In this Cryptocito Twitter Space, Cryptocito talks with the lead of pSTAKE Finance Mikhil Pandey about mitigating the systemic risk of liquid staking and the rollout of stkATOM via pStake Finance.
Read our notes below to learn more.
(pSTAKE is a liquid staking protocol unlocking the liquidity of staked assets. Stakers of PoS tokens can now stake their assets while maintaining the liquidity of these assets which can be used in DeFi to generate additional yield)
Sentiment after FTX bankruptcy
The team is motivated and working as usual, also very excited about the launch.
Prepared for up to a 5-year bear market.
Hoping to have a lot of activity on the chain before the next bull market.
Journey So Far
Started building Persistence (a chain in the Cosmos ecosystem) in 2019.
Found a good opportunity with Liquid Staking which was yet to be tackled on Cosmos.
Team noticed that people wanted to generate additional yield on their staked assets.
Started building pStake on top of Persistence in 2020.
Built own bridge to transfer assets from Cosmos to Ethereum so that users could have liquid-staked assets on Ethereum that could be used to generate additional yield.
Security Audits were done by a number of top auditing firms in the space.
Planning to keep stkAtom on Cosmos ecosystem to avoid bridging risks and the high transaction fee on Ethereum.
stkATOM on Ethereum can be bridged to stkATOM on Persistence Chain on Cosmos ecosystem using the UI or the migration tool.
Current State of stkATOM on Persistence Chain
Was supposed to go live on November 8th but the chain went down because of a bug.
Testing thoroughly and should be live by end of November.
Thoughts on Liquid Staking as a Systemic Risk
Liquid Staking allows you to get a tokenized asset for your staked asset.
Liquid staking for staked assets is currently not available on Cosmos.
The problem with Liquid Staking that is discussed widely is that a de-peg of the tokenized liquid staked asset could happen when redemptions are happening at a higher rate and cause liquidity issues.
Do not think Liquid Staking is a systemic risk.
Liquid Staking monopolies like Anchor on Terra Ecosystem posed a great risk because of the degeneracy it allowed with liquid-staked assets.
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Future of Liquid Staking
Liquid Staking is going to be the most primitive layer for any PoS chain.
Don’t see a future where token holders don’t stake, the smartest way to hold your asset is to liquid stake it.
Liquid Staking will not be a user-first product but could be integrated with money markets on the chain to generate yield.
About Dexter
Dexter is a product where users can provide liquidity for yield-generating assets.
Dexter is trying to minimize Impermanent Loss(net difference between the value of two cryptocurrency assets in a liquidity pool) on yield-bearing assets.
Dexter should be launching by the end of the year.
About pStake token
Currently on the Ethereum Mainnet, but will be migrated to the Persistence chain in the future.
Thinking of a fractional issuance model of $PSTAKE on different chains.
$PSTAKE will be used to incentivize liquidity bootstrapping for $stkATOM on Cosmos.
Q&A
Q: Thoughts on Do Kwon’s proposal to use liquid staked derivates on Cosmos to cross-stake across chains?
A: Haven’t read Do Kwon’s proposal. I think it’s doable but not sure how yet.
Q: How does pStake select validators and how does the governance work?
A: We have selected validators by looking at how many governance proposals they have participated in.
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TODAY’S EDITION IS BROUGHT TO YOU BY LEDGER HARDWARE WALLET
We are all having trust issues with centralised exchanges this week so we have partnered with the Ledger, who is the industry leader and most trusted vendor in the hardware wallet space.
Using a hardware wallet is the smartest way to secure your assets.
Act now, click the link below and secure your crypto.