The staking derivatives track is about to explode? Which projects deserve attention

In order to protect network security, the PoS public chain will be equipped with a Staking module, and a higher mortgage rate can effectively prevent 51% attacks. At the same time, for long-term currency holders, stable risk-free returns can be obtained, which is a mutually beneficial matter for many parties.

At present, the majority of public chains in the industry use PoS consensus, and most of the latecomers also choose PoS consensus. According to Staking Rewards data, the current total market value of PoS assets is 36 billion U.S. dollars, and Staking assets are 16 billion U.S. dollars, with an average mortgage rate of 43% and an average rate of return of 20%.

Through simple calculations, we can know that the average annual income of the Staking market is 3.2 billion US dollars. If the service provider takes a 10% commission, the average annual income is 320 million US dollars. Coupled with the launch of ETH 2.0, based on the current market value of Ethereum of 53 billion US dollars, a mortgage rate of 30% can double the total amount of Staking assets. The space for staking economy is not small.

Although staking has improved the security of the public chain, users have gained benefits. However, there is generally a time limit for releasing staking, which will make users bear a lot of opportunity costs and market risks.

With the rise of DeFi, while providing users with more high-yield channels, this will appear againDeFi and Staking compete for assetsCase. Low Staking returns will cause tokens to flow to DeFi, reducing network security; too high Staking returns will increase inflation and cause negative impacts in many ways.

At present, many players in the market are exploring solutions to the above problems, both centralized and decentralized.Brother Ou believes that decentralized solutions may be more widely accepted. Specifically, users perform staking through the middle layer, and the middle layer issues certificates corresponding to mortgage assets. The certificates can be traded and circulated in the market while obtaining staking benefits. The more important point is that this process is realized by a decentralized network, because compared to incompatible solutions launched by different organizations, decentralized solutions are likely to be more efficient due to unified standards and decentralization. easily accepted by the market.

The launch of the liquidity solution allows users to maintain liquidity and obtain Staking benefits, and at the same time attract users who do not want to participate in Staking, which will increase the mortgage rate, and then improve network security. The situation where Staking and DeFi compete for assets will no longer occur.

At the same time, more importantly, we need to know where will the liquidity of these Staking assets go after they are released? From the current point of view, there is no other good place to go except DeFi. This will also realize what Brother Qu said in his previous article, that Wanchain belongs to DeFi.

At present, there are 16 billion US dollars of locked-up assets in Staking, and the amount of locked-up assets in Staking through liquidity solutions is expected to continue to rise. Then let's think about it, what impact will these new assets entering the DeFi field have on the existing DeFi ecosystem? We must know that the real lock-up volume of the current DeFi market has just exceeded 10 billion US dollars.

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1. Bifrost

Bifrost is a cross-chain network that provides liquidity for staking. The core of its business logic is that a layer of Bifrost Parachain is added on top of user staking. Users no longer directly staking, but Bifrost Parachain performs it on their behalf.

Before the establishment of Bifrost, the Bifrost team developed products similar to releasing liquidity based on IOST. It can be said that the Bifrost team has historical experience in the development of liquidity releasing products. The products based on Polkadot's cross-chain ecological construction have enhanced its imagination and market space.

Assets staking through Bifrost will generate corresponding vTokens. vTokens have interest-bearing properties, can capture Staking revenue, and can be traded and circulated at the same time. Bifrost has a built-in AMM-type decentralized exchange vTokenSwap, which provides convenient exchange services for vToken and can also directly capture the fee income brought by the transaction. At the same time, because Bifrost has its own EVM submodule, Uniswap, Bancor and other popular DeFi platforms can also be easily ported to Bifrost.

The essence of the liquidity release business is to deposit and withdraw the user's tokens through its own contract to complete the deposit and withdrawal of Staking assets. It is a master switch similar to a valve.Although assets cannot be withdrawn without vToken, the security of the original chain can still be affected by attacking Bifrost. Therefore, the liquidity release business has extremely high requirements for security.

Bifrost made it clear that it will participate in the parachain auction, access the Polkadot mainnet through the parachain, and enjoy the same security as the Polkadot mainnet, which opens up its business limit.

In Polkadot's parachain slot auction, users need to be locked for 6-24 months to participate. Although they can get token rewards from the project side, too long a lock-up period will bring a large opportunity cost to users.One of the typical business scenarios introduced in the Bifrost white paper is to provide liquidity solutions for DOT/KSM participating in slot auctions.

The Polkadot ecological slot auction is very important. It is expected that a large number of DOT/KSM will be locked, and the lock-up period will be long, and participating users will have to bear a large opportunity cost.But with the liquidity solution of slot auction, the pain point of too long lock-up period will no longer exist, which means that users can participate in the auction without thinking, which will increase the enthusiasm of users to participate in slot auction. Brother Ou believes that slot auction Liquidity solutions will be widely welcomed by the Polkadot ecosystem.

A unique method of Bifrost is the ticket market. Validators on the original chain can obtain voting rights through bidding in the ticket market, and the benefits obtained by users are deterministic. For example, if the bidder bids 10% of the annualized income to participate in the auction and obtains the right to vote, no matter how much income the original chain validator has earned, the staking user on Bifrost will receive 10% of the annualized income.

The ticket market will allow Staking users to obtain deterministic returns, as well as possible excess returns (when validating nodes compete for incentives). certainlyUsers can also choose to vote for any node, and users still have the right to choose independently.

It is worth mentioning that Bifrost's risk control module, when the node has a problem and is punished by the system, how to ensure the user's income?

First of all, ticket bidders need to mortgage the Bifrost system token BNC when bidding for ticket rights. This part of the collateral will be used as a penalty in case of problems. This is not only to prevent non-subjective losses, but also to restrain subjective malicious behavior of nodes. .

If the penalty amount is too large and the bidder’s mortgage amount is not enough to pay, it will be deducted from the public insurance fund, which consists of 1-5% of the system Staking revenue; if the insurance fund is still insufficient, the system insurance fund will be used For compensation, the system insurance fund is a system token reserved for compensation, which is 10% of the Ecosystem and accounts for 4.5% of the total BNC.If the penalty reaches a certain percentage of the mortgage amount, it will enter the emergency stop stage.

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2. StaFi

StaFi is a player who has entered this track relatively early. It has been deeply cultivated in the PoS field before, and its popularity in the circle is also very good.

The StaFi protocol is divided into the bottom layer, the contract layer, and the application layer. The bottom layer is an independent chain developed using the same development framework as Polkadot, Substrate, and has been launched on the main network.

The contract layer supports the creation of a variety of Staking contracts (Staking Contract). The assets staked through the Staking contract will generate rTokens, which can be circulated and traded. The application layer supports the creation of various markets based on rToken, such as transactions, lending, etc.

The Staking contract is referred to as SC for short, and users can obtain the corresponding rToken by using the SC contract for Staking.rToken is the only certificate for users to retrieve Staking assets, and can capture the income generated by Staking. Simply put, rToken is an interest-earning asset that represents the original assets of its public chain. Holding rToken can automatically obtain Staking income.

Users use the SC contract to participate in Staking, which is basically the same as normal Staking, except that there is an additional intermediate layer, that is, the behavior of Staking is completed through the SC contract agent. Of course, important actions require user signatures, and asset redemption must also be held rToken can be realized.

As mentioned above, the StaFi main network has been launched, but we know that the Polkadot main network cannot be accessed yet, so StaFi is an independent public chain like Darwin and Chainx, which have already launched the main network in the current Polkadot ecosystem. Independent public chain means The security is guaranteed by its own verification nodes. If you want to access the Polkadot network, you need to wait for the auction slot to access the Polkadot mainnet through the mainnet migration. However, there is no news about the parachain auction from StaFi for the time being, and there is no token distribution. See the shares reserved for parachain auctions.

StaFi uses its own validator system to maintain the normal operation of the main network, but for the security of the SC contract, StaFi also has a dedicated SC node system, the main user performs multi-signature, and through multi-signature to ensure the security of the user's Staking assets .

SC nodes are selected from the verification nodes of the main network. Compared with mainnet nodes, SC nodes have higher requirements, such as mortgage more FIS tokens (Stafi system tokens), and the amount of mortgaged assets is positively correlated with the amount of assets that can be processed. At the same time, StaFi uses various mechanisms such as threshold signatures, secure multi-party computation, random selection, and periodic rotation to ensure the security of the SC system.

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3. Acala

Brother Acala has written it many times, and he is quite familiar with its architecture. Acala has multiple business segments such as stable currency generation, DEX, and liquidity solutions. Among them, the liquidity release is to provide liquidity release services for Staking's DOT and KSM, and the corresponding tokens generated by it are LDOT/LKSM.

For Acala, the liquidity release business is not an open business, which means that it will not serve the entire PoS ecosystem like StaFi and Bifrost, but only serve the Polkadot ecosystem. It is confirmed that Acala currently only intends to do the liquidity release business of DOT and KSM.

But for slot bidding, Acala will also do it, and it will be open to the entire Polkadot ecosystem, which will form a certain competition with Bifrost.

For more information about Acala, please clickFour. Summary。

Four. Summary

The liquidity release track market is vast, and it is a market with real demand. At present, this track is still in its infancy, and Brother Qu will continue to pay attention to it. The following is a brief summary.

Bifrost will access Polkadot in the form of a parallel chain to obtain the same security as the Polkadot mainnet, which will increase its business ceiling. At the same time, innovations have been made in the basic gameplay, and multiple guarantee mechanisms have been set up in risk control. In the early stage of the business scenario, it is mainly to provide liquidity solutions for Polkadot parachain auctions. In the later stage, liquidity solutions may be provided for the entire PoS ecosystem to introduce high-quality assets into the Polkadot ecosystem.

StaFi is currently on the main network and exists in the form of an independent public chain. StaFi recently released the ETH 2.0 Staking liquidity solution and the rBridge beta version of the Ethereum cross-chain bridge. From the perspective of StaFi's actions, it may want more ecological development.

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1、Disclaimer: This article is the author's independent opinion, does not represent the position of the Blockchain Institute (public account), and does not constitute any investment opinion or suggestion.

2、"How to quickly understand the fiery Polkadot? This Getting Started Guide is Worth Bookmarking »

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Disclaimer: This article is the author's independent opinion, does not represent the position of the Blockchain Institute (public account), and does not constitute any investment opinion or suggestion.