THE 3 LAYERS ASSOCIATED WITH EMPOWERING LIQUIDITY ON STAFI PROTOCOL

For some years now, many cryptocurrency projects, through a consensus process known as proof-of-stake (PoS), have enabled users to invest their assets and earn incentives in exchange. In the crypto industry, users who put their money on the line to support, contribute and earn from a particular network are known as a validator. These validators which are mostly general public and crypto enthusiasts contribute massively to the effectiveness of an asset staking process, particularly PoS. As a result, users must provide services that are both stable and safe. Some Projects frequently implement this by reducing a users’ stake if they engage in activities that negate their policy or attempt to trick the system. Some projects incorporate a lengthy lockup duration during which users are unable to access their funds as well as staking limits.

Proof-of-stake is one of the most widely used consensus processes in the crypto world, with staking serving as the primary incentive model for maintaining network security and discipline. However, due to the cryptocurrency markets’ immaturity and volatility, token values might suddenly decline. As a result, staking incentives may be insufficient to compensate for the loss.

Not to add that users must follow certain basic guidelines. These rules describe the technical and financial criteria for users — for example, a minimum stake amount,- the algorithms for selecting eligible users to execute actual validating tasks, and the principles for reward distribution. The stake size, actual involvement in the consensus procedures, and the total quantity of coins at stake are commonly used to calculate the payouts. As much as users are required to comply with staking protocol while interacting with a project, there has also been excessive control over their assets by the developers. Also, assets leached out to support a project are sometimes susceptible to scams and liquidation. Hence, many crypto-asset owners often prefer to authorize their assets to a staking system run by the users themselves to prevent dealing with all of these regulations.

To tackle this challenge, StaFi employs a novel technique. Stakers can obtain alternative tokens called rTokens, which represent the staked assets and are transferable on Centralized Exchange (CEX) or Decentralized Exchange (DEX), through their staking contracts. Stakeholders can liquidate their staked tokens while still earning staking benefits on the original network.

StaFi Protocol

StaFi is the offshoot of Staking Finance and it aims to provide a solution to the polarity between mainnet security and token liquidity. The project is the first and most reliable Decentralized Finance (DeFi) protocol for releasing staked assets’ liquidity. StaFi allows crypto owners the opportunity to stake their PoS tokens in exchange for rtokens. They can choose to trade the staked assets and equally earn incentives with rtokens.

Stakers receive rTokens as an alternative token through the staking contract. For instance, if you stake DOT, you can obtain rDOT. These assets have a 1:1 ratio. Holders of tokens are eligible for rewards based on tokens staked. rTokens can also be traded on the open market. The staking contract will change the reward and redemption rights after the transaction.

StaFi facilitates liquidity because it is a decentralized protocol as it operates on three layers: the bottom layer, the contract, and the application layers.

• The bottom layer: Substrate is a blockchain system on which the bottom layer is primarily produced. Also, the blockchain architecture behind Substrate is a product of Parity, and the entire architecture includes several development modules, such as a consensus module, a P2P module, and a staking module, among others.
• The contract layer aids in the creation of many types of staking contracts, such as DOT and Atom staking contracts. The token holder can stake via a Staking Contract, which provides the same inflation incentives as a regular Stake. The difference is that the holder can be shattered as well.
• The application layer, on the other hand, allows third-party StaFi-based APIs or bespoke APIs to be used to construct a decentralized contracted asset trading market where tokens can circulate, transfer, and trade using the StaFi protocol.

The ecology functions are entirely decentralized. StaFi, which is based on Substrate, is linked to Polkadot as a parallel chain that shares Polkadot’s underlying consensus. Polkadot additionally ensures the highest levels of security and performance. The contract level is the most fundamental layer, and the contract code ensures that the Stake token is entirely owned.

Conclusion

The StaFi Protocol adds value by allowing Staking assets to be liquidated. Stakers can earn inflation rewards while circulating tokens to react quickly to market changes. The protocol catches the liquidity’s value and returns it to the protocol. FIS is a transferable representation of attributed functions stated in the StaFi protocol’s code, designed to play a large role in the ecosystem’s running, and intended to be utilized primarily as the platform’s principal utility token. The native token for StaFi is FIS, which is a utility token that is used to cover transactions between StaFi protocol members. FIS was created to provide a simple and secure method of payment and settlement amongst ecosystem users.

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