Liquid Staking Solution: How StaFi is the Missing Link for POS Chains
POS chains might be the winners of the consensus war, but they are not flawless. Their reliance on staking poses an illiquidity problem that’s detrimental to the network. Though most of these restrictions imposed on the chain are meant to secure the network, the consequences are still palpable.
Liquid staking solutions like StaFi offer an easy way out of this illiquidity crisis of these blockchains, providing users with access to their funds when they need it. They do a lot for POS chains, as far as the average Joe is concerned.
POS Chains: The True Picture
POS chains are currently the preferred choice in the crypto space no thanks to the poor environmental scorecard of their POW alternative. Yet, that’s not the true picture. POS chains revolve around staking, which can be hit and miss sometimes. The inability to access the staked asset, the minimum staking requirement and the reliance on validators brings the vulnerability of POS chains to the surface.
Staking on POS chains is attractive, which explains the average investor’s desire to get involved. The rewards are often mouthwatering, especially if you have a decent chunk of the network’s native token.
As attractive as staking on the network might be, a few niggling issues set it back in the eyes of the investor. The lengthy lockup period combined with the long unstaking phase means anyone staking might encounter problems getting access to liquidity in a jiffy. That’s enough to trigger skepticism in a crypto space that’s big on liquidity than anything else. People want to be able to exit any project whenever they want, which isn’t something you can achieve directly by staking on POS chains.
When people talk about POS chains, they fail to mention the role played by validators in keeping the network efficient. Staking on the chain is only plausible if the validators do their homework. Interestingly, the validators are humans, so there’s always the slim chance they might not keep to their end of the bargain all the time. This leaves anyone staking on the chain to bear the consequences, which is often a slash of rewards. If an investor’s rewards are slashed, the desire to continue staking dwindles. Should more stakers face the same problem, then the POS chain might be in a grave situation.
StaFi Makes POS Chains Better
Liquid staking solutions like StaFi tend to fix most of the wrongs affecting POS chains. The DeFi protocol achieves this through the use of synthetic staking derivatives known as rTokens.
An investor looking to make the most of staking on a POS chain can achieve this through StaFi. The liquid staking solution caters to several POS chains including Ethereum, Polkadot, Cosmos, BSC, and more. There aren’t many staking solutions with that sort of coverage, which says a lot about the capacity of StaFi to deliver.
StaFi’s position as the missing link for POS chains is hinged on its ability to solve the illiquidity problem of these blockchains. When you stake the token on a POS chain using the StaFi application, you get rTokens equivalent in value to your stake with rewards accrued over time. You can easily trade the synthetic staking derivative for a few other assets on any of the supported DEX. This can make a difference for the liquidity of POS chains.
The StaFi platform fits the POS puzzle to the last piece. The minimum asset that can be staked through the protocol is much lower than what’s obtainable on the chain. This way, investors without deep pockets can still partake in staking.
With delineated validators on the StaFi chain that are efficient at their job, maximum returns for those staking their tokens through the protocol are certain. StaFi users don’t have to worry about slashing, which means a greater chance of getting decent rewards from staking.
StaFi has scaled up plans to make the rTokens more than just receipts of asset staked. This is reflected in the growing number of collaborations the protocol has with other projects. At the moment, a handful of rTokens can be used in many ways such as staking and lending. This is bound to get better as StaFi continues to partner with other projects. If the rTokens gets more valuable, staking on POS chains becomes more attractive as everyone would want to get their wallet on the synthetic staking derivative.
Security is one aspect the StaFi platform hasn’t left untended. There’s an insurance cover that anyone staking assets through the protocol can leverage.
Conclusion
Staking on POS chains can be rewarding, but lots of limitations put many interested investors off. This needs to change if the consensus algorithm is to remain highly desired.
StaFi offers some quick fixes to some of the challenges bedeviling the POS chain, which explains its missing link status. Of course, the liquid staking solution market is expanding, but we expect StaFi to stay ahead of the pack.
You can learn more about StaFi Protocol by visiting the websites below:
Website: www.stafi.io
Twitter:@Stafi_Protocol
Telegram Chat: https://t.me/stafi_protocol
Telegram Announcements: https://t.me/stafi_ann
Discord: https://discord.com/invite/jB77etn
Forum: https://commonwealth.im/stafi