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- Maximizing Your LST Yield with Persistence
Maximizing Your LST Yield with Persistence
The future envisioned by Persistence is one where liquid staking becomes a cornerstone of the DeFi ecosystem.
Liquid staking was one of the dominant narratives in DeFi in 2023. Liquid staking is particularly intriguing because it provides valuable utility to the Ethereum network and frees up previously locked-up liquidity. In today’s article, we will familiarize ourselves with the Persistence Ecosystem and learn how it helps you maximize yield through Liquid Staking Tokens (LSTs).
Staking vs Liquid Staking
Staking is a straightforward way to earn returns on native digital currencies. Retail investors usually participate in staking by delegating their assets to validators, who then share the proceeds. However, traditional staking problems have several issues.
Liquidity crunch: The biggest problem is that standard staking locks in cryptocurrencies and removes them from the circulating supply, essentially killing liquidity. In some cases, the coins can’t get unstaked without a cooldown period.
Capital inefficiency: The invested capital is tied up solely in staking, missing out on other potential investment opportunities.
Centralization risks: Traditional staking methods can lead to centralization, especially if a small group of large validators controls a substantial portion of the staked assets.
Liquid staking effectively addresses these issues.
Maintaining liquidity: Liquid staking ensures liquidity by issuing representative tokens that can be actively traded or utilized in various DeFi platforms, keeping the staked assets functional.
Capital utilization: LSTs from liquid staking can be used across a range of DeFi protocols, enabling additional yield opportunities and diverse investment strategies, thus maximizing the efficiency of the staked capital.
Decentralized approach: Liquid staking allows for a broader distribution of validators, which helps mitigate centralization risks.
The rising popularity of LSTs highlights their considerable benefits.
Throughout 2023, liquid staking has seen remarkable growth, with its total value locked (TVL) soaring by 327%, from $7.51 billion to a substantial $32.04 billion, as per DeFiLlama. This surge underscores the increasing popularity and viability of liquid staking in the DeFi sector.
Liquid Staking Token Finance (LSTfi) protocols have been instrumental in this expansion. It provides a solution that doesn't force users to choose between participating in staking and engaging with DeFi protocols. This approach maintains liquidity and maximizes the potential for earning yields.
Liquid Staking With Persistence
Persistence operates as a Cosmos app chain specializing in LSTfi. It is a purpose-built Layer 1 on a mission to maximize liquid staking yield. It provides a secure and robust infrastructure for dApps to build an economy around LSTs.
The Persistence core-1 chain facilitates issuing and deploying liquid-staked stkASSETs via pSTAKE, allowing users to earn staking rewards while participating in DeFi primitives. Having enabled CosmWasm, the core-1 chain also facilitates the deployment of Dapps via Smart Contracts.
Before going any further, let’s look at the Persistence ecosystem.
pSTAKE Finance: A liquid staking protocol
Dexter: A decentralized exchange
XPRT: The native taken of the Persistence ecosystem.
pSTAKE Finance is a multi-chain liquid staking provider. It operates on the Persistence chain for Cosmos-based assets and extends its services to other ecosystems like BNB. It offers a versatile and integrated approach to liquid staking.
The core functionality of pSTAKE lies in enabling holders of proof of stake (PoS) tokens to stake their assets on its platform. Not only does the platform incur lesser fees than the competition, but pSTAKE's automated stake decentralization delegation model constantly optimizes for decentralization by using various parameters to suggest the final validator set and the amount of stake delegation to each validator in this set.
pSTAKE's significant milestones include:
Launching the first ATOM liquid staking token as an ERC20 token on Ethereum in 2021.
Introducing BNB liquid staking with stkBNB in August 2022.
Rolling out stkATOM natively on the Persistence core-1 chain in January 2023, with a TVL of approximately $6.8M and integration into 7 DeFi platforms.
Launching stkOSMO in December 2023, featuring a decentralized and automated stake delegation strategy involving 75 Osmosis validators.
Will soon launch dYdX liquid staking with stkDYDX.
Operating within the Persistence Core-1 chain, pSTAKE benefits from the chain's economic security provided by XPRT and essential technical support for LST issuance.
Governed by the PSTAKE token, pSTAKE collaborates closely with the Persistence ecosystem, which is pivotal in issuing LSTs and nurturing the decentralized liquid staking economy on the platform.
pSTAKE Finance has raised north of $20M in three fundraising rounds with investments from Binance Labs, DeFiance, Sequoia Capital India, Galaxy Digital, Lattice Capital, Ryze Labs, Coinbase Ventures, and Kraken Ventures, amongst others.
Dexter is a decentralized exchange integral to the Persistence ecosystem. It is designed to be user-friendly, catering to traders and liquidity providers seeking efficient trading and yield opportunities. Developed collaboratively by various teams and primarily maintained by Persistence Labs, Dexter is governed entirely by XPRT holders, ensuring it remains a key part of the ecosystem.
Dexter's Automated Market Making (AMM) mechanisms were inspired by Balancer and Curve Finance, optimizing it for liquidity and efficient trading. It has also introduced an Instant LP Unbonding feature to enhance user experience.
Dexter pool overview
The ATOM/stkATOM pool is the most liquid, with over $3 million in TVL, offering around 26% APR to liquidity providers.
When it comes to APR, the USDT/XPRT pool currently offers a whopping 57.35%, while DYDX/USDC comes second with 46.35%.
The USDC/USDT pool offers efficient, stable swap rates and has garnered over $300k in liquidity.
Dexter is crucial in the Persistence ecosystem as the primary liquidity hub. It enhances the platform by providing liquidity for LSTs from pSTAKE and other valuable tokens, attracting users, and boosting on-chain activity.
XPRT is the native token of the Persistence Core-1 blockchain. It is integral to both the operational and governance aspects of the Persistence ecosystem. Its primary utilities in the Persistence ecosystem include:
Chain security: XPRT is used in the CometBFT consensus mechanism for block production and validation. Stakers and validators stake XPRT to participate, secure the network, and earn rewards. The chain often maintains a high bonded ratio, indicating robust security.
Governance: XPRT holders have voting rights for key decisions like chain upgrades, dApp improvements, and network parameter changes. This decentralized governance model has led to significant developments like the launch of pSTAKE and Dexter.
Ecosystem traction: As a base asset on Dexter and other dApps, XPRT drives traction within the ecosystem, playing a central role in liquidity and incentivization strategies.
Transaction fees: Transactions on the Persistence Core-1 chain, including staking, transfers, and trading activities, require XPRT for fee payments.
Persistence is rapidly establishing itself as a trailblazer in the DeFi with 'Persistence One', a purpose-built Layer 1 platform dedicated to revolutionizing liquid staking. This ecosystem stands out for its commitment to integrating various Proof of Stake (PoS) blockchains and DeFi applications, thereby expanding and enhancing its liquid staking services (LSTs) and decentralized exchange (DEX) capabilities.
Moreover, the Persistence Labs team, with their extensive history and expertise in the Cosmos ecosystem, brings a wealth of knowledge and experience to the table. Their early involvement in key developments like the Game of Stakes and the creation of the first ATOM liquid staking and an LSTfi appchain underscores their capability and dedication to shaping the future of DeFi.
The future envisioned by Persistence is one where liquid staking becomes a cornerstone of the DeFi ecosystem. In this future, LSTs are not just a medium of exchange but a central component in a wide array of DeFi applications, ranging from decentralized exchanges to complex financial instruments like perpetuals and options. Persistence One is at the forefront of this vision, offering a platform where LSTs from leading PoS chains like Cosmos Hub, dYdX, Osmosis, and Celestia are not only issued but also widely adopted across various DeFi applications.