How to Build a DeFi Staking Platform
Decentralized finance has opened up a host of new opportunities for members of the crypto community, including the chance to earn passive income through DeFi staking. If you’ve also decided to take advantage of this model and are thinking about DeFi staking platform development, you’re on the right IdeaSoft blog page. In this article we will explain how DeFi staking works and more about the process of developing decentralized platforms that support this feature and what that looks like.
What is DeFi staking?
Many users of centralized staking platforms have taken the opportunity to learn what DeFi staking is and how it works, and for good reason. DeFi staking is an additional way to generate income from your crypto assets by leveraging the benefits of decentralized finance.
The concept of staking in a centralized and decentralized environment can be different. Before DeFi came along, staking was understood as the process of confirming transactions and generating new blocks on the blockchain and getting rewarded for doing so. DeFi staking usually works another way. You deposit your crypto assets to a DeFi protocol and receive a share of the commission from the operations performed on the platform as a reward. Thus, the DeFi protocol maintains its liquidity, and liquidity providers receive interest. You may have heard of liquidity mining or yield farming, which are basically a form of DeFi staking.
DeFi staking provides all the benefits of decentralization, such as greater transparency, fewer intermediaries, lower transaction costs, and more. Also, this method of passive earning is considered safer than traditional investments since the DeFi system is managed by self-executing smart contracts and empowered with blockchain.
Types of DeFi staking platforms
Since the concept of DeFi staking is fairly new, staking mechanisms differ from platform to platform. As of today, we can identify three main types of DeFi staking platforms.
Stablecoin-based DeFi Staking platforms
Such platforms have their own stablecoins, which are assets more resistant to volatility than conventional cryptocurrencies. Liquidity providers or yield farmers stake these stablecoins against crypto assets and then other users can borrow them by paying a commission to the platform. Part of this commission goes to the stakers. Compound and Aave are examples of this type of platform.
Synthetic tokens staking platforms
Some platforms such as Synthetics allow the issuance of so-called synthetic assets that are not related to the blockchain (like gold, silver, fiat money). The platform generates a token representing a real asset and makes it available to the crypto market. Users can also place these assets in liquidity pools and receive interest.
DeFi staking aggregators
These are in fact ordinary DeFi aggregators that provide information about several liquidity pools and protocols in a single interface. They help users more intelligently allocate their assets in order to get the maximum return on investment. Zapper and Zerion are the most famous examples of DeFi aggregators.
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