Introducing Wave Protocol 🌊
A new, improved way to stake your EGLD on the MultiversX (previously Elrond) blockchain.
Staking on Elrond is one of the most lucrative and productive ways of using your EGLD. While benefiting the network through security & decentralization, users earn yields on their EGLD.
Unsurprisingly, more than 62% of the current EGLD in circulation (more than $550M at the time of writing) is staked.
Staking is simple yet powerful. Simply put, you choose a validator and delegate your funds for them, for a percentage of their rewards. Your money contributes to the security of the network and you get to earn more EGLD.
So, what’s wrong with that?
Even though staking on MultiversX is easier and rewards are generally better than on other chains, traditional staking (delegation) has some flaws for the end user:
- All your money is locked — you cannot trade nor use it under any circumstances.
- Getting back access to your funds takes 10 days.
- You have to claim or redelegate your rewards continuously in order to maximize your gains.
- Bigger sums of money & effort is involved in delegating to multiple validators.
- Optimizing your stake for performance is hard — changing validators requires waiting 10 days without earning any rewards.
Currently, there is more than 15M EGLD locked in staking. Out of that, none is usable around the ecosystem and all are prone to these inconveniences.
Introducing Wave Protocol — Liquidity, better yields, less effort.
To solve these problems and assure users get the most out of staking, we’re excited to introduce Wave Protocol — a decentralized, yield-optimized Liquid Staking solution for your EGLD, featuring:
- Full control of your assets
- Instant Unstaking
- Smart Delegation
- Use across the ecosystem
- An easier staking experience
You stake EGLD and receive stEGLD, an Elrond Standard Digital Token (ESDT) you can use just like any other token. It allows participation in DeFi, quickly getting out of the staking position, earning additional rewards and more.
Instant Unstaking allows geting out of your staking position, selling your tokens to an AMM without having to wait the mandatory 10 days.
Even if this process requires paying a fee to the liquidity providers, it can prove to be way more convenient than waiting the full time.
Regular (delayed) unstaking is still possible, allowing withdrawal of your funds with no charge.
When creating a Liquid Staking solution, one of the most important factors is keeping the network decentralized and the funds well distributed. You don’t want to put all the eggs in one basket, especially with potentially millions of dollars worth of crypto.
One validator’s APR might drop drastically over night, they might change the service fee or simply gain too much power & funds to theoretically take over the network.
In order to overcome these issues and improve the MultiversX network security, Wave will automatically distribute staked EGLD to the most reliable, highest earning & less “popular” validators, based on an open-source calculation called the Delegation Strategy.
This way, using Wave you get to contribute to the decentralization of the blockchain while earning better rewards. Ultimately, Wave intends to delegate to most of the active validators.
The price mechanism
In order for seamless staking to work, we’ve implemented a well-tested exchange-rate mechanism. At the beginning, 1 EGLD = 1 stEGLD — as time passes, the price of stEGLD rises, reflecting the staking rewards coming in.
Exchange Rate = EGLD delegated / stEGLD minted
Simply put, you hold your stEGLD and earn rewards. To claim them, you can simply unstake or sell some of your tokens.
The price of stEGLD is 100% backed by the protocol. A “depeg” of the stEGLD-EGLD ratio on exchanges will be easily arbitragable and taken to the true price, that of the Wave pool.
stEGLD enables seamless transfers, liquidity provision, farms, DeFi & much more. You get to use it however you want across the ecosystem while still earning rewards.
To maximize the regular staking gains, a compounding action (known as rewards redelegation) is needed. That means logging in daily and manually compounding all of your validators rewards.
It’s time to say goodbye to that. With Auto-compounding, all rewards are redelegated daily by the Protocol. You get to enjoy the power of compound interest with little to no effort.
To ensure security and make the product much more trust-worthy and useful, the Wave Protocol Smart Contract will go through multiple audits.
The first one is scheduled right around the time of the Devnet public testing. The Protocol won’t launch until all due security checks & testing is done.
All Wave code will be open-sourced, as we believe that is an important part of creating a striving ecosystem and trust.
Liquid staking has the ability to not only grow the ecosystem as a whole, but make it much easier for regular users to enjoy its full benefits. If done right, it can unlock whole new possibilities for the users and create a healthier, more powerful & attractive ecosystem.
In our vision, Wave Protocol will be enabling:
- Control over funds, without sacrificing yields;
- Maximum gains, without sacrificing time & effort;
- Security, without sacrificing User Experience;
Let’s get to work! 👷♂️
For more info about the architecture, development & technical details, our full documentation & website are going live in less than 1 week! 📘
We cannot wait for you to test out Wave: the first public testing session is set for this January!
Stay tuned. 🏄♂️
P.S: We’re actively looking for developers to help build & scale our mission. If you are or know one, feel free to reach out to me on Telegram :)