Token Analytics: PSTAKE

EXECUTIVE SUMMARY

In pSTAKE you can securely stake your Proof-of-Stake (PoS) assets, participate in protocol improvements and security to earn staking rewards, and receive 1:1 pegged staked representative tokens which can be used to explore yield opportunities across DeFi.

At present, pSTAKE supports Cosmos and Persistence networks’ native tokens with a view to support more chains and assets in the future.

pSTAKE issues staked representative tokens through a custom bridge built to tap into the growth of the Cosmos ecosystem while accessing the liquidity and composability of Ethereum. Users can either hold these representative tokens as ERC-20 to maintain the liquidity of their staked assets, or use them to discover yields offered by other DeFi protocols.

The main potential risk are that platform would not be used after a token sale on Coinlist and regulatory compliance.

More detailed information you will find in my report below.

INTRODUCTION

pSTAKE is the protocol that unlocks liquidity for your staked assets. With pSTAKE, you can securely stake your Proof-of-Stake (PoS) assets, participate in protocol improvements and security to earn staking rewards, and receive 1:1 pegged staked representative tokens which can be used to explore yield opportunities across DeFi.

pBridge is a bridge between several blockchains, which currently powers pSTAKE. This unique bridge enables transfer of value between multiple disparate blockchains such as Ethereum, Cosmos, Persistence etc.

Webpage:

https://pstake.finance/

Docs:

https://docs.pstake.finance/

MARKET OVERVIEW

DeFi’s growth in 2021 has been exponential, turning it into a sector now worth over $100 billion. Cosmos Network is making great strides while adding new layers to its already robust DeFi infrastructure that includes many exciting projects such as Terra, THORchain, Band Protocol, and Crypto.org.

One key area of growth is the addition of some of the most advanced cross-chain decentralized exchanges (DEXs) that leverage the Inter-Blockchain Communication protocol (IBC) to enable permissionless and harmonious trading across various Cosmos blockchains and beyond.

The DEX ecosystem within Cosmos is growing quickly. There’s now access to new and promising tokens, higher liquidity for smooth trading and price stability, permissionless token listings, opportunities for generating higher ROI by participating in liquidity pools, and a lot more. So, let’s take a look at four of the hottest protocols right now and examine why they’re gaining traction:

https://blog.cosmos.network/defi-in-cosmos-meet-these-4-cross-chains-dexs-1df23dd413b0

PROBLEMS

Many DeFi offerings and products closely resemble products and functions in the traditional financial marketplace. There are decentralized applications, or dApps, running on blockchains, that enable people to obtain an asset or loan upon posting of collateral, much like traditional collateralized loans. Others offer the ability to deposit a digital asset and receive a return. Both types of products offer returns, some directly, and some indirectly by enabling the use of borrowed assets for other DeFi investing opportunities. In addition, there are web-based tools that help users identify, or invest in, the highest-yielding DeFi instruments and venues. Other applications let users earn fees in exchange for supplying liquidity or market making. There are also tokens coded to track the prices of securities trading on registered U.S. national securities exchanges, and then can be traded and used in a variety of other DeFi applications. So while the underlying technology is sometimes unfamiliar, these digital products and activities have close analogs within the SEC’s jurisdiction.

  • Investment opportunities are offered completely outside of regulatory oversight

In spite of the number of authorities having some jurisdictional interest, DeFi investors generally will not get the same level of compliance and robust disclosure that are the norm in other regulated markets in the U.S. For example, a variety of DeFi participants, activities, and assets fall within the SEC’s jurisdiction as they involve securities and securities-related conduct. But no DeFi participants within the SEC’s jurisdiction have registered with SEC, though SEC continue to encourage participants in DeFi to engage. Investors and other market participants must understand that these markets are riskier than traditional markets where participants generally play by the same set of rules.

  • High fees for the transactions on the Ethereum blockchain

Much of DeFi activity takes place on the Ethereum blockchain, but any blockchain that supports certain types of scripting or coding can be used to develop DeFi applications and platforms. Users can only pay in ETH, which they may not have at that moment. Or the user may not want to spend their ETH investment.Necessity to pay a gas fee every time the user uses your application.

  • Volatile and pending transactions

Volatile further dampen the user experience on your Dapp. Pending and stuck transactions can force your users to wait for minutes and even hours before they can carry on interacting with your application. And sometimes the transaction fails altogether.

However, it also poses important risks and challenges for regulators, investors, and the financial markets. While the potential for profits attracts attention, sometimes overwhelming attention, there is also confusion, often significant, regarding important aspects of this emerging market.

https://www.sec.gov/news/statement/crenshaw-defi-20211109SOLUTIONS

pBridge

The pSTAKE protocol uses an inter-blockchain bridge named ‘pBridge’ which facilitates the transfer of value between various blockchains, such as Ethereum, Cosmos, Persistence, among many others. While other blockchain bridges only allow for the creation of pegged tokens, pBridge enables interchain staking and unstaking of PoS tokens at the protocol level on their respective native chains.

The purpose of the pBridge is primarily to:

  • Mint 1:1 pegged ERC-20 wrapped representatives or pTokens
  • Stake and unstake these PoS tokens that are deposited on the pBridge
  • Accrue and claim respective staking rewards and replicate them onto the Ethereum blockchain

pBridge implements Crash Fault Tolerance by being a multi-party computation based bridge that is secured by some of the industry leading Proof-of-Stake validators.

Dual Token Model

The dual token model of pSTAKE simplifies staking and rewards mechanisms for users and mirrors the exact workings of the PoS networks that it supports.

pTokens are 1:1 pegged ERC-20 unstaked representative tokens that copy the functionality of the underlying PoS network and only represent unstaked tokens on that network. Users can then stake their pTokens with pSTAKE to mint stkTokens, which are 1:1 pegged staked representative tokens. In the background, the PoS assets deposited on the protocol are staked onto the network with leading PoS validators. stkTokens accrue staking rewards in pTOKENs which can also be used in the broader Ethereum DeFi ecosystem.

Fungibility

All issued stkTokens are fungible in nature.

This fungibility is achieved by delegating assets staked on the respective PoS networks evenly across a set of validators participating in the pSTAKE protocol. This proportion of stake distribution will be governed by $PSTAKE token holders after the token launch.

stkToken holders equally share the risk of slashing in the ecosystem. However, these slashing risks are mitigated to a large extent through distributed delegation across multiple validators.

TOKEN UTILITY

PSTAKE is an ERC-20 token that provides its holders with a two-fold benefit:

  • Participation in protocol improvement proposals through voting
  • Participation in protocol security

The PSTAKE token functions as the governance and incentivisation/dis-incentivisation token of the pSTAKE protocol. PSTAKE holders are incentivised to participate in the protocol’s governance to ensure its long-term success and security by staking PSTAKE on the pSTAKE staking contract. PSTAKE token holders will have the immediate ability to use the token for its intended functionality .

PSTAKE tokens will also be used as a dis-incentivization token in case stakeholders staking PSTAKE act maliciously or are unable to perform their respective duties appropriately.

Read more about the PSTAKE utility token and its role in the pSTAKE ecosystem here.

TOKEN SUPPLY

PSTAKE has a total genesis supply of 500,000,000 tokens.

INVESTORS

Sequoia, Alameda and Spartan are strong funds in the US market. Tendermint will be a great strategical and technical partner.

TEAM

pSTAKE is developed by Persistence.

Persistence is enabling exposure to multiple asset classes such as Liquid Staking (pSTAKE), NFTs (Asset Mantle), and Synthetics (Comdex). Persistence ecosystem products are designed to stimulate global liquidity and enable seamless value exchange.

SALES OPTIONS

TOKEN EVALUATION

Solution

8

pSTAKE is a liquid staking protocol that unlocks the true potential of staked PoS assets. Product has a long term roadmap with many important challenges.

Token Utility

8

Token utility is clear for staking, fees, governance and can be hold as a store of value.

Token Distribution

8

$0.40 per token

25% unlock on or around January 25, 2022, followed by a 6-month linear vesting schedule

Token Metrix

8

Seed investors bought tokens for $0.10. Their tokens begin unlocking after a 6 month cliff and will be unlocked over 12 months.

Investors

8

Sequoia, Alameda and Spartan are strong funds in the US market. Tendermint will be a great strategical and technical partner.

Team

7

pSTAKE is developed by Persistence. Persistence is enabling exposure to multiple asset classes such as Liquid Staking (pSTAKE), NFTs (Asset Mantle), and Synthetics (Comdex). Persistence ecosystem products are designed to stimulate global liquidity and enable seamless value exchange.

Overall Score

8

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Ivan Maltsev

Ivan Maltsev

Partner at 3xcapital.fund. Managing portfolios in crypto since 2017.