounding Staking Rewards Process

Milkyway’s modular restaking protocol allows users to automatically restake their rewards, compounding their earnings over time. This process is managed by the staking contract, which reinvests the rewards into the staking pool.

Milkyway Modular Restaking Protocol

Milkyway is a modular restaking protocol designed to empower a truly open market for decentralized trust, addressing the fragmented trust and security issues among various decentralized services. This protocol allows any modular asset from all supported chains to be used to provide crypto-economic security to Autonomous Verification Services (AVSs). As a modular restaking marketplace, Milkyway offers additional yields to stakers, a new revenue stream to operators, and reduces the complexity of network bootstrapping for all services across blockchain ecosystems.

Design Philosophy

Milkyway’s modular restaking protocol design philosophy is centered around solving several key problems in the blockchain ecosystem:

1. Fragmented Crypto-Economic Security: Most blockchain systems use Proof of Stake (PoS), requiring significant collateral to be locked for network security. As demonstrated by interchain security, this collateral can technically secure multiple services, not just a single PoS chain.

2. Low Security for Decentralized Services: Decentralized services are becoming more abundant but often lack security comparable to the base layer they support. As the crypto scene becomes more interconnected, these services need similar or higher levels of security.

3. Limited Assets for Restaking: Currently, most assets available for liquid staking are concentrated on a few assets and their derivatives. Restaking should be accessible to a broader range of assets and be chain-agnostic.

4. Lack of Modularity in Existing Solutions: Existing restaking solutions are often rigid, enforcing specific methodologies for asset delegation, distribution, and slashing. A truly modular restaking layer must be flexible to cater to the diverse needs of AVSs.

Problem-Derived Principles

To address these issues, Milkyway’s restaking layer focuses on being fully customizable, extensible, and inherently modular:

• Replaceability at the AVS Level: AVSs can opt-in, out, or switch settings regarding asset allocation and distribution methods, ensuring sufficient decentralization.
• Extensibility in the Restaking Layer: The restaking layer should be a free market where anyone can build or participate. AVSs should have full autonomy over their level of decentralization, with the restaking layer providing the necessary tools for customization.
• Convenience for AVSs: The restaking layer should offer presets that AVSs can choose from, allowing them to focus on application logic. It should be ever-extensible, enabling adding and updating new features to meet AVS needs.

Milkyway’s Liquid Staking Solution

Milkyway offers liquid staking solutions tailored to different blockchains, enhancing the flexibility and utility of staked assets.

MilkTIA for Celestia

Milkyway has developed a unique Authz Delegated Multisig design for the Celestia blockchain. This design ensures robust and secure liquid staking, allowing users to stake their TIA tokens and receive milkTIA, an on-chain representation of their staking position. This empowers Celestia token holders to access liquidity for their staked assets, enabling them to trade or use them as collateral in various DeFi products. Liquid-staked TIA automatically compounds staking rewards, and users can withdraw their TIA to receive their native tokens and accrued rewards. MilkTIA can be utilized on third-party lending platforms like Camelot, Demex, Levana, Margined, Mars, Osmosis, and UX.

MilkINIT for Initia

Milkyway has also launched a liquid staking solution for the Initia ecosystem, leveraging the battle-tested Interchain Accounts to deliver a highly trust-minimized experience. Users who stake their INIT tokens with Milkyway receive milkINIT, an on-chain representation of their staking position. This allows Initia token holders to access liquidity for their staked assets, enabling trading or their use as collateral in various DeFi products. Liquid-staked INIT automatically compounds staking rewards, and users can unstake their milkINIT to receive their native tokens and accrued rewards.

Funding and Development

Milkyway has successfully raised $5 million in a seed round, attracting investments from prominent firms such as Polychain, Binance Labs, HackVC, Longhash Ventures, and Crypto.com Capital. Additionally, the project has garnered support from distinguished angel investors, including Mustafa Al-Bassam (co-founder and CEO of Celestia), George Lambeth (Celestia’s inaugural investor), Batuhan Dasgin, Stan (co-founder of Initia), YQ (founder of Alt Layer), Rushi (co-founder of Movement), Kenny Li (co-founder of Manta), and Michael Ng (founder of StakeWithUs).

Utilization of Funds

The capital raised will be crucial in propelling Milkyway’s mission forward. The funds are being utilized to expand the team, cover operational expenses, and, most importantly, further the development of the modular ecosystem. Milkyway aims to grow the modular ecosystem by amplifying the applications of modular liquidity, ensuring that the platform continues to innovate and provide value to its users.

Future Development Plans and Roadmap

The new capital will be pivotal for Milkyway’s innovation and community value-creation efforts. One of the key upcoming initiatives is a collaboration with Initia to bolster modular security, where milkTIA will secure both the L1 and the rollups built on top of it. Additionally, Milkyway plans to introduce its rollup in partnership with Initia, integrating with Celestia to facilitate access to Milkyway’s data across Celestia rollups.

Furthermore, Milkyway will launch its governance and utility token, MILK, later this year. This token will play a crucial role in the platform’s ecosystem, enabling users to participate in governance decisions and access various utilities within the Milkyway network.

How to Get Started with Milkyway

Follow these steps to begin your journey with Milkyway and start maximizing your staking rewards.

Step 1: Liquid Stake

First, you need to stake your TIA tokens. Doing this, you help secure the Celestia network and earn auto-compounded staking rewards. Here’s how you can do it:

1. Acquire TIA Tokens: Purchase TIA tokens from a supported exchange such as Gateio

2. Transfer TIA to Milkyway: Use the IBC Transfer module to move your TIA tokens from the exchange to the Milkyway platform.

3. Stake TIA: On the Milkyway platform, stake your TIA tokens. This process will lock your tokens into the staking contract, initiating the staking process.

Step 2: Receive MilkTIA Token

Once you have staked your TIA tokens, you will receive milkTIA, an on-chain representation of your staking position. This token accrues in value along with the staking rewards. Here’s what happens next:

1. MilkTIA Issuance: The platform will issue milkTIA tokens to your wallet after staking.

2. Monitor Rewards: Your milkTIA tokens will automatically accrue staking rewards, compounding over time.

Step 3: Use In DeFi

With your milkTIA tokens, you can further enhance your returns by utilizing them across various DeFi platforms. Here’s how:

1. Explore DeFi Platforms: Identify DeFi platforms that support milkTIA, such as Camelot, Demex, Levana, Margined, Mars, Osmosis, and UX.

2. Utilize milkTIA: Use your milkTIA tokens for trading, lending, borrowing, or as collateral in these DeFi platforms to further compound your staking rewards.

3. Maximize Returns: By participating in these DeFi activities, you can maximize your returns and take full advantage of the liquidity provided by milkTIA.

Future Outlook for Milkyway

Looking ahead, Milkyway is poised to continue its trajectory of growth and innovation. The platform’s upcoming initiatives, such as the collaboration with Initia to enhance modular security and the launch of its governance and utility token, MILK, will further solidify its position in the crypto ecosystem. These developments will enhance the platform’s capabilities and provide greater value to its users.