SKL is the native token of Skale Network, an Ethereum scaling solution designed for decentralized applications (DApps). By operating DApp nodes and chains in a decentralized manner, Skale Network aims to lower gas fees and improve throughput.
The SKL token plays a key role in the platform’s Proof-of-Stake consensus mechanism and incentive structure. In this article, we take a deep dive into the technical architecture and tokenomics behind SKL and Skale Network.
Elastic DApp Chains
Skale allows DApps to launch customizable smart contract chains that inherit Ethereum’s security while operating with 2,000 TPS throughput per chain. These so-called Elastic DApp Chains, or EDCCs, enable high scalability.
DApp developers can deploy nodes that run their specific EDCC. The Ethereum root chain handles consensus while nodes process transactions and run smart contracts. This sharding approach reduces network congestion on Ethereum.
The Skale consensus mechanism ensures all EDCC transaction data is relayed back to Ethereum mainnet periodically using a deterministic function. This maintains Ethereum’s security guarantees.
Skale utilizes a delegated Proof-of-Stake (DPoS) consensus that is fully decentralized by the SKL token. Validators on the network must stake SKL to participate in block production and governance.
The top 100 validators by SKL stake are selected to operate nodes and validate EDCC blocks. Validators earn inflationary block rewards but can lose stake for misbehavior. This aligns incentives for proper validations.
Additionally, token holders vote on upgrades, treasury allocation, and other governance matters. The SKL token thus powers the consensus, security, and governance of Skale.
Skale implements a unique regional distribution model by requiring a minimum threshold of globally distributed validators for its DPoS consensus. This prevents monopolization by any single jurisdiction.
For example, up to 33 validators can be based in a region like Asia. This ensures decentralized participation and allows Skale to operate as a regulated network compliant across regions.
Developer Tools and SDKs
For developers, Skale offers modifiable dev tools like Besu, Truffle, and OpenZepellin to easily launch and operate EDCCs. The Skale Network also provides monitoring, optimization, monetization modules and its own SKALE.py SDK.
This allows a seamless experience for building scalable DApps using Skale’s decentralized L2 infrastructure.
By delivering modular custom chains anchored to Ethereum, Skale Network unlocks scalability for DApps without compromising composability with Ethereum’s DeFi stack. The SKL token powers this ecosystem via novel tokenomics that balance decentralization and compliance.