How StaFi Protocol Uses Liquid Staking To Attract More People To DeFi
PoS chains have grown in their numbers. Yet, this hasn’t helped the patronage of these blockchains — people are wary of them. What’s with the lengthy unstaking time?
Proof-of-Stake (PoS) chains are seen as disruptors of the status quo. Unlike blockchains that rely on a Proof of Work (PoW), environmentalists love PoS chains. However, it’s not all rosy for these blockchains with a PoS consensus.
Blockchains relying on the PoS consensus have lost their appeal for a few reasons. The time it takes to unstake — 21 days — is unattractive for many. Also, rewards depend on the Validators used. Many stakers get short-changed due to the activities of these verifiers.
The DeFi Situation
It wasn’t so long ago when DeFi protocols were the toast of crypto space. TVLs kept increasing, and every man and his dog were enthusiastic about the future of the disruptive technology.
However, that enthusiasm has dropped since then. DeFi no longer enjoys the spotlight as much as it should. Mainstream adoption hasn’t taken place despite the initial hype. Things need to change, else DeFi becomes the bubble the naysayers warned us about.
StaFi, A Likely Solution
Staking Finance (StaFi) Protocol has gone on a rescue mission for PoS chains, liberating these blockchains from the stranglehold of illiquidity.
By staking your assets through the StaFi protocol, you worry less about the long unbonding time — a big relief for those staking PoS chains. StaFi gets around this through its growing supply of synthetic staking derivatives, rTokens. Anyone staking through the StaFi protocol gets rTokens worth the actual asset staked. The staking derivatives can be traded easily, eliminating the extended unstaking period.
By allowing asset holders an easy way out of their staking quagmire — through the option of a quick sale of staking derivatives — StaFi encourages more people to stake assets on PoS chains. This makes Staking Finance Protocol a likely savior of PoS chains.
StaFi’s messianic approach for PoS chains doesn’t stop at the quick sales of rTokens. Staking rewards are also better through StaFi protocol. The staking contract identifies the Validators with the best rewards, ensuring users get more rewards than they would do if they went solo.
Beyond putting PoS chains out of their misery, StaFi gets DeFi protocols some much-needed traction. Total value locked (TVL) can hit the roof if liquid staking gets the green light from these projects. rTokens weren’t meant only for trading. StaFi is creating massive utilities for these staking derivatives. Currently, they can be used as collateral for loans on Liqee, a DeFi lending platform.
rTokens holders have also enjoyed fair launch liquidity mining programs; the recent WraFi mining comes to mind. For rETH holders, they earn mouthwatering rewards on several DeFi protocols, including Curve.
Once StaFi opens its rToken multiverse to more PoS chains, the focus will shift towards making these synthetic derivatives useful to the De-Fi space. Considering staking derivatives aren’t so different from wrapped tokens (and we all value those), it’s only a matter of time before interest-bearing tokens become a popular sight on DeFi protocols.
With staking derivatives making their way into the DeFi ecosystem, TVL should get a major boost. Just like people are driven by what they see, TVL is a major benchmark for identifying worthy DeFi protocols, so these dapps will have their day, albeit much sooner than they envisaged.
DeFi and PoS chains can become the destination of the average crypto investor. StaFi — through its rToken multiverse — can make such a lofty dream a reality. It’s a marathon towards making De-Fi mainstream, and StaFi is leading the charge.