StaFi rToken Whitepaper
Abstract
Proof of Stake (PoS) has become one of the mainstream consensus algorithms. Since 2012, with the combined efforts of different researchers and teams, many technical problems have been solved, such as Nothing at Stake, Long Range Attack, etc. By 2018, the PoS consensus algorithm gradually matured. In June of the same year, PoS (PoS-like) projects represented by EOS and Tezos, began to go live, marking the beginning of a new generation of PoS consensus-driven technologies. Over the next two years of development, PoS has ushered in a golden development period. In 2020, representatives of new public chains like Polkadot, Near, Solana, and Celo all adopted PoS as their consensus algorithm of choice.
The data from StakingRewards shows that there are 151 staking projects in which a total worth 15 billion USD of assets are staked now. In fact, there are actually far more than 157 projects that have adopted the PoS consensus mechanism, and the total worth of staked assets easily exceeds 40 billion USD if you include those converted from ETH 2.0 to PoS.
Therefore, as PoS grows, the task of helping validators unleash the liquidity of staking assets while ensuring the security of the original chain remains. The rToken solution proposed by StaFi is a solution to the above problem. With rTokens, billions of dollars of staked assets can circulate without the need to unstake. It solves the liquidity dilemma of staking, and increases the willingness of both crypto enthusiasts and blockchain developers to participate in PoS consensus.
We believe and work to see StaFi become the standard for the solution of the liquidity of staking assets, empowering hundreds of PoS projects, and liberating assets. rToken’s solution will first be implemented on three main public chains: ETH 2.0, Polkadot and Cosmos. It will not only provide liquidity solutions, namely rETH, rDOT, and rATOM, for the above three public chains, but will also provide the standardized protocol of rToken for all PoS projects that have been developed on these networks.
In addition to providing rToken staking liquidity solutions for PoS projects, StaFi will also develop cross-chain bridge services that help the circulation of hundreds of rTokens in the Ethereum, Polkadot, and Cosmos ecosystems. For example, the rToken in the Polkadot ecosystem can ‘cross’ its chain to the Ethereum ecosystem to be traded or lent in DEXs, and vice versa.
2.Introduction
2.1. The Definition of rToken
rToken is a redeemable token for the staked assets issued by StaFi protocol that can be traded, lent, or borrowed in a variety of venues. Whenever a user stakes a native token through the relevant Staking Contract, a certain amount of rTokens will be issued per amount of the native tokens staked in the Staking Contract and the real-time exchange rate for the rToken. The exchange rate for the rToken will gradually increase, as staking rewards for that native token accumulate, and so will the amount of native tokens that can be redeemed.
2.2 Rights represented by rToken
rToken represents the rights to redeem the native staked assets at any time and obtain the corresponding staking income. Next to that, rToken holders also have the right to continue participating in on-chain governance on the original chain.
2.3 How to obtain rToken
There are two main methods to obtain rToken:
1) Stake native tokens through StaFi’s Staking Contract: rTokens will be minted and sent to your designated wallet address according to the amount of the native tokens you Stake(Qs) and the exchange rate of rToken (Cr);
2) Obtain rToken on Uniswap or other exchanges:
All rTokens can be traded and exchanged for native tokens per market exchange rates on decentralized exchanges or centralized exchanges that support rTokens.
2.4 Why rToken
The liquidity issue of staked assets has been the driving force for our development of rToken solutions. For most Proof-of-Stake projects, staked assets are subject to a certain lock up period or require a lengthy unbonding period during which the user neither has access to his asset nor is he eligible to receive staking rewards. For example, the redemption period for Cosmos is 21 days, Polkadot 28 days, and StaFi 14 days.
As a result, User’s ability to trade out of an asset position is limited, especially in anticipation of an adverse market movement, because the user cannot place orders to sell while the asset is being staked.
However, through StaFi’s solution, a user can now obtain a corresponding amount of rToken when he stakes, and enjoy the flexibility and discretion to redeem the native staked assets any time while still enjoying staking income. More importantly, rTokens can be circulated and traded freely, thus allowing rToken holders to hedge against exposure without the need to worry about unlocking periods.
StaFi tackles the following issues for users through rToken services:
1) There is no need to worry about the liquidity of Staked assets（liquidity of rTokens is an extra question and will be addressed later）.
2) There is no need to wait for the long redemption period as before. Users can immediately exchange at the current rToken/Token exchange rates on the markets.
3) The StaFi Staking Contract Pool will automatically capture those Original Validators with the highest rate of return on the chain for Staking, which can optimize users’ staking yield.
5) The current NPOS Staking mechanism adopted by the StaFi mainnet is hard to be understood for an ordinary Staker, especially with regard to consensus mechanism, the maximum number of nominators that a validator can have, the determinants of Reward, how to claim reward, how to choose the best validators, and so on. However, with the introduction of rFIS, FIS stakers can participate in FIS Staking with just one-click.
StaFi tackles the following issues for PoS projects through rToken services:
1) Through rToken, the users’ willingness to stake is greatly encouraged. This will further increase the staking ratio of PoS projects and enhance the security of the original chains.
2) No matter how many assets are locked in the StaFi Staking Contract, the security of the original chain will not be hampered, since those assets are distributed to a host of Original Validators.
3) StaFi will not encroach on the validators on the original chain, as StaFi does not engage in the validation of the original chain. This further allows us to build in cooperation with existing ecosystems and validators in the spirit of open-source DeFi development, instead of cannibalising their business and traction.
2.5 rToken classification
StaFi classifies rToken into four categories:
1) rETH: the rToken for Ethereum 2.0 Staking after it goes live.
2) rTokens for Polkadot: rFIS, rDOT, rKSM and rTokens for other Substrate based projects.
3) rToken for the Cosmos ecosystem: rATOM, rKAVA, etc.
4) Others, such as rXTZ, rEOS, etc.
We will develop rETH, rFIS, and rDOT as the first priority, and gradually expand to other assets and establish the standards of rToken protocol together with selected partners. Speaking of, do reach out to us to learn more and jointly develop solutions for your communities!
2.6 The standards of rToken protocol
After developing and supporting 5 rTokens: rFIS, rETH, rDOT, rKSM, and rATOM, StaFi will accelerate the development of the standards of rToken protocol for different public chains by supporting various PoS projects and their developer communities to help them develop their own rTokens through the toolkits we provide. It is StaFi’s mission and vision to emancipate the liquidity for all staked assets of PoS projects.
3.Business architecture
3.1 Introduction of different parties
3.1.1 Stakers
The ‘Stakers’ in the context of rToken business only refers to the participants of Native Token Staking. Using the Stake function provided by StaFi, they can participate in Staking with just one click, without any need to study the PoS consensus mechanism of the original chain or the rules about claiming Staking Rewards.
Staking through StaFi will also offer you access to liquidity solutions, and the flexibility regarding the amount of tokens for staking,
Take Ethereum 2.0 Staking as an example. The amount of user’s staked tokens must be 32ETH or more, however with StaFi’s rToken solution, users can stake whatever amount they are comfortable with, be it 0.01 ETH or 10,000 ETH.
3.1.2 Original Validators
3.1.2.1 Definition
In the business structure of rToken, Original Validators refers to the original chain validators who have joined the Staking Contract program. In order to avoid the threat posed by the staking of assets in the StaFi Staking Contract (SC) to the verification security of the original chain, StaFi will not run any nodes on the original chain. At the same time, tokens deposited by users in the SC will only be distributed to Original Validators.
3.1.2. Validator nomination rules
StaFi will establish an intelligent rating system that quantitatively scores the performance of each Original Validator that joins rToken Staking Contract program. Funds will be allocated automatically by the smart contract per ranking of the Original Validators, and good performing OVs will have an edge over inferior performing OVs.
The main rating criteria are:
1) Background of node operator
2) Times and duration of disconnection
3) Historical Slashes
4) The amount of Staked FIS tokens
In order to realize the vision of “All for one, one for all”, StaFi will also issue FIS tokens as a reward for those validators who choose to support the rToken business and join the Staking Contract program. The amount will be based on their scores.
Staking Contract itself will implement an automatic staking strategy and stake tokens to the most appropriate Original Validators per expected rate of return provided by different Original Validators, the size of Staked tokens, Commissions, Slash history, and other factors. However, due to differences in the staking mechanism of a variety of blockchains, the automatic staking strategy may also be different.
rFIS
Since StaFi adopts NPoS consensus, the staking income obtained by each elected node is relatively equal without any correlation with the number of Staked FIS. In addition, the nominators (stakers) of the elected nodes will share the proceeds of Staking by the proportion of votes. That means if one elected node has more Staked FIS than another, stakers will enjoy higher RoR if they choose to Stake the later.
Therefore, the rFIS Staking Contract will automatically execute the following nomination strategy:
1) Nominations are executed in every Era(6H).
2) OVs are selected whose commission is set less than or equal to R, which will be set at 10% in the beginning.
3)Nominations of the picked OVs are sorted from low to high, and the first number N OVs are chosen to nominate (number N will set at 10 in the beginning).
Note: Both R and N are governance parameters and will be slightly adjusted according to the market situation and product development.
rDOT
The choice made to the selection of Original Validators for rDOT will be similar to that of rFIS, as the two projects both adopt NPoS mechanisms. And in terms of validator nomination rules, their solutions are also very similar.
rETH
In rETH, Original Validators specifically refer to Ethereum 2.0 validators who have joined the StaFi Ethereum 2.0 Staking Contract program.To register as a validator of the StaFi Contract Pool in the rETH product, one must run the node through the Onboarding tool provided by StaFi, pay a quantity of N ETH as a margin, and deposit it in the Ethereum 2.0 Deposit Contract together with the Staker’s assets.
Every time a user deposits greater than or equal to 32 ETH, Original Validators can apply to establish and operate a new node. The platform will rank the original Validators by their historical scores, and those with higher scores will have an edge.
3.1.3 Special StaFi Validator
Security has always been a top priority in our thought process and we have been exploring various ways to ensure the security of users’ staked assets. In summary, the following will be adopted to comprehensively ensure fund safety in a decentralized manner:
1) The private keys of the Staking Contract will be comprehensively managed by the StaFi Special Validators (SSV) on the StaFi chain using multi-party secure computing (MPC) and multi-signatures. StaFi will adopt the MPC scheme to form 21 fragments of the private key to the Staking Contract Pool, which will be distributed to 21 validators in the SSV Group on the StaFi chain. 16 of the 21 SSVs are needed to fully recover the private key, and then control the operational authority of the Staking Contract deployed.
2) Staking Contract is not subject to a single point of failure given it is managed by a group of 21 unspecified SSV, which will be rotated frequently. Although the security of Staking Contract can be greatly improved under this mechanism, we still need to consider the possibility of SSV collusion. Thus, to further protect against potential collusion, a certain amount of FIS (StaFi native token) will need to be staked by SSV in the StaFi Vault, and the overall amount of FIS staking by 21 SSVs should be greater than the value of staked Native Token in the Staking Contract Pool. If collusion really happens, the system will punish the culprits by confiscating SSV’s Staked FIS and use them to repay users.
Please refer to the StaFi white paper for details on SSV election, multi-signature, and penalties: https://docs-cn.stafi.io/yan-zheng-ren-validator/te-shu-yan-zheng-ren-ssv
3.2 Technical architecture
The technical architecture of rToken contains six key components, including: 1) communications between the original chain and the StaFi chain; 2) Staking Contract deployment; 3) SSV verification; 4) rToken exchange rate; 5) user Staking income settlement; 6) validator income settlement. The detailed workflow diagram is shown below:
For rETH, since Ethereum 2.0 Staking is currently in Phase 0, wherein the transfer function is not available, and no delegation relationship exists between the validator and the staker, the technical architecture of rETH is different from that of a standard rToken.
1) The top layer is for user fund management and settlement. Users participate in Staking through the Staking Contract deployed on Ethereum 1.0. The system will mint and send back rETH based on the amount of ETH Staked and the current exchange rate. The system will also be responsible for the clearance and settlement of funds deposited and redeemed by users.
2) The middle layer is for distribution and settlement of staking funds. StaFi will deploy Staking Pools based on the amount of funds locked in SC. StaFi will deposit 32 ETH in each Staking Pool, and stake to the Ethereum 2.0 Deposit Contract after matching validators;
3) The bottom layer is for management and monitoring of Ethereum 2.0 nodes (Original Validators). StaFi will provide Original Validators with a set of standardized onboarding tools. Validators can use this tool to operate the Ethereum 2.0 node client. At the same time, this tool will also monitor the events of the Ethereum 2.0 beacon chain on a live basis, including but not limited to, node operation status, the issuance of staking proceeds, the time and number of disconnections, the occurrence of Slash, and the validator drop-offs.
Figure: rETH workflow
4.The Exchange Rate of rToken
4.1 Calculation method
The rToken exchange rate (Ci) is positively correlated to the Staking income, which is mainly composed of the total amount of Native Token staked in the SC (Qstk), the total amount of redeemed Native Token (Qred), the amount of staking rewards (Qrew), the amount of slash (Qslh), the amount of Penalty (Qpey), and the commission ratio (Rcom), as well as the total amount of rToken issued (M), and the total amount of rToken destroyed (N). The formula is as follows:
4.2 Exchange rate update frequency
The rToken exchange rate will be updated and announced by the system based on the Staking Reward Claim status on the original chain and the occurrence of Slash.
rFIS: every 6 hours;
rDOT: every 6 hours;
rETH: once an hour;
4.3 Slash
When participating in Staking, the slashing problem is hard to ignore. Slashing refers to the deduction of staked assets due to disconnection or malicious behavior of validator nodes. To cope with this challenge and further ensure staker interests, the following will be implemented:
1) Staking Contract will assess original validators’ historical track record and only elect to match staking funds with original validators who haven’t been slashed before.
2) Staking funds will be matched with multiple Original Validators in order to diversify risk and avoid single point of failure. Therefore, even if a certain Original Validator is Slashed (which is highly unlikely), it will not have a major impact on the staking funds pool.
Besides, OVs will be required to commit additional deposits as collaterals, which varies projects to projects given their differences in Slash penalties. And whenever a slash occurs the relevant deposit will be deducted to cover the loss from stakers. This is especially the case in Ethereum 2.0 staking, where the user’s principal could be deducted by as much as 50% in extreme situations.
To register as a validator of the StaFi Contract Pool in the rETH product, one must run the node through the Onboarding tool provided by StaFi, pay a quantity of N ETH as a margin, and deposit it in the Ethereum 2.0 Deposit Contract together with the Staker’s assets. This is to ensure that the user assets are not affected when the node is Slashed, and the Slash loss that occurs will be compensated by the margin.
Therefore, the total amount of margin (Pi) that a node operator needs to deposit is determined by the N value defined in the current network and the total number of running nodes (Mv):
As for the value of N, it is determined by the operation of the ETH2.0 network, the historical performance of the node operator, the number of nodes, and some other factors. Taking into account the Slash rules of ETH 2.0, the value of N will be between 4ETH and 16ETH and the default of N will be set as 8ETH.
Since the redemption function of ETH2.0 will not be supported until Phase 2 goes live, the validators will not be able to charge Commission for a long period of time to make up for the operating cost. In order to encourage validators to join the StaFi rETH solution, we will support Original Validators to apply for liquidity from StaFi at that time.
Suppose that the node operator Bob runs several (X) nodes, and the number of ETH Staked for each node is N. As Bob lacks liquidity funds in the short term, Bob can sell the Staked ETH to StaFi at the current FIS/ETH exchange rate to obtain FIS (either ERC 20 FIS or StaFi Mainnet FIS). Bob can obtain liquid assets by selling FIS out.
The maximum amount of ETH that Bob can sell (S) is:
In the future, we will roll out insurance products to prevent the validator from slashing for each rToken solution in cooperation with DeFi insurance projects. Even if Slash occurs, the validator and users’ losses will be insured.
4.4 Reward Claim Mechanisms
As each PoS project has its own rules for claiming rewards, StaFi will ensure that users’ Staking Rewards can be obtained in a timely manner per relevant project rules.
rFIS
StaFi network will calculate the reward for all validators every Era (6 hours). However, the nominators (stakers) and validators will not receive rewards unless they manually claim the rewards. If the Rewards have not been claimed for 84Era (21days), they will be destroyed.
Within 21 days, as long as a validator or a Staker Claim rewards, the system will automatically issue rewards for all Stakers. In order for Stakers to receive Staking Reward in a timely manner, StaFi Staking Contract will utilize smart contracts to Claim rewards regularly on a periodic basis, such as every 6 hours.
If any one of the following two situations occurs, StaFi will update the exchange rate of rToken:
1) Other Stakers manually claimed the rewards, which causes StaFi Staking Contract to receive the Staking Reward before the next scheduled automatic Claim.
2) The automatic Claim is triggered (every 6 hours), and the Staking Contract receives Staking Rewards.
rDOT
Polkadot network will calculate the reward for all validators every Era (24 hours). However, similar to StaFi, the nominators (Stakers) and validators will not receive rewards unless they claim the rewards. If the Rewards have not been claimed for 84Era (84 days), they will be destroyed.
Within 84 days, as long as a validator or a Staker Claim rewards, the system will automatically issue rewards for all Stakers. In order for Stakers to receive Staking Reward in a timely manner, StaFi Staking Contract will utilize smart contracts to Claim rewards regularly on a periodic basis, such as every 24 hours.
If any of the following two situations occurs, StaFi will update the exchange rate of rToken:
1) Other Stakers manually claimed the rewards, which causes StaFi Staking Contract to receive the Staking Reward before the next scheduled automatic Claim;
2) The automatic Claim is triggered(every 6 hours), and Staking Contract receives Staking Rewards.
rETH
According to the current official documents about Ethereum 2.0 released by the Ethereum Foundation, staking rewards are issued on beacon chain every 6.5 minutes, yet they cannot be directly claimed, nor transferred until further notice. Thus, reward claiming will not be an option on StaFi either until more information is made available.
Therefore, StaFi is currently not taking into consideration the effect of reward Claim function in Ethereum 2.0 network when calculating the exchange rate.
4.5 rToken/Token market price and rToken exchange rate
The exchange rate of rToken represents the price relationship between rToken and the Native Token in the StaFi Staking Contract. For example, if the current rToken/Token exchange rate is 2, then the rToken holder can redeem 2 Native Tokens from the StaFi Staking Contract by burning 1 rToken.
The exchange rate of rToken sets the foundation for the rToken/Token price on the secondary market. Since rToken/Token can be traded 24/7 and price could potentially be affected by market fluctuation, short-term rToken/Token market prices and Token exchange rates may not be consistent. In an efficient market, however, once the rToken/Token market price is inconsistent with the rToken exchange rate, the price discrepancy is likely to be picked up and filled very quickly.
5.rToken Use Cases
5.1 Summary
StaFi believes that delivering an interest-bearing rToken service is only the first step. The liquidity dilemma of staked assets will not be fully resolved if rToken cannot be freely traded, exchanged or utilized in other financial applications. Therefore, StaFi will strive to create comprehensive use cases such as DEX, lending, and synthetic assets for rTokens.
1) For example, StaFi will be dedicated to developing cross-chain bridge services, bringing rToken into the Ethereum ecosystem, and at the same time, enable rETH to be utilized in Cosmos (Tendermint) compatible blockchains. We aim to do so with the help of other ecosystem giants like xDai, 1inch, and developers who are interested in joining our mission.
2) Besides, StaFi will also aims to cooperate with DEXs, lending protocols, and synthetic asset platforms in the Ethereum ecosystem, so that non-ETH rTokens such as rFIS, rDOT, rKSM, rATOM, etc. can be traded in exchanges such as Uniswap. Users could also be able to utilize their rTokens in liquidity mining programs or simply as collaterals on such as Aave.
5.2 Cross-chain Bridge(rBridge)
rToken will realize interoperability through the cross-chain Bridge function developed by StaFi. For example, rFIS on the StaFi chain can be converted to rFIS on the Polkadot chain through rBridge, so that the holders of rFIS can have access to the DeFi applications built on Polkadot. This means that rETH could also potentially be converted to its counterparts for Cosmos, so that its holders could also access the service built on Cosmos.
5.3 Secondary markets
rToken holders can not only redeem native tokens from the StaFi Staking Contract, but also sell rTokens on a variety of venues with rToken/Token, rToken/ETH, and rToken/USDT pairs. We have previously announced collaboration with BitMax as one of the user-choices among CEXes and will strive to add more partners and liquidity providers, including dedicated liquidity programs for all users.
The platform on which rTokens traded can be a decentralized exchange on the original chain or another as long as rBridge is supported. Meanwhile, StaFi will implement liquidity incentive programs in order to promote liquidity for rTokens on DEXs.
Besides, StaFi will cooperate with centralized exchanges to list rToken/Token, rToken/USDT, and other pairs to further enhance the circulation and liquidity conditions of rTokens.
6.Economics
6.1 Mint rToken
In order to encourage adoption of rToken solution, StaFi will not charge any fees for Mint.
6.2 Commission
StaFi and Original Validators will in total charge 20% of the net income of the rFIS Staking Contract as commission. The Commission ratio of OV will be dynamically adjusted according to the number of validators in the StaFi Staking Contract.
At the beginning, OV’s Commission rate is temporarily set at 10%. Original Validators will receive 10% of the net income of rFIS Staking contracts as Commission.
6.3 Burn rToken
When users want to redeem FIS, they only need to apply for redemption from StaFi’s Staking Dashboard. Soon afterwards, they will obtain their FIS tokens. The redemption process is mainly divided into two steps:
Step 1: Submit the number of rFIS for redemption, with the maximum number being the total number of rFIS one holds.
Step 2: After your submission is confirmed, the system will burn the corresponding amount of rFIS, and calculate the quantity of FIS to be redeemed per the current exchange rate. Thereafter, the system will deduct a service charge and Commission fee and send the remaining tokens to the user’s designated wallet address.
The redemption fee for rFIS (Feered) is determined by the number of rTokens that the user applies for redemption (M), the current rToken/Token exchange rate (Rc), and the redemption rate (Rr):
The redemption fee (Rr) is set to be 0.2% initially.
7.Income Distribution Plan
7.1. Revenue Generation
The revenue of rToken business mainly comes from:
1) The earnings from rToken business, such as the Commission or the transaction fee charged for redemption. These incomes are in the form of the native tokens of various PoS projects, such as ETH, DOT, KSM, FIS and so on.
2) The Commission charged for rBridge services, and the earnings are in the same token as above.
7.2 Income Distribution Plan
As a DeFi protocol widely supported by the community, we will be distributing the earnings back to our supported through the following ways:
1) 70% will be given back to FIS token holders, in the form of buyback & burning, or sharing with token holders.
2) 20% will be deposited in the StaFi Treasury to support the further development and promotion of the StaFi project and rTokens.
3) 10% will be allocated to the StaFi team.
We aim to evolve into a proper DAO with long-term incentive both for developers and liquidity providers. As such, we have long been convinced that a variation of a smart treasury model nicely explained by Placeholder is the way to go.
8.Governance
In the initial stage of rToken business, the core team of StaFi will shoulder the responsibility of governance. That is because products such as rBridge, rToken, and Staking Derivatives have not yet been fully developed. Meanwhile, community autonomy rules have not been clearly defined yet either. StaFi believes that at this stage, it is unwise to blindly pursue a fully decentralized governance.
When StaFi’s core products are relatively mature and the community autonomy rules are clearly defined, StaFi will gradually delegate the decision-making on rToken-related issues to the community, achieving on-chain governance. At that time, community members are more likely to be familiar with the StaFi DAO governance process and have clearer judgments on products and businesses. In the future, StaFi will virtually be an assistant of the community on decision-making, only responsible for the implementation of some ideas. We believe that this will be a perfect relationship between the community and the team and a good foundation for the full autonomy of StaFi. This is the ultimate goal of StaFi which, we believe, is not very far away.
At that time, FIS holders can put forth on-chain proposals that cover the following aspects and submit them to the community for vote:
1) Product planning. For example, design a rToken for a PoS project, or whether to add or reduce a certain application scenario for a rToken.
2) Adjustment of critical parameters. For example, adjust the redemption rate, Commission rate, Mint rate, and other important system parameters.
3) Treasury expenditure plan. For example, applying for funding for rToken development tools, or for staking derivatives research, and so on.
4) Others. Such as FIS token inflation rate, revenue distribution, dividends & repurchase plan, etc.
9.The Relations between rToken and StaFi chain
9.1 The security mechanism of Staking Contract
The private key management of the rToken Staking Contract will be implemented by the SSV validator on the StaFi chain using MPC+ multi-signature, thereby realizing the decentralization and a high-security level of Staking Contract.
9.2 Initial issuance of rToken assets
The initial issuance of each rToken asset will be on the StaFi chain, so a myriad of rTokens will be issued and stored on the StaFi chain. The rToken assets on the StaFi chain will be interoperable with different public chains through the ETH bridge, Polkadot bridge, or Cosmos bridge, circulating in different DeFi ecosystems.
10.The Value Capture of FIS
The rToken business model, as we believe, will provide a variety of value capture mechanisms for FIS to support its economic dominance on the market:
1) The Native Tokens locked in the Staking Contract will become one of the value supports of FIS tokens, especially due to the fact that the FIS mortgaged by SSV are actually higher than that of Native Tokens in the pool.
2) 70% of the income in the rToken solution is used to give back to FIS token holders, in the form of repurchase & burn or dividends.
3) In the future, rToken will interact with Ethereum, Polkadot, and Cosmos ecosystems through cross-chain bridges, and 70% of the revenue from this business will also be used to repurchase and burn FIS.
4) Original Validators can Stake FIS tokens to increase their credibility, thereby enjoying the priority of the allocation of funds.
11.Prospects
It is StaFi’s vision to provide liquidity solutions to staked assets with the adoption of rToken and to further create liquidity and utility for those, like making it a collateral. In addition, rToken as an interest-earning asset can also be used as the underlying asset of various index funds, futures, and other derivative products in the digital asset world. Currently, however, StaFi must focus on creating rTokens for some key PoS projects. It is not necessary for us to build a proprietary DEX, lending, or other products immediately. Instead, we can cooperate with reliable partners and grow together.
In the future, StaFi will explore the idea of a self-built DEX and a lending platform, since there may be a host of rTokens circulating in the crypto field, 50–100 or even more. This provides impetus to the possibility of StaFi building a DEX and a lending platform.
11.1 DEX
With a variety of rTokens minted in the future, StaFi will consider establishing a DEX specialized for their trading. The DEX will adopt an AMM or a better market maker model to provide benefits to users who provide liquidity — reducing slippage and creating a more robust environment for users. With such a DEX in place, all rTokens that observe StaFi’s rToken protocol standard could be traded freely.
In addition to a DEX, StaFi may also launch a rToken lending platform. If so, all rTokens that are created with the StaFi’s rToken protocol — would use that platform to yield more interest. They would also be used as collateral to lend Native Tokens or other assets with better liquidity, such as ETH and USDT. This is a long-term goal for us.
11.2 Derivatives based on rToken
When a large number of rTokens can freely circulate, StaFi will explore more possibilities based on the interest-bearing attributes of rToken, especially rToken derivatives. For example, StaFi can cooperate with Synthetix. rTokens could act as the underlying assets of index funds, and various rToken-based Index products can be designed.
As a use case, a cooperation with Nexus Mutual may bring together insurance products based on the rToken Slash scenario for validators. In the event of slashing, the validators’ loss would be insured. These are just two examples. In fact, the rToken-based derivatives could be extensively versatile in usage. StaFi will always have an open mind towards derivatives and welcome like-minded developers and partners to join us.
11.3 Release the liquidity of all Staked assets
When StaFi realizes that all Staked assets of PoS projects can circulate freely, we will also consider how to set free the liquidity of any Staked assets, such as a Staked token of a dApp in ETH, or the secondary market circulation of locked assets in loans. StaFi is considering the following design for this issue.
About StaFi Protocol
StaFi is the first DeFi protocol unlocking liquidity of staked assets. Users can stake PoS tokens through StaFi and receive rTokens in return, which are available for trading, while still earning staking rewards. FIS is the native token on StaFi Chain. FIS is required to provide security to the network by staking, pay for transaction fees on the StaFi chain, and mint & redeem rTokens.
Website: www.stafi.io
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