Massive amounts of capital are locked in staked crypto assets. But a relatively new platform is making those markets both tradeable and liquid.
StaFi, founded in 2020 and built onÂ Polkadot, is among the first-ever decentralized protocols that help unlock the liquidity of staked assets via its own platform. This means users can stake theirÂ proof of stakeÂ (PoS) tokens (which are untradable until they are staked) and get a â€œrTokenâ€ (reward-Token) in return.
These rTokens enable users to both get the staking reward and trade the locked staking token at the same time. â€œYou can stake your PoS tokens through Staking Contracts built by StaFi,â€ the team said in a post, adding:
â€œAll you have to do is use the tools to stake your PoS tokens, and youâ€™ll receive rToken in return which can be exchanged and traded on DEXes and CEXes in the near future, as well as integrated in other DeFi protocols.â€
StaFi developers had earlier launched rETH, a solution to the liquidity of ETH2.0 staking, with the help of community contributors. This opened the gates for the nearly $3.3 billion locked in ETH 2.0 to be tokenized, liquified, and traded.
In addition, the staking amount for users has been lowered to 0.01 ETH instead of the 32ETH ($33,000) required by ETH 2.0, which further lowers the barrier to entry for the masses.
rTokens can be (or will be) generated for Ethereum, StaFi, Polkadot, Kusama, Tezos, and Cosmos. Among those, rETH and rFIS are already under audit; rDOT/rKSM is under development, and rXTZ/rATOM will be started in Q1.
The StaFi team is also developing StakingDerivatives for many other public PoS public chains, such asÂ Solana, Near,Â Avalanche, Nuls, CapserLab, Cartesi, and others. It will also gradually support rSOL, rNEAR, rAVA, and other rTokens in a phased manner, making the ecosystem of rToken more broader.
Another important development for StaFi is the upcoming introduction of cross-chain â€œbridges,â€ namely the two-way bridge, rToken bridge, BSC bridge, SOL bridge, among others.
These would allow rTokens to enter different ecosystems, such as the bridge between rToken and Ethereum is our main focus. The team has already completed the development of the two-way bridge linking Substrate and Ethereum, with other bridges on the way forÂ Binance Smart ChainÂ andÂ Solana.
The rise of PoS cryptocurrencies
PoS cryptocurrencies are tokens that generate new blocks through a staking mechanism, meaning the rate of validation of transactions on the blockchain occurring as per a proportionate amount of coins held by users.
This is unlike the proof of work (PoW) cryptocurrencies, which depend on a huge network of â€œminersâ€ who conduct millions of calculations each second to validate blocks, verify transactions, and unlock â€œrewards.â€ However, such a design oft-results in a slower network, high fees, and poor scalability â€” all of which limit the growth of the crypto ecosystem by way of slower apps and other use cases.
The PoS market has, hence, bloomed in the past year, especially as crypto users search for faster blockchains, turn towards passive yields, and put their crypto holdings to work instead of trying to time market tops and bottoms.
As per CryptoSlateâ€™s data page, the PoS sub-sector comes in at a $55.59 billion market cap as of this writing, with high-speed blockchain Polkadot ($15 billion market cap), smart contract platform Cardano ($11 billion market cap), and payments network Stellar ($6.6 billion market cap) leading that part of the market.
In the past 24 hours, over $17 billion worth of PoS cryptocurrencies were traded on various exchanges, with Cardano (ADA) accounting for over $4.3 billion of that figure. The sector has, cumulatively, returned over 43.49% to investors in the past week as well.