When staking emerged on the DeFi horizon, it immediately caught the wave of enthusiasm from supporters of the industry. Paving the way to mass transformation of how income is generated and distributed, staking was the first solution of its kind converting passive income into active gain: by locking assets for a defined period of time (known as lockup period), users could hope to achieve interest rewards compensating the effort of extended expectation. However, with the flow of time, staking proved itself not as straightforward as it initially seemed: few scandalous stories (with prominent rug pulls like SushiSwap) have shaken up the authority of this prolific niche, implying that more action had to be taken to safeguard the security of the operation. Now, even though the field made a few significant advancements in terms of risk mitigation, it pertains clear that the mechanics of liquidity protocols are open to further enhancement.
Traditionally, the lockup period has been the time best characterized by the inactivity of the asset. Staking implied a temporary limitation on managing the resource until the locking period is expired and the asset is ready to be disposed again. However, the cost of missing out on opportunities foregone does not get explicitly emphasized in this case: up to the present, this issue is largely missed from sight. Staking Finance (or StaFi, shortly) is among the first to bring this challenge to the public’s eye: by coming up with a multi-chain solution based on Polkadot, StaFi aims to create a space that does not impede users from utilizing the multiplicity of asset management options while keeping the assets in-lock. The crucial role in this task falls to synthesized asset alternative dubbed “rToken” – a token replacement issued in exchange for the original asset locked on StaFi smart contract; as soon as it’s obtained by a holder, rToken can further be leveraged upon one’s own discretion. As a multi-chain solution, StaFi supports the whole variety of currency options and includes, but is not limited to, rETH, rDOT and rATOM; on top of that, rDEX creates a valuable addition that supports the decentralized trading of rTokens. The revolutionary scope of StaFi proposition already garnered the attention of prominent players in the field, including Binance, Curve and Yearn.finance. In the nearest future, it may happen that liquid staking takes up an entirely new development phase, wherein StaFi sets at defiance existing industry practices and fuels the industry potential with multi-purpose staking, altogether unlocking the scale and expanding performance of DeFi.
Intrigued to find out more, we reached out to StaFi CEO Liam Young in order to discuss the questions consuming top minds in the industry.
What inspired you to rival the existing staking standards through StaFi?
We have been providing Staking Service since 2018. At that time, many of our customers do not really understand what Staking is or what PoS is. More are attracted by inflationary benefits. Then we put a lot of effort into generalizing our ideas, such as holding lectures, to familiarize users with Staking. But we realized no matter how we convey our ideas to them, many still couldn’t understand why the lock period of Staking is that long in PoS public chains. In our mind, more blockchains will adopt PoS consensus in the future, so that is an issue that must be tackled. Why don’t we design a product that helps users with that? That was our Eureka moment.
Why is StaFi a revolutionary proposition?
StaFi is the first DeFi protocol unlocking liquidity of staked assets. Users can stake PoS tokens through StaFi and receive rTokens in return, which are available for trading, while still earning staking rewards.
StaFi has provided liquid staking solutions for 8 PoS projects, including Ethereum (ETH), Binance (BNB), Polkadot (DOT), Kusama (KSM), Cosmos (ATOM), Matic Network (MATIC), Solana (SOL), and the native StaFI token (FIS). A couple of months ago, the TVL of StaFi has reached above 100million USDT. Now StaFi’s total locked value(TVL) reached about 53 million $USDT at the moment due to the secondary market’s influence.
StaFi now has built a fast-growing ecosystem for these staking derivatives, which we call rTokens.This ecosystem has included: 1) the third-party integrations, like Curve, Yearn and imToken; 2) DeFi DApps on StaFi chain, like the Exchange-Rate Discounting (ERD) solution called rSwap, and decentralized trading platform rDEX.
Who would be interested to adopt this innovation in the first place?
It’s the PoS token long-term holders who are willing to stake their holdings to earn long-term stable staking rewards, including loyal community members, the whales, core team members, foundation treasury and VCs.
They will try to put their long-term holdings into StaFi and enjoy the liquidity while still earning staking rewards.
Please tell me more about the mechanics of the system.
In simple terms, StaFi is a DeFi protocol unlocking liquidity of staked assets. Users can stake PoS tokens through StaFi and receive rTokens issued on StaFi chain in return, available for trading while still earning staking rewards.
The easiest way to understand this is via an example: If a user stakes 1 DOT (Polkadot), he will obtain rDOT (reward DOT) that is equivalent to the original token. rDOT represents regular yields of tokens and the ownership of DOT on the original chain. At the same time, rDOT can be traded on the bonded assets market based on the StaFi protocol. Different to DOT that is staked and locked on the original chain, tradable rDOT has no lock period, but still keeps generating returns. Thus, holders of rDOT can avoid the risk of volatility.
Synthetic token – what is it, and what are its most notable use cases within StaFi?
In StaFi, this synthetic token is called rToken, like rETH, rBNB. rToken is short for reward-Token.
Users can stake PoS tokens through StaFi and receive rTokens in return, which are available for trading, while still earning staking rewards. rToken is a synthetic staking derivative issued by StaFi to users when users stake PoS tokens through StaFi rToken App. rTokens are anchored to the PoS tokens staked by users and the corresponding staking rewards. rTokens can be transferred and traded at any time.
rToken allows users to receive staking rewards and access liquidity any time by trading rTokens directly. Users also have the right to redeem the corresponding amount of staked tokens at any time.
I’m interested to hear more about rDEX. What is its role within the StaFi system?
rDEX is an AMM DEX based on the Continuous Liquidity Model and has officially launched on the mainnet after the completion of testnet Bug Bounty and PeckShield security audit. As a project under the StaFi Ecosystem, rDEX directly supports the trading of all the rTokens issued by StaFi, thus enhancing the rToken liquidity for users.
Specifically, rDEX now supports the following trading pairs on StaFi chain: rFIS/FIS, rETH/FIS, rDOT/FIS, rATOM/FIS, rBNB/FIS, rSOL/FIS, rMATIC/FIS.
rDEX has three key features including: Continuous Liquidity, Lower Slippages and Asymmetrical Deposits. rDEX is an AMM (Automated Market Maker) DEX to provide continuous liquidity for rTokens by utilizing Thorchain’s CLP market maker model. At the same time, rDEX ensures low slippage for small and medium-sized transactions by using a fee model based on slippage. Unlike the majority of cryptocurrency liquidity pools, rDEX users may provide liquidity by depositing either one or two tokens asymmetrically.
What exactly is StaFiHub, and how does it work?
In the booming Cosmos ECO ecosystem, multiple vertical chains based on Cosmos SDK have emerged. StaFi team proposes to build a parallel chain called StaFiHub based on the Cosmos SDK, in order to serve the Staking Derivatives of Cosmos ECO. StaFiHub will be an important part of the expansion of the StaFi rToken ecosystem to theCosmos ECO.
The features of StaFiHub are:
1) The chain function will be based on the Cosmos SDK that is similar to that of TerraChain, Osmosis Chain, and Sifchain. However, the validator system will not be open when the mainnet is launched and will be nominated by the StaFi Foundation.
2) It will be an application chain serving the Cosmos Eco Staking Derivatives.
3) The IBC cross-chain protocol will be supported. The token assets of the Cosmos ecosystem can be cross-chained to StaFiHub through the IBC protocol, and the rToken assets on the StaFiHub can all circulate in the Cosmos ecosystem through the IBC protocol.
4) Cosmos ECO tokens can directly mint out StaFiHub-based staking derivatives using the Keplr wallet and the corresponding PoS Token.
5) The StaFi team will build a cross-chain bridge between StaFi Chain and StaFiHub to support the exchange of rTokens between the two chains.
6) General Liquid Staking Solutions for Cosmos SDK Projects will be opened to the community to encourage the Cosmos ECO community to develop staking derivatives.
Generally, can StaFi be said to open a new phase in decentralized asset management?
Yes, through StaFi lots of community members or capitals could manage their long-term holdings with a great liquidity. For example, Alice is a long-term investor of ATOM tokens, and she would like to hold for more than 2 years.
Maybe she could stake it directly in the Binance Chain to earn the staking rewards, but when she need some liquidity for the short-term, she has to bear the 21 days unbonding period.
Now she could choose StaFi to stake the ATOM tokens to earn the same and even higher staking rewards, while still enjoying the liquidity through rATOM tokens. And the rATOM tokens could be traded against ATOMs or stable coins at any time she wants. And rATOMs could be used to provide the liquidity for rATOM and ATOM trading pool, which will help she earn the liquidity provider fees and corresponding liquidity farming rewards.
In summary, with StaFi, long-term holders, even short-term holders could earn more rewards and liquidity than the normal staking.
What are your future plans with regard to 2022?
We have a lot of things planned for 2022. In Q2, we plan to release our StaFiHub mainnet and the liquid staking SDK services to build a fully open platform for Cosmos Ecosystem. This is very important because with the StaFiHub and the liquid staking SDK, we can do much more.
For example, we can quickly and efficiently serve all Cosmos ecosystems (which consists of over 40 Cosmos SDK Projects) and provide them with a Liquid Staking Solution. We can also Promote Adoption with a more friendly user experience for Cosmos ecological users while enriching the ecosystem of StaFi’s rToken.
StaFi is the first DeFi protocol unlocking liquidity of staked assets. Users can stake PoS tokens through StaFi and receive rTokens in return, which are available for trading, while still earning staking rewards. rToken is a synthetic staking derivative issued by StaFi to users when users stake PoS tokens through StaFi rToken App . rTokens are anchored to the PoS tokens staked by users and the corresponding staking rewards. rTokens can be transferred and traded at any time.
rDEX is an AMM DEX developed by StaFi that seeks to solve the liquidity problems associated with rTokens, the staking derivatives issued by StaFi. It will provide decentralized transaction services for rToken users with the key features including Continuous Liquidity, Lower Slippage and Asymmetrical Deposit.