Liquid Staking on Wombat
Liquid staking took the crypto space by storm when its implementation commenced in the BNB Chain. We’re thrilled to announce that we will launch our very own Liquid Staking pool soon!
The pool will go live on 14th Sep 2022 at 2 AM UTC with token listings that include BNBx from Stader Labs, stkBNB from pSTAKE Finance, and aBNBc from Ankr. Without further ado, let’s dig deeper into how these new features work!
What is Liquid Staking?
Unlike ‘staking’, where users lock their tokens for specific durations to generate yield with their idle assets, liquid staking takes the mechanism a whole step further by generating yield for you while allowing you to access the locked funds. Each of them has a different mechanics- and in the later part of this article, we will introduce each token one by one.
How Wombat’s Liquid Staking Pool Works
Firstly, liquid staking has its own pool to segregate risks from the Main Pool. External oracles are utilized to gain accurate swap calculations as the pool contains yield-bearing tokens, the exchange rate of which for redeeming will grow over time.
When the price of tokens changes, the equilibrium coverage ratio will likely vary and deviate from 1. When it grows higher than 1, it is easy for us to repeg it to 1 by reducing assets in the pool. On the rare occasion when it grows below 1, we will fill the gap and push it back to 1 with the haircut fees that we accumulate over time. Since it is not expected to occur often, we should have sufficient funds to cover the difference.
Losses in the BNB pool of liquid staking providers due to slashing and penalties are extremely rare. However, for such instances, compensation from liquid staking providers is expected as this will help maintain the liquid staking tokens’ peg to the base asset — BNB.
How can a user benefit from the liquid staking pool?
Users can flexibly exchange different assets within the pool and acquire rewards in WOM through staking these yield-bearing tokens on Wombat.
The locking and minting of liquid staking tokens are usually instant, whereas the unlocking and redemption period takes 1–3 weeks, depending on the provider. Users are able to bypass the unbonding period and directly swap their liquid staking tokens to BNB on Wombat if the swap price to BNB is comparable to the rate from the liquid staking providers a week later. Thus, liquid staking token assets, e.g., stkBNB asset, would have a higher coverage ratio than the base asset, i.e., BNB because of the illiquid nature of liquid staking tokens compared to the base asset.
Details of the liquid staking pool
The swap fee of Liquid Staking Pool is 0.1%.
Refer to our whitepaper for more details on the mechanism. First-month emissions will be as below:
*Updated as of 14th Sep
Introducing the New Tokens in the Liquid Staking Pool
1) stkBNB
stkBNB is the liquid-staked version of BNB, which is minted when you stake BNB on pSTAKE. Rewards accrue into the value of stkBNB which rises after every epoch (UTC 00:00 hrs). Users start earning rewards from the first epoch after staking. stkBNB follows an exchange rate model (Compound’s cToken model) which increases in value as the protocol accrues staking rewards.
There is no minimum or maximum limit to the amount of BNB a user can stake. pSTAKE allows users to stake any non-zero amount of BNB. The protocol has decided to waive fees in it’s bootstrapping phase, with potential reconsideration of this plan after 3 months through a governance vote.
When you perform an unstake transaction on the pSTAKE, the stake immediately stops accumulating rewards and you can then claim the underlying BNB after the 15-day unbonding period.
stkBNB has been audited by the industry’s best including Peckshield, Halborn, and Certora, with on-chain tracking on Forta and a Bug Bounty program running on immunefi.
2) BNBx
BNBx is the liquid-staked version of BNB, which is minted when you stake BNB on Stader. As staking rewards accrue, BNBx will grow in value as compared to BNB.
At launch, the BNBx exchange rate is initialized to 1. When rewards are added to the pool, the BNBx: BNB exchange rate will increase.
There is no minimum amount of BNB a user is required to stake, but it is recommended to stake a minimum of 0.01 BNB. Note that there is a 7–15 days unbonding time after unstaking, post which the user is able to withdraw the underlying BNB to their wallet. You can check the exact time and date in the Withdraw tab.
3) aBNBc
aBNBc is the liquid-staked version of BNB, which is minted when you stake BNB on Ankr. As a reward-bearing token, it increases in value over time to reflect your staking rewards. The minimum amount of BNB you can stake is 1.002 BNB: 1 BNB, plus the relayer fee for cross-chain transfer of your assets applied during the staking — 0.002 BNB. You must also count in the gas fee on top for sending the transaction.
The exchange ratio is calculated like this:
totals_supply_of_abnbc / (total_staked_bnb + total_rewards_for_staked_bnb — total_unstaked_abnbb_and_abnbc).
If you decide to unstake, it can take up to 7–14 days before you receive your underlying BNB.
5% are subtracted from your Liquid Staking rewards to cover the services and operations provided by Ankr. Your APY already includes the fee so no need to recalculate it, you get what you see.
Mark your calendar! You wouldn’t wanna miss the launch. More information will be coming in the next days. Stay tuned!
About Wombat Exchange
Wombat Exchange is a multichain stableswap native on the BNB Chain, focused on re-engineering the stableswap experience with its innovative algorithm design as the next-generation stableswap 2.0.
Wombat’s vision is to fuel DeFi growth and push boundaries with greater capital efficiency, increased accessibility, and scalability, with the adoption in a multichain world. To learn more, visit wombat.exchange, or follow us on the social channels below:
