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pSTAKE's Liquid Staking Solution for BNB

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Blog / Tech Deep Dives / Announcements

pSTAKE's Liquid Staking Solution for BNB

pSTAKEfinance

By pSTAKEfinance

Created 2 months ago, last updated 2 months ago
6 mins read
pSTAKE's Liquid Staking Solution for BNB

Table of Contents

BNB Chain is a thriving ecosystem of DeFi (decentralized finance) solutions and products that’s taken the world by storm since its inception in 2019. As the network has grown in popularity, so has its user base, TVL (total value locked), and overall activity.

Now, the chain has accelerated to the fifth rank in terms of market capitalization (third layer-1 network behind Bitcoin and Ethereum) and first when it comes to overall network activity, with 3.3M+ daily transactions.

After months of rigorous development and careful testing, which included a partnership with Binance Labs and a series of audits by leading blockchain security firms, pSTAKE is now moving forward with its mainnet launch for BNB liquid staking.

Let’s dive deeper into the details of pSTAKE’s stkBNB liquid staking implementation, including how it will work and the key benefits to both users and the BNB Chain DeFi ecosystem.

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What is pSTAKE’s BNB Liquid Staking?

With stkBNB, pSTAKE aims to unlock liquid staking functionality for the BNB community and supercharge the growth of the BNB Chain ecosystem. Once launched, users will be able to stake their native BNB tokens via the pSTAKE app and directly mint stkBNB, pSTAKE’s liquid-staked representative token for BNB.

As a result, they’ll be able to simultaneously earn auto-compounded staking rewards from their on-chain staked BNB and also utilize their stkBNB across the BNB Chain’s 1,400+ dApp ecosystem to earn additional yield in DeFi.

The implementation is scheduled to go live on mainnet on August 8th, 2022.

Functionality Overview

Let’s take a closer look beneath the hood at how our BNB liquid staking implementation will function, in addition to stkBNB’s token dynamics and exchange rate model.

Smart Contracts

pSTAKE has deployed smart contracts on BNB Smart Chain (BSC) that will facilitate user activity, such as depositing and unbonding BNB, minting stkBNB, and more.

Users will interact with the StakePool contract for stake, unstake, and claim requests. The contract is also responsible for maintaining the exchange rate (c-value) and storing the wallet addresses for cross-chain transfers to the BNB Beacon Chain where the staking module is present.

Validator Strategy

Our goal is to enable our users to earn high staking rewards without sacrificing security. The initial set of whitelisted validators will be selected from the top validators across BNB Chain based on a unique scoring mechanism. This mechanism takes several factors into account, such as APR, slashing history, uptime, and more.

Delegation & Undelegation Strategy

Participants who stake via pSTAKE’s user interface will immediately receive minted stkBNB tokens. pSTAKE will delegate all staked BNB on an epoch basis (every 24 hrs) to the validator set.

Based on our current strategy, the top 10 BNB Chain validators will be selected as the active validator set through whitelisting. In the future, the active validator set will be determined via an automated scoring algorithm (more details to come).

Users will be able to unstake their stkBNB tokens at any time - BNB will then be claimable after 15 days and pSTAKE will undelegate from validators every 7 days.

In the event a pSTAKE validator being slashed, it will be removed from the whitelist and another validator will be subsequently added.

stkBNB Token Issuance & Exchange Rate Model

When a user deposits their BNB into pSTAKE’s smart contracts, stkBNB is issued immediately and won’t be dependent on staking on the BNB Chain mainnet. stkBNB is also BEP-20 and BEP-2 compatible.

stkBNB token will follow an exchange rate model - the cToken model. It’s important to note that the exchange rate will only be updated at the end of the current epoch (start of the new epoch) because Binance Chain rewards are distributed based on epoch.

Formula:

A slashing event won’t directly impact the exchange rate, as staked funds are not slashed based on the network’s mechanism and model.

Rewards & Fees

100% of earned rewards will be distributed to BNB holders who stake through pSTAKE. User rewards will automatically be compounded at every epoch (24 hrs) as staked BNB continues to earn rewards. 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.

Key Benefits

pSTAKE’s liquid staking solution for BNB offers a wide array of benefits for both users and the network/ecosystem when compared to traditional on-chain BNB staking. In addition, several major integrations are in the pipeline to provide utility to both participants and the network.

Below are some of the important points to note.

User Benefits

  • Instant Liquidity: Receive instant liquidity on staking position in the form of stkBNB.
  • High Yields: Staked assets are balanced and staked across a range of high-performing validators to optimize users’ staking yields. Staking rewards earned by users will be auto-compounding in nature allowing users to maximise their earning potential while particpating in BNB DeFi ecosystem with stkBNB.
  • Flexibility: Ability to avoid the traditional 7-day unbonding period when unstaking BNB by simply swapping stkBNB for another asset from the respective liquidity pool. Additionally, any non-zero amount of BNB can be staked via pSTAKE.

Network/Ecosystem Benefits

  • Higher Liquidity: pSTAKE will unlock a new wave of liquidity for BNB Chain by bringing staked assets into the DeFi ecosystem, leading to an increase in dApp usage, activity, and TVL.
  • Greater Adoption: Increased demand and adoption of stkBNB will encourage further innovation and development from BNB Chain DeFi applications looking to capitalize on the interest by providing further utility and use cases.
  • Increased Staking Ratio: The user advantages provided by liquid staking will encourage more BNB holders to stake, thereby increasing the staking ratio and enhancing the security of BNB Chain.

Integrations

  • PancakeSwap: Two separate liquidity pools will be launched for stkBNB/BNB and PSTAKE/BUSD, where users will be able to trade token pairs and provide liquidity to earn LP tokens. Users who stake LP tokens can receive CAKE as a reward.
  • Alpaca Finance: Users will be able to leverage farm the stkBNB/BNB and PSTAKE/BUSD pools on Pancakeswap by depositing and borrowing assets. ALPACA stakers will also be able to receive PSTAKE rewards through pools within its Grazing Range.
  • Others: Other potential integrations can include Venus Protocol (Money Market for stkBNB), Wombat Exchange (BNB & stkBNB swaps via sidepools), Beefy Finance (earning compound interest on stkBNB).

The Next Frontier for BNB Chain

With the BNB liquid staking market beginning to heat up, pSTAKE has arrived on the scene with a solution poised to become a game-changer and bring increased adoption to the BNB Chain ecosystem.

Our unique stkBNB solution will enable participants to explore DeFi within BNB Chain like never before, allowing them to secure the network and make it more robust while simultaneously earning additional DeFi yields.

We’re about to flip the switch, so brace yourselves - stkBNB is coming soon on pSTAKE.

About pSTAKE

pSTAKE is a Liquid staking protocol that unlocks liquidity for your staked assets. With pSTAKE, you can securely stake your Proof-of-Stake (PoS) assets, participate in protocol improvements and security to earn staking rewards, and receive staked underlying representative tokens (stkASSETs) which can be used to explore additional yield opportunities across DeFi.

At present, pSTAKE supports Cosmos ($ATOM), Persistence ($XPRT) and Ethereum ($ETH) networks’ native tokens with BNB staking going live on 8th August 2022, with a view to support more chains and assets in the future.

Developed by Persistence

Persistence is a Tendermint-based, specialised Layer-1 network powering an ecosystem of DeFi applications focused on unlocking the liquidity of staked assets. Persistence facilitates the issuance and deployment of liquid-staked stkASSETs, allowing users to earn staking rewards while participating in DeFi primitives, such as lending/borrowing and liquidity provisioning on DEXs.

Persistence aims to offer a seamless staking and DeFi experience for PoS (Proof-of-Stake) users and enable developers to build innovative applications around stkASSETs

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