DeFi’s emerging 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 is a practical and straightforward approach to protecting blockchain networks and a surefire means for users to earn high APYs for staking their assets or participating in network management. Therefore, the transition from Ethereum to the PoS-based Ethereum 2.0 – planned for the third quarter of 2022 – is among the most anticipated events in the blockchain industry.
Ethereum currently powers most of DeFi’s widely used lending, lending, and farming protocols. So, the upcoming transition to a PoS network is poised to increase liquidity and bring additional scalability to the network. However, the long staking periods for PoS assets and eventual liquidity constraint are a growing concern for stakers.
The pSTAKE protocol addresses this problem. The upcoming implementation of Ethereum 2.0 will unlock new liquidity for $ETH, allowing users to take full advantage of staking while earning additional rewards via DeFi. The pSTAKE $stkETH public testnet recently went live and saw users stake ETH on pSTAKE to receive stkETH, a tokenized representation of ETH. stkETH can be used across the board EVM-based ecosystems to generate excess returns through activities such as yield farming and lending.
Liquid staking the new frontier in DeFi
The high returns and efficiency of PoS have made it one of the key drivers of liquidity in DeFi. However, the assets deployed in PoS protocols become inaccessible for the duration of the deployment period. Users cannot access other investment opportunities using staked assets, resulting in pools of unused and underutilized liquidity.
DeFi innovators are therefore exploring liquid staking to make the most of the liquidity of PoS assets. Minting of 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 such as decentralized lending, liquidity mining, and yield farming to generate additional returns.
In this regard, pSTAKE is an innovative protocol that aims to make liquid staking the new frontier in DeFi. It allows users to stake digital assets on the platform and receive 1:1 coupled tokenized derivatives called stkASSETs. In turn, pSTAKE deploys the accumulated PoS assets with top validators on their underlying networks. This allows users to take advantage of the staking rewards in PoS networks while benefiting from investment opportunities in other protocols.
pSTAKE is the signature product of the Cosmos/Tendermint-based persistence Network. Persistence not only makes liquid staking more accessible, but also creates an ecosystem of products that use stkASSETs in their operational core. This increases the utility of this newly released liquidity, making DeFi a composable, capital-efficient industry.
Access to new dimensions in DeFi
With the ongoing transition to DeFi 2.0, the industry is moving from a speculative phase to the value creation phase. The focus is now on addressing real financial problems to provide users with a better economic infrastructure. And in this new phase, tapping into the underutilized and inaccessible liquidity of PoS networks is critical to the growth of the industry as a whole. pSTAKE is making great strides on this front and its implementation of liquid staking for Ethereum 2.0 opens the doors to new dimensions in DeFi with newfound capital for the most popular PoS asset.
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