With DeFi yield squeezed across the board, we thought it’s about time to introduce some high-yield staking assets to DeFi. dForce plans to introduce an innovative market to address the un-tapped market opportunity of liquid staking tokens, which equates to roughly about half trillion dollars in market size.
dForce is the first lending protocol supporting Staking Yield Token with a dedicated pool, enabling holders of PoS staking tokens to:
- receive staking yields ranging currently from 5% ~ 15% APY;
- access 24/7 transferable underlying tokens without compromising yields on the staked assets;
- participate in DeFi lending activities to harvest top-up yields and borrow at attractive rates;
- capture upside potential of staked assets.
We target to launch dForce Staking Asset Pool in mid to late July, subject to governance approval.
How will This Rock the World of DeFi?
According to The State of Staking Q2 Report by Staking Rewards, market capitalization of staked assets amounted to $450 billion, representing a 151% Q/Q growth and accounting for 20% of total market capitalization of crypto. This is a new asset class which is approximately 8x of total value locked in DeFi and a huge untapped opportunity for DeFi protocols.
Staking rewards on top PoS assets ranges from 5% ~ 15% per annum currently, with a projected of $18.9 billion annual staking rewards in 2021.
(Source: https://staked.us/)
By tokenizing staking assets on PoS blockchains and introducing them to DeFi, it creates a new liquid staking market, where stakers are able to enjoy 7/24 liquidity with their staked tokens without compromising on staking yield, participate in lending activities and take out loans against their staked tokens for optimized capital efficiency.
The Beauty of Staking Assets
Staking refers to ‘locking up’ PoS assets in exchange for a share of inflationary rewards distributed to all stakers (aka staking rewards) in a PoS network. However, in order to participate in the network and receive staking rewards, token holders are often required to lock up their tokens for a certain period. This is referred to as a “bonding period”, during which you can’t withdraw or transfer your tokens.
We already saw a number of DAO-style or centralized models aiming to alleviate some of the most pressing issues for staking token holders, making it simple and accessible for everyone to earn staking rewards with the most efficient liquidity.
Introducing the First Dedicated Lending Market for Staking Yield Tokens
At dForce, we plan to support Staking Yield Tokens through a dedicated pool. This is the first pool-based lending market dedicated to Staking Yield Tokens and corresponding underlying tokens.
Staking Yield Tokens are tokens representing staked PoS assets (i.e., stETH, rETH, rDOT, rATOM, sFil, etc), which accrue in value with staking yield coming from the underlying staked tokens (i.e., ETH, DOT, ATOM, FIL, etc).
On dForce Staking Asset Pool, users are able to:
- deposit Staking Yield Tokens as collaterals to borrow underlying tokens (i.e., deposit stETH to borrow ETH). You can use the borrowed underlying tokens for leveraged staking (by converting it into Staking Yield Tokens then depositing them back as collaterals to harvest higher staking yields) or trade for instant liquidity of underlying tokens during the bonding period.
- use Staking Yield Tokens as collateral to mint USX and EUX (dForce stablecoins pegged to USD and EUR). You can then use them to borrow out other assets.
- holders of underlying tokens (i.e., ETH, DOT, ATOM, FIL, etc) are able to achieve a higher savings yield by lending underlying tokens to Staking Yield Token holders (for leverage staking and loans).
Schedule and Proposed Plan
We are exploring collaboration with a number of partners to bring staking yield tokens to DeFi in scale, with more details to be disclosed in due course.
The launch of dForce Staking Asset Lending Market, assets/collaterals to be supported, risk parameters, and other planned items are subject to on-chain governance voting jointly decided by all DF token holders. We will formulate a governance proposal in the coming days for voting.
We are open to working with all partners and validators. If you are interested in being our partner to bring these assets to DeFi, please reach out to us at [email protected].
Stay tuned for more exciting offering!
We welcome you to join our community to participate in related discussions.