StaFi: DeFi protocol that unlocks liquidity of staked assets
StaFi — Staking Finance in Polkadot network
StaFi (Staking Finance) is a DeFi protocol that will unlock the liquidity of staked finances. StaFi will use its rToken as a hedge against the volatility of the market. There is also a FIS token, which will be used for paying transaction fees and provides value for the liquidity of rToken.
Stafi will use Frontier, which is a DeFi aggregation solution integrating different wallets together, to help with the adoption of Stafi. This will boost the liquidity of wrapped tokens like wALGO or wADA (wrapped ALGO and wrapped ADA) and encourage more people to stake and support the aforementioned networks in different manners.
Liquid staking
Let’s first look at what Liquid staking is. In PoS blockchains, you might bond your tokens to secure the network and receive a reward for it. This is called staking, but it has some inconveniences —first of all, there is (almost) always an unbonding period that tells how soon you can manipulate your tokens after you cancel the staking. For example, it takes 7 days on Kusama and it’s even 28 on Polkadot.
And the main disadvantage in my opinion is, that you can’t handle your tokens when they are staked. Wait…what I’ve just said? Disadvantage? Well… it shouldn’t be possible to handle tokens while they are staked, or not, you might ask?! Sure, you can, with liquid staking.
With liquid staking, you can enjoy both rewards from staking and DeFi applications, such as lending or providing liquidity to some pool. You simply don’t need to decide if you want to get a reward by staking PoS coins or lend them in some DeFi system — you can now have both at one time! And the best thing for the underlying protocol is that in comparison to the classic way of lending or liquidity providing, you don’t endanger the security of that particular protocol. So, it's kind of a win-win situation.
How StaFi works
StaFi protocol is based on Substrate and uses, similarly to Polkadot, Nominated Proof-of-stake (NPoS) to conclude consensus within the network.
StaFi is the first DeFi protocol, that lets PoS users stake their token through their StaFi’s Staking Contracts for what the users of StaFi will receive in return rTokens (reward-Tokens). So not just the user will earn the original staking reward, but can use those rTokens for trading on different DEXes end CEXes.
rBridge
rBridge is a cross-chain bridge that links StaFi mainnet assets such as FIS token or rToken and Ethereum with its ERC-standard tokens (and even other blockchains like Cosmos or Tezos). FIS token can be easily bridged into ERC20 token-FIS at a 1:1 rate which enables transfers, lending, and other DeFi applications in Ethereum network like Uniswap.
Tokens
FIS
The native token of StaFi Chain is FIS, which has 3 major usecases:
- Staking: FIS tokens provide network security by staking in NPoS
- Tx fees: FIS is used as a gas for paying transaction fees on the StaFi chain
- On-chain governance: FIS holders can participate in the StaFi governance
- rTokens control: FIS is used to mint and redeems rTokens
The initial issuance of FIS is 100 million with additional inflation.
rToken
This is the liquid staking improvement. For your Token, you get rToken (reward Token), which is used for rewarding users, while they stake their original PoS tokens on StaFi. Let’s say you will have ADA and XTZ tokens — while using StaFi, you will get rADA and rXTZ tokens as a reward (1:1 amount), that you would normally get for staking (in ADA or XTZ). Instantly you can then trade your rADA and rXTZ tokens, or lend those on some DeFi application.
Usecases of rToken:
- Staking rewards distribution — rToken holders receive the staking rewards 1:1 to the original token
- Trading — rTokens can be traded on StaFi, besides that, it will be enabled on CEXes and DEXes as well
- Lending — rTokens will be possible to lock on lending platforms to borrow ETH or USDT
- Derivates — StaFi will try to enable using rTokens on derivatives protocols like Opyn or Hegic, that could use options to hedge from the secondary market price fluctuation
- Insurance — exploring of providing insurance services for rToken original validators, that might insure the loss from slashing validator deposits
- Redemption of the Staking Token — only rToken holder can unlock the original token
Protocol Treasury
StaFi has its own Protocol Treasury, which serves for the sustainable further development. It motivates developers for the additional contribution to the network. Protocol Treasury subjects to the on-chain governance — developers initiate proposals, for what is then voted within the network. The contribution can be developing new rToken derivates, new staking contracts, etc.
rETH Solution
Another great improvement for staking in the Ethereum network! It will enable anyone on participating in Ethereum 2.0 staking, but without a limit of 32 ETH as a minimum stake. rETH by StaFi needs just 0,01 ETH to start participating in Ethereum 2.0 network. Besides that, stakers don’t need to run Ethereum 2.0 validator nodes which also increases the number of participants of the ETH staking.
Conclusion
Liquid staking on StaFi brings security and value benefits both to users and the underlying protocol. You don’t need to ask yourself anymore if you want to earn extra tokens from staking or DeFi. Just use StaFi and benefit from both by using the rToken app!
The Polkadot ecosystem is a coopetitive space. From now on, you can take advantage of all the bridged networks such as Ethereum, Cosmos, EOS, Algorand, Cardano, Tron, Tezos, and many others. Not just from Polkadot!
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