Stafi unleashes the potential of DeFi by bringing liquidity to the PoS token economy
Proof of Stake (PoS) within the crypto economy was originally proposed as an alternative consensus mechanism to the original hashpower-dependent Proof of Work (PoW). Committing owned and deposited tokens through staking makes sense, as a way to effectively align incentives and secure the network from double-spending and tampering. But as adoption of PoS has grown, so to has the value of the assets locked up within the staking environment, to over $9bn — creating its own difficulties, not least of which is the opportunity cost associated with those staked assets. In volatile markets the real cost of leaving tokens locked in staking agreements over prolonged periods is difficult to predict, which escalates risk for the stakers involved.
Stafi (short for ‘Staking Finance’) brings liquidity to those staked assets by unlocking their value, in the form of rTokens, through its unique protocol — rTokens are Substrate minted at a 1:1 ratio with the staked asset, on the Stafi chain, and are redeemable at any time. This means that stakers can enjoy the profitability of trading analogous rTokens, while their cryptoasset secures their network of choice and earns investment yields as a result: win-win. In fact, we can describe this as a win-win-win, because the non-staking users of the cryptoassets and the broader DeFi ecosystem also benefit from the network effects thus inspired. No longer will token holders be forced into a zero-sum choice between participating in staking and in DeFi projects (like lending, which can now be collateralized with rTokens).
This unique mechanism democratizes PoS, in a similar way to the existence of mining pools in PoW. As the market grows the entry cost tends to escalate, excluding those who cannot afford to tie up huge commitments of assets in staking — such as 1000 DASH to own a Masternode. Everyday retail investors have not been able to balance risk and reward in scenarios like this, which undermines the very principle of DeFi — by allowing control and decision-making to accumulate in fewer and fewer hands. Arguably, this also runs counter to the original cypherpunk vision of the Bitcoin whitepaper and the earliest cryptocurrency ideals.
But by unleashing the power and liquidity of staked assets through rTokens, the Stafi project enables far more creative applications of staking than simply as a service in its own right.
Once the staked assets are tokenized they can be traded on centralized or decentralized exchanges in their own right, creating a new derivatives market — bringing deeper sophistication to DeFi as a movement, and truly embracing the power of programmable value, in ways which have not yet been realized with in the marketplace. rTokens can also be staked to provide varied operational activities in networks, such as streaming, data encryption and collection.
In practical terms liquidity is also served by frictionless UX, and this is facilitated by Stafi’s recently announced integration with Frontier. A chain-agnostic DeFi aggregator solution — making it even easier for users to obtain rTokens, as they can connect mobile wallets such as Trust Wallet, Coinbase Wallet, ImToken, Metamask and FortMatic with Frontier and access Stafi’s staking contracts on mobile phone.
Frontier makes it possible for users to connect their preferred mobile wallets to its interface via its wallet composability feature.
This exciting partnership will enrich the diversity and quantity of assets flowing into the DeFi space, helping the new alternative economy transcend its origins at a time when the world has never needed it more urgently: while the fiat ‘CeFi’ paradigm attempts to prop up sovereign currencies via unprecedented money printing and magical thinking, the real value of secure, decentralized, and transparent smart-contract driven trading becomes ever more important and attractive to new market entrants.
As the world stands on the brink of traditional economic collapse, the future will demand the clarity and accountability only DeFi can bring — and the Stafi protocol is the catalyst to unleash its real power at the moment when it is most required.