Staking Finance (StaFi)-Unlocking Liquidity of Staked Assets with rETH and rTokens.
The advent of crytocurrency and blockchain unlocked a portal to several innovations, and within a decade we have seen the creation of thousands of blockchain-based applications for different purposes. In recent times, decentralized finance (DeFi) has become more than just a buzz word, as it has become one of the amazing breakthroughs of the blockchain technology that allows users enjoy more decentralized financial services that are barely available with traditional financial services.
Some years ago, it may have been difficult to envisage a period when crypto investors would have access to the liquidity attached to assets that were staked for investment. In order to bridge that gap between staked assets and liquidity, the StaFi Protocol was designed as the ideal solution.
What is StaFi?
Staking Finance (StaFi) is a protocol that was created as a link between staked assets and liquidity. With StaFi, the holders of the tokens will have them staked with the aid of smart contracts that are specifically implemented on the StaFi framework, and in return get an alt token referred to as rTokens which can be traded.
The functionality of the StaFi protocol is a function of the independent workings of its three layers:
- Application Layer
This layer enables the support for 3rd party API. It can be implemented to aid the creation of a market that allows for the trading of rTokens, transferred or circulated via the StaFi framework.
- Contract Layer
This was created to support the creation of different staking-related contracts needed for various assets like DOT, ATOM, and XTZ. Ordinary stakes can obtain incentives that come from inflation which make up the staking contract that is used by token holders for staking.
- Bottom Layer
This layer uses a Substrate-based blockchain process that has a Parity-based structure. The bottom layer functions as an integrator of multiple modules for staking, P2P, and consensus operations.
Release Plans till December 2020
A lot has happened with StaFi since inception, and the team has been working real hard to ensure that the protocol performs better than was envisaged. It may interest you to know that they have been able to achieve most of what they set out to achieve according to the contents of their roadmap. At the moment, we are at the fourth quarter of the roadmap, and this is characterized by two major goals:
We are well aware of the fact that the major underlying technology for most DeFi protocols is the Ethereum blockchain. However, to extend the limits of the ecosystem, there is the need to have rTokens in their ERC-20 forms. This will be achieved by building an ERC-20 bridge that will provide two major solutions:
- It will facilitate the conversion into ERC20-based rToken from substrate-based rToken.
- ERC-20 FIS conversion from FIS that is substrate-based.
When the conversion is done, it becomes possible for rTokens and FIS to get traded on decentralized exchanges like balancer and UNISWAP among others. The creation of the ERC-20 bridge involves the following:
- Developmental stage (smart contract, bridge logic, and pallet module)
- Testing stage (documentation, code, security, performance, and function)
- Audit of codes
- Launch preparation
The ‘r’ in ‘rToken’ stands for reward. When PoS tokens are staked by the token holders, they get rewarded with its equivalent in rTokens. The token makes it possible for the holders to get liquidity and rewards whenever rTokens are traded. Furthermore, it also gives the token holders the right to have their tokens redeemed whenever they want.
As part of their plans to provide a StaFi with seamless functions and possibilities, the StaFi team has a plan to implement different rToken types:
- POS rTokens
- CosmosSDK rTokens
- Substrate rTokens
- ERC-20 rTokens
The rFIS will get issued first, and this will take place at the end of November. Subsequently, tests will begin for rKSM and rDot, and since both of them have the Substrate framework in common, it is expected that integrating them will be expedited. The major stages involved in the development of the rToken include:
- Development (functionality of the rFIS protocol)
- Documentations and testing
- Audit and launch
- Level 2 of StakingDrop
- Finishing touches to integration designs
- Outlining the specific solutions to possible problems of the different modules
- Test of the important processes off-chain.
- Development of rKSM and rDOT
FIS refers to the token that drives the StaFis protocol, and it is used to provide the framework’s security and functionality. It can be used for payment of transaction fees, as well as for staking, minting, and to have rTokens redeemed.
The plan is to make rToken available on both decentralized exchanges (DEX) and centralized exchange (CEX). For instance DOT’s trading pairs rDOT/USDT and rDOT/DOT will be implemented to allow for staking liquidity.
The StaFi protocol is revolutionary and different Point of Stake projects are interested in becoming a part of the StaFi integrations. However, the partnerships with these PoS projects are targeted at accepting rToken and its related products like researches, listings and integrations. The company intends to expand in the near future and get involved with notable DeFi companies like Lending, Dex, Oracle, etc. The StaFi team is positive that there will be some good news soon, as they are currently in talks with the teams of the tier DeFi service providers.
Other future plans include the research and development of an upgraded staking mechanism that will facilitate the development of rETH. There will be a release of the rETH whitepaper and also the whitepaper of rToken version 2. The company also intends to present new StaFi ambassadors through its warrior program, and it is expected that it would contribute immensely to the expansion of the protocol.
It is interesting to see the huge development that has come on since the Proof of Stake (PoS) algorithm was introduced to the crypto community, and its rapid adoption over Proof of Work (PoW) is an indication that the PoS has more advantages, and with StaFi, token holders can enjoy liquidity on staked tokens.