Introducing sKLAY: the Birth of Klaytn DeFi

This post explores the limitations of current staking economies, and how staked KLAY can be leveraged to address these limitations. Furthermore, we show how ozys adds liquidity to Klaytn’s economy as a whole.

After just three months post-launch, KLAYstation has gotten explosive interest from the market as a completely trustless staking tool. More than 170 Million KLAY tokens have already been locked up in the Klaytn network. With this popularity, KLAYSTATION has now become the most used BApp (Blockchain App) in the Klaytn network — cementing its place as a formidable DeFi protocol.

ozys, Klaytn’s governance partner, aims to build up Klaytn’s trustless finance infrastructure while adding on-chain use cases. ozys is excited to provide increased liquidity to the Klaytn network and help expand the DeFi ecosystem by utilizing its technology, products, and the KLAY locked up in KLAYSTATION.

This post explores the limitations of current staking economies, and how staked KLAY can be leveraged to address these limitations. Furthermore, we show how ozys adds liquidity to Klaytn’s economy as a whole.

The size and limitations of Staking economies

PoS consensus algorithms are the most common systems blockchains currently use to protect and operate decentralized networks. Compared to PoW consensus algorithms, they have more efficiency, finality, and a lower cost of operation. Over the past few years, these advantages have led to an explosive growth of cryptocurrencies using staking economies. Together, they are currently estimated to be worth more than USD $35 Billion.

Generally, users participating in staking systems delegate their own coins/tokens to a specific Validator operating a node in the chain. While maintaining a staking or delegating position, users passively share the profits that arise from block generation. This current structure of maintaining a single position with one’s assets, however, is massively inefficient and comes along with limitations.

Firstly, as the DeFi market continues to expand along with the staking market, users have a myriad of investment opportunities with promising returns, but when a user has already staked their assets, moving said assets with speed is greatly limited. This makes it near impossible for them to determine an asset distribution structure to maximize profits.

Furthermore, for a particular blockchain ecosystem to continually scale up its economy, various risks of assets, such as the volatility of locked-up assets and the counter-party risk that may arise from delegation, should be dealt with through optimized risk transfer according to market principles. But to date, the market’s concerns and capabilities regarding risk transfer have not kept up with the development of new technology and services.

Although there are limitations in centralized staking economies such as unbalanced participation in governance, in order to drive the fundamental growth of the decentralized finance ecosystem, including staking economy systems, asset efficiency must be increased and an individual participant must be able to assess and manage the risk of locked-up assets.

sKLAY: Liquidizing Staked KLAY

ozys plans to support sKLAY as a liquidity token for staked KLAY through KLAYSTATION and remedy the aforementioned limitations to grow Klaytn’s economy. The liquidity of sKLAY will allow users participating in staking to utilize their assets for a variety of revenue opportunities while maintaining a staked position. By injecting this direct liquidity in the Klaytn ecosystem, ozys will make it possible for users to manage and diversify their risks.

At its core, sKLAY is a token that gives KLAY owners staking through KLAYSTATION the power to exercise rights over their staked assets. The reward that nodes receive after verifying blocks will be shared proportionally based on the amount of sKLAY held. Unstaking will also be based on sKLAY.

sKLAY adheres to the KCT (Klaytn Compatible Token) standard, making transactions possible. This increases efficiency of assets by allowing withdrawals at any time without having to go through KLAY’s unstaking period (7 days). Note that while sKLAY acquired through delegating essentially has the same value as corresponding KLAY, sKLAY acquired through staking KLAY may have a different price at time of trading. This is due to the presence of a time-difference discount rate applied to the supply and demand of the market and the increase in conversion rate due to staking compensation.

Using sKLAY: DeFi Protocols on Klaytn

Because sKLAY is a token in addition to being a method used as a way to unstake without time constraints, sKLAY can be used as an asset in various DeFi protocols as the Klaytn DeFi ecosystem grows.

DeFi ecosystems largely include lending, DEX, derivatives, and payments. A unifying factor of these is that they are all liquidity driven. TVL (Total Value Locked) has risen as a key standard when judging the value of recent DeFi protocols because of this need for ample liquidity.

However, in the case of Klaytn, the scale of the various cryptocurrencies on the network is comparably less than other platforms and the price volatility of these assets is high, hence they have limitations to becoming assets widely used for decentralized finance. For these reasons, Klaytn faces difficulties in growing a diverse array of DeFi protocols.

Considering KLAY’s value and volatility, sKLAY is a standout, reliable source of liquidity in the Klaytn network in terms of asset value. It particularly is of immense value to users who have been staking KLAY. With sKLAY, these users can take advantage of a variety of investment opportunities offered by DeFi services by additional asset input or liquidation of staked assets.

sKLAY will take the critical role of injecting liquidity into the DeFi projects that ozys fills Klaytn’s networks with. Furthermore, Klay.Exchange will be the first DeFi protocol to support sKLAY.

A separate announcement regarding Klay.Exchange will be made on relevant official channels.

Massive Growth Goals of the Klaytn DeFi Ecosystem

Over the past few years, Decentralized Finance (DeFi) has grown to play a major role in bringing many users into the crypto ecosystem. It is still rapidly evolving in many blockchains to new, improved forms.

ozys will drive the growth of the Klaytn DeFi ecosystem and increase efficiency and scalability by building upon the base of the various blockchain fintech protocols we have developed.

To achieve this, we will add instant finality to allow heterogenous chains to transfer value (i.e. tokens) or data to each other, providing the reliable liquidity necessary in DeFi ecosystems and also addressing a major limitation of PoS chains.

This will soon lead to a Klaytn network with enough liquidity to support a wide variety of DeFi protocols.

ozys will continuously and devotedly improve the liquidity of the Klaytn DeFi ecosystem and expand the scope of protocols in which this liquidity can be utilized. We hope that our great community will continue to support and participate in future innovations that we and our partners, including Klaytn, make.

KLAYstation: https://klaystation.io

Orbit Chain : https://orbitchain.io

Orbit Chain Explorer : https://explorer.orbitchain.io

Orbit Chain Voting & Governance : https://voting.orbitchain.io

Orbit Chain Telegram: https://t.me/Orbit_Chain

Orbit Chain Twitter: https://twitter.com/Orbit_Chain

Orbit Chain Discord: https://discordapp.com/invite/PJzE63A