As Ethereum enters the PoS era, users’ demand for ETH staking is growing. The emergence of the re-staking concept has further increased users’ expectations for ETH yields.
As the foundation of the re-staking track, let’s take a look at the data growth of Eigenlayer. According to DefiLlama data, Eigenlayer has attracted 14.56b TVL and remains high.
However, the traditional staking method has liquidity limitations. After users stake ETH, the liquidity of their assets is greatly reduced and they cannot be used in other DeFi applications. Especially in the mid-term bull market, the capital and time costs are very high, and the lock-up method will greatly reduce the opportunity cost. For example, the lock-up problem of Ethereum's L2 Blast is often complained by the community.
If the lock-up occurs in a bear market or the beginning of a bull market, it is not a big deal because the asset price is lower at that time. As long as the position can be unlocked in the middle and late stages of the bull market, you can still earn asset appreciation income during the passive lock-up period.
However, if you lock your position in the middle of a bull market or at a peak, if you do not have a hedge, you may lose the opportunity to sell at a high price, and your assets will shrink after you unlock them, which is not worth the loss. Even in a volatile market, locked funds will lose some profit opportunities because they cannot operate other profit strategies.
Therefore, whether assets can be freely deposited and withdrawn is a pain point that users participating in staking projects are very concerned about. Currently, providing liquidity staking/re-staking certificates has become a popular solution.
Liquidity staking/re-staking certificates have spawned various ways to amplify profits by killing two birds with one stone, attracting a steady flow of on-chain ETH to various staking protocols.
Various re-staking protocols often provide liquidity re-staking certificates (LRT) while rolling out returns. For example, Renzo can obtain the pledge certificate ezETH; as well as Swell's swETH, KelpDAO's rsETH, Puffer's pufETH, etc. In order to pursue returns, some users holding LRT will also put LRT tokens into Defi products again to earn additional returns, and even conduct revolving loans to maximize the rate of return.
However, as the number of LRT nestings increases, the risks become more exposed. For example, Renzo's ezETH was decoupled for a short period of time due to pool liquidity issues, causing many high-leverage users to be liquidated. This is also a common problem faced by all LRT tokens that can only use Dex for liquidity withdrawal due to token lock-ups.
The booming development of the re-staking track has attracted the birth of many protocols, but one of the problems that has arisen is the fragmentation of LRT liquidity, which further makes LRT more vulnerable to the risk of depegging. At present, LRT also has a trend of expanding to L2. Although this expansion has many benefits, such as: bringing many high-quality assets to L2, enriching the gameplay of LRT, and cheap gas can also lower the threshold for user participation, but many L2s have further aggravated the fragmentation problem of LRT. Therefore, enhancing the liquidity of LRT has become a major pain point in the current re-staking track.
For Defi products, liquidity is a key factor in promoting market development and innovation, and it is crucial to make liquidity flow. As a full-chain liquidity distribution protocol that provides free access to funds, StakeStone aims to solve these pain points of liquidity. With its unique mechanism and vision, it reshapes the pattern of liquidity pledge and distribution, and provides users and developers with unprecedented opportunities for liquidity release and utilization.
Unique way to release liquidity
StakeStone packages ETH staking and potential blue chip re-staking rewards represented by Eigenlayer into STONE and distributes them to the application layer of each ecosystem. STONE plays a role in unifying standards and improving the efficiency of users, blockchains and the entire ecosystem. Users deposit ETH into StakeStone and obtain corresponding STONE tokens, which represent the staked ETH and the income generated, and users can freely propose to unstake and retrieve the staked assets. Therefore, unlike the liquidity exit mechanism that relies solely on Dex, the liquidity exit mechanism of STONE's protocol layer can support higher liquidity needs. Since the first day, StakeStone has supported users to freely unstake and has processed hundreds of millions of US dollars in circulation.
StakeStone also releases the liquidity of ETH and other assets by providing liquidity staking tokens (LST), but there is no completely competitive relationship between StakeStone and re-staking protocols such as Ether.fi, Renzo, Swell, KelpDAO, and Puffer. Instead, they may have a mutually reinforcing relationship.
StakeStone has launched three types of solutions related to re-staking, including:
Liquid Stake Token re-staking solution: Use LST for re-staking;
Beacon chain re-staking solution: Apply beacon chain re-staking;
Re-staking pool integration solution: integrating LRT.
At present, the pattern of the re-pledge track is undetermined, and the AVS ecosystem is also constantly developing. Various re-pledge assets and derivative strategies may appear in the future. StakeStone, on the premise of ensuring the overall security and stability of STONE assets, maintains compatibility with various re-pledge strategies and achieves a potential balance between returns and stability through a combination of numerous re-pledge assets.
So how do you choose the underlying assets among the many re-pledges?
StakeStone has introduced the OPAP (Optimized Portfolio and Allocation Proposal) mechanism, which is a decentralized asset allocation strategy. Through OPAP, any STONE holder can participate in governance and vote on the asset allocation behind STONE, including ETH pledge pools, Restaking protocols, or other Yield protocols.
This mechanism not only improves the security and profitability of funds, but also enables StakeStone to flexibly adapt to market changes and provide users with the best asset allocation plan. For example, the OPAP-3 portfolio and allocation optimization proposal that just ended last month added EigenLayer native re-staking as one of the underlying assets and allocated the first batch of ETH to it. The proposed fund allocation ratio is: Lido staked ether (stETH): 99.9%; EigenLayer native reallocation: 0.1%.
StakeStone proposal link: https://app.stakestone.io/u/portfolio-allocation/vote/vote-list
Full-chain liquidity distribution
Another core advantage of StakeStone lies in its full-chain liquidity distribution capabilities, focusing on establishing STONE as the standard for full-chain liquidity assets. Its mechanism allows users to seamlessly transfer and utilize their liquidity between different blockchains and Layer 2 networks, thereby improving the utilization efficiency and profit potential of assets.
Through integration with cross-chain technologies such as LayerZero, StakeStone is able to support seamless transfer of assets and prices across multiple blockchains. This means that users can use STONE tokens on different chains and participate in various DeFi, GameFi or NFTfi projects without being restricted by a single network. This helps L2 attract liquidity and provide users with multi-layer profit opportunities.
For example, StakeStone cooperated with Manta Network and attracted more than 700 million STONE liquidity within a month, and obtained extensive ecosystem integration, creating a new paradigm of liquidity. The first wave of the recent full-chain carnival activities started cooperation with Srcoll. At the same time, StakeStone also worked closely with emerging Bitcoin L2s such as B² Network, Merlin Chain, and BounceBit to establish STONE as the ETH asset standard in the emerging Bitcoin ecosystem.
Asset Security
Another pain point in the staking track is fund security. The recent collapse of Zkasino’s staking has sounded the alarm for staking users.
For StakeStone, the security of assets is its priority. StakeStone will first focus on STONE, rather than issuing multiple derivatives based on different AVS combinations, and may not integrate all types of heavily pledged assets, but focus on more stable and secure assets, as well as excellent suppliers who excel in this regard.
For example, its beacon chain re-staking strategy is achieved by working with InfStones to integrate InfStones' EigenLayer Restake technology into StakeStone. InfStones is an expert in the Stake field and provides high-quality node operation services. Currently, InfStones supports more than 20,000 nodes on more than 80 blockchains, including Binance, CoinList, BitGo, OKX, Chainlink, Polygon, Harmony and KuCoin. 100 customers have used InfStones' services.
In terms of technical security, the re-staking strategy uses Cobo's security solution to further enhance the stability of the system. Cobo is an industry-leading security expert. In addition, its strategy code will also undergo multiple rounds of audits such as Secure3 and SlowMist to maximize security.
In terms of leverage ratio, StakeStone prefers a safer strategy, directly holding selected underlying assets and not using revolving loans and inflated underlying assets to increase leverage.
In terms of centralized risk, all operations of StakeStone are conducted through smart contracts, completely eliminating the risk of manipulation. The decentralized governance mechanism creates a solid and reliable framework for optimizing the portfolio.
In terms of STONE's price stability, STONE is a deposit and revenue sharing token, not a rebase token. In terms of mechanism design, StakeStone Vault acts as a capital buffer pool, keeping the deposited ETH in the contract until a new settlement occurs, at which point it will be deployed to the underlying strategy pool. The Minter function decouples STONE token minting from its underlying assets.
This separation allows for independent adjustments to the circulation of the underlying assets and issued STONE tokens, thereby ensuring the stability of STONE by decoupling the minting and burning of STONE from the asset management smart contract. The addition or removal of underlying assets, or even the upgrade of the asset management contract, does not require the re-minting of the currently circulating STONE.
In terms of strategy, the strategy pool adopts the whitelist mechanism of OPAP governance, showing a high level of asset compatibility, such as pledge pool, heavy pledge agreement, etc. At the same time, asset risks will be isolated within each strategy route to prevent cross-contamination of risks.
Partners and Ecosystem Development
StakeStone is a project jointly invested by Binance and OKX. BounceBit and Renzo, two staking projects jointly invested by the two, have already been listed on Binance.
As a liquidity infrastructure, StakeStone is committed to serving a wide range of liquidity assets. In addition to ETH, StakeStone also sees the potential to integrate Bitcoin into the liquidity distribution network and has established partnerships with multiple well-known projects. It is believed that in terms of BTC liquidity, StakeStone's liquidity distribution architecture will also play a unique role in its ecological niche.
These collaborations not only enhance StakeStone’s credibility and market influence, but also provide StakeStone’s users with more profit opportunities and application scenarios.
recent activities
Following the first wave of the Omnichain Carnival in cooperation with Scroll, StakeStone has launched the second wave of airdrops in cooperation with BNB Chain, with a total reward of 1,000,000 tokens. For specific rules, please refer to StakeStone's document https://medium.com/@official_42951/stakestones-omnichain-carnival-bnb-eco-wave-starts-with-bnb-chain-airdrop-alliance-779963ba5dea
Conclusion
StakeStone provides users and developers with a new platform for releasing and utilizing liquidity through its full-chain liquidity distribution network. With the emergence of more Layer 2 and application chains, StakeStone's full-chain liquidity distribution network will become more important and is expected to become a bridge connecting different chains and ecosystems, providing users with richer and more efficient asset utilization methods, and promoting the development of the liquidity pledge and distribution market. Under the leadership of StakeStone, we are expected to usher in a new era of full release and utilization of liquidity.
