Persistence One Unleashes DYDX Liquid Staking on Cosmos

Persistence One recently accomplished a significant milestone by introducing DYDX liquid staking on Cosmos via sktDYDX. This initiative marks a new chapter in the expansion of liquid staking solutions within the Cosmos ecosystem, following the successful integration of stkATOM and stkOSMO.

The Argument for Liquid Staking in DYDX

In the last quarter of 2023, the dYdX Chain underwent a significant evolution, transitioning to a Proof-of-Stake (PoS) network with the unveiling of dYdX V 4. This version leverages the Cosmos SDK and the Tendermint PoS consensus protocol, marking a strategic move towards bolstering decentralization.

The shift to a PoS framework allows DYDX token holders to stake their tokens, reinforcing the dYdX Chain and earning USDC token rewards. This staking model is enhanced by the platform's decision to distribute 100% of its generated fees to stakers, aligning with the increased interest in DeFi tokens following proposals like UNI's for fee sharing. 

So far, dYdX has distributed $8.90M in rewards to stakers and validators.

However, stakers must navigate the 30-day unbonding period, which locks their funds and limits their use in other DeFi applications.

stkDYDX offers an elegant liquid staking solution, offering a seamless blend of staking benefits and DeFi accessibility.

What is stkDYDX?

stkDYDX is a liquid staked token (LST) representing the native token DYDX of the dYdX Chain, issued by pSTAKE Finance on Persistence One. This innovative financial instrument offers holders the dual benefits of earning DYDX staking rewards — derived from trading fees and other sources — while also participating in DeFi activities, all without sacrificing liquidity.

stkDYDX also enables users to participate in the Cosmos DeFi ecosystem by providing liquidity on Dexter and earning trading fees.

Here are the key features of stkDYDX:

• Zero liquid staking fees: For the initial two months post-launch, users can enjoy 0% fees on DYDX liquid staking, allowing them to retain all their staking rewards and benefit from enhanced yields.
  

• Auto-compounded rewards: The platform introduces a seamless "no-click" auto-compounding feature, converting all USDC staking rewards into DYDX tokens, which are then automatically restaked, optimizing the compounding process for users. This mechanism also introduces a perpetual buy pressure on $DYDX.
  
  Simply put: More $ DYDX liquid staked -> More USDC rewards generated -> More buy pressure.
  

• Immediate liquidity: Users can quickly convert stkDYDX into DYDX via DEXs like Dexter or utilize the "Flash Unstake" feature on pSTAKE Finance for instant access to liquidity, matching daily DYDX deposits with unstaking requests.
  

• Safe and secure: Liquid staking on Persistence One has undergone thorough security evaluations by prominent security companies, including Halborn Security, Notional, Hexens, among others. It stands out in the Cosmos ecosystem for having an active bug bounty program through Immunefi. Furthermore, to enhance security measures, stkDYDX has been independently audited by Oak Security.

Boosting dYdX Decentralization with stkDYDX

Liquid staking through stkDYDX is vital in enhancing the decentralization of the dYdX ecosystem by allocating staked DYDX tokens across approximately 35 validators. This strategy covers over half of all validators within the dYdX ecosystem, contributing significantly to its decentralized structure.

pSTAKE’s unique architectural design is set to amplify the dYdX chain's decentralization, aligning with the core reasons behind dYdX's shift to a sovereign chain model. Decentralization is essential for a PoS chain's resilience, security, fair governance, and community trust. The Nakamoto Coefficient, a measure of decentralization indicating the number of validators needed to control over a third of the network's stake, is a critical metric in this context.

With the launch of pSTAKE's automated stake decentralization delegation model, stkDYDX aims to optimize decentralization continuously. This model will recommend the final validator set and delegate stakes based on various parameters, ensuring transparency and fairness in validator selection without the need for gatekeeping by liquid staking providers.

Highest $DYDX DeFi Yield Strategy

Here's a comprehensive guide on how to use stkDYDX in the Persistence One ecosystem.

pStake and stkDYDX

#1 Staking DYDX

• Connecting to pSTAKE: Ensure you have DYDX tokens in a compatible wallet (Keplr, Cosmostation, Leap Wallet, or Ledger). Navigate to the pSTAKE app, connect your wallet, and select DYDX as the token to stake.

• Staking: On the staking page, enter the amount of DYDX you wish to stake and confirm the transaction. Your DYDX will be auto-delegated to various validators, enhancing decentralization.
  

  

• IBC transactions: Complete two IBC transactions to transfer and liquid-stake DYDX on the Persistence Core-1 chain.

• Minting stkDYDX: Once confirmed, stkDYDX will be issued to your wallet, and you'll start earning compounding rewards in DYDX and USDC, which are converted to DYDX and restaked by pSTAKE. Currently, pSTAKE offers 22.09% APY
  

  

#2 Unstaking stkDYDX

• Accessing pSTAKE: Return to the pSTAKE app and select DYDX.

• Unstaking options: Choose between "Flash Unstake" for instant liquidity or "Regular Unstake," which takes about 30 days. pSTAKE allows users to instantly redeem stkDYDX for DYDX (with a 0% fee for the first 2 months and a small fee after that) on pSTAKE.
  

  

• Confirmation: Confirm the unstaking transaction in your wallet. For Regular Unstake, monitor the progress in the "Unstaking" section.

Dexter and stkDYDX

Persistence One’s Dexter app currently offers 78.41% APY in the DYDX/stkDYDX pool. 

You can click on the pool to add liquidity.

Simply click on “Add LIquidity” and provide liquidity to the DYDX/stkDYDX pool:

Conclusion

With its unique features and user-centric innovations, stkDYDX is poised to play a pivotal role in the growth of the liquid staking economy on Cosmos and the dYdX ecosystem. If you want to know more about stkDYDX read this.