DeFi’s emergent liquid staking protocol, pSTAKE, is set to implement liquid staking for Ethereum 2.0 ($ETH). Once implemented, pSTAKE will issue $stkETH to $ETH stakers as a liquid-staked asset to participate in DeFi.
Stakers benefit immensely from the proof-of-stake (PoS) consensus mechanism. It’s a practical and straightforward approach to safeguard blockchain networks and a sure-shot means for users to earn high APYs for staking their assets or participating in network governance. Thus, Ethereum’s transition to the PoS-based Ethereum 2.0—slated for Q3 2022—is among the most anticipated events in the blockchain industry.
Ethereum currently runs most of DeFi’s widespread lending, borrowing, and farming protocols. So, its impending transition to a PoS network is poised to drive liquidity and bring additional scalability to the network. However, the long staking periods for PoS assets and the eventual liquidity limitation are a growing cause of concern among stakers.
The pSTAKE protocol addresses this problem. Its upcoming implementation of Ethereum 2.0 will unlock new liquidity for $ETH, enabling users to reap the full benefits of staking while earning additional rewards across DeFi. The public pSTAKE $stkETH testnet recently went live, seeing users stake ETH on pSTAKE to receive stkETH, a tokenized representation of ETH. stkETH is usable across EVM-based ecosystems to earn surplus returns through activities like yield farming and lending.
Liquid Staking the New Frontier in DeFi
The high returns and efficiency of PoS have made it one of the significant liquidity drivers in DeFi. However, the assets staked in PoS protocols become inaccessible for the duration of the staking period. Users cannot access other investment opportunities using staked assets, resulting in pools of idle and underutilized liquidity.
DeFi innovators are thus exploring liquid staking to utilize the liquidity of PoS assets optimally. Minting tokenized derivatives for PoS assets is also possible via this process. While the PoS assets themselves remain staked, these tokenized derivatives can represent them elsewhere for various activities like decentralized lending, liquidity mining, and yield farming to bring in additional returns.
In this regard, pSTAKE is an innovative protocol aiming to make liquid staking the new frontier in DeFi. It enables users to stake digital assets on the platform and receive 1:1 pegged tokenized derivatives called stkASSETs. In turn, pSTAKE stakes the accumulated PoS assets with top validators on their underlying networks. This allows users to reap the staking rewards on PoS networks while benefiting from investment opportunities on other protocols.
pSTAKE is the signature product of the Cosmos/Tendermint-based Persistence network. Besides making liquid staking more accessible, Persistence creates an ecosystem of products that use stkASSETs at their operational core. This increases utility for this newly unlocked liquidity and makes DeFi a composable, capital-efficient industry.
Accessing New Dimensions in DeFi
With transitions toward DeFi 2.0 underway, the industry moves from a speculative phase to the value-creation stage. The focus now is tackling real-world financial problems to provide better economic infrastructure for users. And in this new phase, unlocking PoS networks’ underused and inaccessible liquidity is crucial for the industry’s growth on the whole. pSTAKE is making great strides on this front, and its implementation of liquid staking for Ethereum 2.0 opens the doors for new dimensions in DeFi with newfound capital for the most popular PoS asset.
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