Binding to the concept of ETH 2.0, LiquidStake launched today integrates liquidity release + lending

As the footsteps of ETH 2.0 are approaching, related concepts have recently become market hotspots.

Since the network transfer function will not be developed until Phase 2, users who participated in the ETH 2.0 pledge early will not be able to unstake freely, and the principal will be locked for a long time within one to two years after the birth of the genesis block.

In order to solve the problem of liquidity release, the following have emerged in the early marketRocket Poolsecondary title

new ideas 

On November 12, DARMA Capital, an encrypted asset investment company founded by former ConsenSys executives Andrew Keys and James Slazas, announced the launch of LiquidStake, a new platform for the ETH 2.0 pledge scenario.

As the name suggests, the main concepts of LiquidStake are "Stake" and "Liquid". Joseph Lubin, co-founder of Ethereum and founder of ConsenSys, tweeted in support of the project today, saying: "LiquidStake provides an ideal solution for ETH holders to maintain liquidity while earning staking income."

LiquidStake allows users to entrust an unlimited amount of ETH to themselves, then split all assets into units of 32 ETH, and participate in ETH 2.0 pledge through cooperation with companies such as ConsenSys. The ETH entrusted to LiquidStake by the user can be used as collateral to lend freely tradable USDC.

According to its operating mode, we define it as aAn over-collateralized lending platform that can maintain partial asset liquidity while participating in ETH 2.0 pledges。

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LiquidStake vs Rocket Pool

look firstAdvantages of Rocket Pool：

• Liquid release ability

Both LiquidStake and Rocket Pool want to solve the liquidity release of ETH 2.0 pledged assets, but LiquidStake adopts an over-collateralized model, that is, users can only lend USDC that is lower than the value of the mortgaged assets (the current coefficient is 50%), while Rocket Pool's solution can release almost 100% liquidity.

• Security Risk

Since the pledged ETH cannot be unlocked until the network enters phase 2, the platform needs to survive until the network transfer function is opened, and security will be a long-term test. On the other hand, although Rocket Pool also faces contract security issues, users can end the pledge early by selling derivative tokens.

• liquidation problem

As mentioned above, LiquidStake is still essentially a lending platform, so it is bound to face the risk of liquidation. If the price of mortgage assets (ETH) drops sharply, the platform will issue a risk notice on the specified price level, requiring users to replenish margin; if the price of mortgage assets continues to fall, the platform will automatically perform liquidation. On the other hand, users of Rocket Pool can choose to sell derivative tokens directly when the tokens plummet.

Sounds like you're at a disadvantage across the board? now let's look againAdvantages of LiquidStake：

• Transaction Scenario Questions

Currently, the biggest problem facing solutions like Rocket Pool is the lack of usage scenarios for derivative tokens. It is expected that with the official launch of ETH 2.0, a large number of similar schemes will appear in the market. How to land on mainstream exchanges or be adopted by other projects will be a common problem facing these derivative tokens. On the contrary, the currency that LiquidStake lends is USDC, so there is no need to worry about scenario issues.

In addition, the staking rate of return of ETH 2.0 will decrease with the increase of the total amount of pledged assets in the entire network, that is, "stake early and get early". LiquidStake has now launched a registration window, and users can deposit ETH before the 2.0 network is launched. Start earning immediately. Although Rocket Pool and other schemes can theoretically start staking at the beginning of the network launch, due to concerns about later transaction scenarios, users need to horizontally compare which derivative token has a wider usage scenario, which is relatively easy Lose the opportunity.

• The Value of Overborrowing

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A centralized lending platform that supports ETH 2.0 pledge

To sum up, although LiquidStake and Rocket Pool share the same concept, they are essentially products in two different directions. Although LiquidStake has been vigorously promoting the release of the liquidity of pledged assets from the beginning to the end, in fact,The platform is more like a BlockFi or Celsius that supports ETH 2.0 staking。 

Compared with general centralized encrypted lending platforms, the ETH 2.0 pledge service introduced by LiquidStake can indeed provide users with additional benefits, but whether they can quickly acquire customers in the competition still needs to consider brand background, loanable currency, mortgage rate, etc. Many questions.

At present, LiquidStake already has sufficient brand endorsement. The platform has received the support of ConsenSys, Protocol Labs, Bison Trails, Figment, OpenLaw and many other well-known companies in the industry.

However, the current use of LiquidStake can only lend up to 50% of the total value of mortgage assets in USDC (mortgage rate of 200%), and this ratio does not seem attractive enough. Considering that the loan cycle of using LiquidStake in the early stage will be quite long (the settlement can only be made after the network transfer is opened), hastily lowering the mortgage rate will increase the risk of liquidation on the platform, and how to set specific parameters will be a big problem for the LiquidStake team.