Adaora Anders
3 min readSep 21, 2021

StaFi Protocol’s Staking Derivatives: A Lasting Solution To The illiquidity Of Proof of Stake Blockchains

Ethereum’s first-mover advantage has made the blockchain the preferred destination for DeFi protocols. Typical of any setup that enjoys heavy favoritism and gives back complacency, Ethereum has become rigid with its expensive gas fees, making that blockchain the playground of whales.

As always, when a competitor falters, others rise to the challenge. This is precisely the case for Proof-of-Stake blockchains that have risen in their numbers, hoping to offer De-Fi protocols an alternative with cheaper fees and faster transactions.

Unfortunately, these ‘ETH killers’ as they are often nicknamed have failed woefully in upstaging Ethereum as the go-to blockchain. Perhaps the practice of locking liquidity to protect the blockchain has backfired against these PoS chains since it results in illiquidity in the system, rendering DeFi protocols — known to depend on liquidity — redundant.

Interestingly, the trapped liquidity isn’t the only damage as the long unlocking period — acting as the final nail in the coffin of these blockchains — puts off interested stakers.

Staking Derivatives As the Solution

Staked assets on PoS chains have caused illiquidity for DeFi protocols, making these blockchains unattractive for these disruptive enterprising hubs. Just like the problem of a liquidity clog has been identified, a solution is in the offing. Staking derivatives are seen as the panacea to these problems.

In staking derivatives, PoS chains have themselves the key to a prosperous future. Through these derivatives, stakers can rest easy knowing they don’t have to worry about the lengthy unstaking timeline that makes PoS chains unattractive.

Derivatives aren’t exactly new; they have been around for some time. For instance, lending derivatives are given to lenders in place of assets lent to the lending protocol. So it’s strange that PoS chains are glaringly late to the party. However, it’s better late than never, so it’s great to see StaFi (Staking Finance) Protocol push for PoS chains to leverage staking derivatives in making these blockchains a true haven for DeFi protocols.

How Staking Derivative Came Up Top

A PoS chain is only functional if certain entities that make up its ecosystem are happy. Validators and stakers are some of the most valued entities in a PoS chain. And the reasons are simple: validators keep the blockchain running through transaction verifications while stakers deposit assets that help secure the blockchain.

With the roles of both entities properly defined, the desires of these parties drive their performance in these roles. Through staking derivatives, validators can work efficiently without waiting days for remuneration. Stakers also find staking derivatives handy as these tokens eliminate the unstaking waiting time, making it easier to cash in profit whenever it happens without the need to learn the nuances of unstaking.

StaFi Protocol Delivers

The impact of staking derivatives on PoS chains is clear. Yet, creating these synthetic derivatives can be complicated. StaFi rescues PoS chains from a dicey situation through its rToken, a staking derivative given to stakers when they deposit their assets through StaFi’s rAPP.

StaFi Protocol, a DeFi project built on Substrate, has the sole purpose of unlocking the liquidity trapped on mainstream blockchains. The protocol achieves this by issuing staking derivatives, rToken to anyone that stakes assets on the connected blockchain using its rAPP. To ensure most PoS chains get covered, the DeFi project is creating rApps for these blockchains, offering staking derivatives for the staked tokens of these networks. Lots of partnerships made this possible.


By looking towards staking derivatives, PoS chains can unlock the liquidity trapped within. The blockchain’s ecosystem becomes balanced as all entities don’t begrudge the network.

StaFi protocol delivers on the staking derivative needs of PoS chains through its league of rTokens. Through the DeFi project, these blockchains get a second chance at displacing Ethereum as the top choice for De-Fi protocols.

For more information, visit these websites below:


rToken App:

Twitter: @Stafi_Protocol

Telegram Chat:

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