In Phase 0 of the staking implementation, seed node operators will have to deposit funds in a smart contract by transferring the tokens to the contract.
A seed node operator that does not have the minimum number of $ZILs to stake may open up this service to other token holders who may not have the right expertise to run a seed node themselves. This is often referred to as delegated staking
. In Phase 0, the way in which the custody of delegated tokens is handled is left to the seed node operators.
We are however working on several improvements that we plan to implement in the next phases. For instance, one possible improvement would be to not require seed node operators or token holders to transfer funds but instead lock those funds at the core protocol level, i.e., funds do not move but only stay locked. This will require handling the entire staking architecture at the protocol-level, which, due to its intrusive nature, can be handled in the next phases based on the success of Phase 0.
Another idea that is not intrusive to the core protocol and yet presents a safer and more useful alternative to simple token locking for delegated staking would be to implement bonded stakes
. Bonded stakes allow a token holder to delegate her stake (by transferring the tokens to a seed node operator), to receive wZILs (a wrapped version of ZILs) in return. wZILs however come with usage restrictions in the sense that the moment a token holder redeems wZILs for actual ZILs, she loses her stake. However, she can use wZILs in other applications such as a DeFi DApp that requires collateral.