Original author: LD Capital, Duoduo

basic situation

pSTAKE Finance is a multi-chain liquidity staking project. The token was launched in early 2022. The project originally provided liquidity token staking services for the BSC chain and the Cosmos ecosystem, with a TVL of approximately US$7 million. Recently, it cooperated with the BTC staking project Babylon to launch BTC staking business. More than 90% of the project tokens have entered circulation, with a token market value of US$57 million.

Team and Financing: Binance Labs strategically invested in 2022

The founder is from Singapore and graduated from Nanyang Technological University. The project received angel round financing of US$10 million in November 2021. Investors include Galaxy Digital, Coinbase Venture and other institutions. The token price of this round of financing was US$0.1, and the institutions received 100 million tokens, accounting for 20% of the total tokens. In December 2021, a public offering was conducted through coinlist, with a total fundraising amount of US$10 million and a token price of US$0.4. A total of 2,500 tokens were sold, accounting for 5% of the total tokens. In May 2022, the strategic round of financing received a single investment from Binance Labs, and the specific investment amount and valuation were not disclosed. It can be seen that from the financing price, the current secondary market price is close to the seed round financing price, which is lower than the public offering round price.

Trapped in the investment dilemma caused by the low market value and high FDV token issuance model, Binance launched the Binance Listing Project Open Recruitment Plan in May 2024, hoping to promote the development of the blockchain ecosystem by strengthening support for small and medium-sized cryptocurrency projects with good fundamentals, organic community foundation, sustainable business model and industry responsibility. pSTAKE, as a low-market value, high-circulation token that has participated in Binance's bear market and has not yet been listed on Binance, has the opportunity to be selected for the plan.

Token Economics: 93.6% of tokens in circulation

The total amount is 500 million, which will be launched in February 2022. More than 93.6% of the tokens have entered circulation. The remaining part belongs to the team. According to the plan, the team will lock up for 18 months, and then release linearly within 18 months. It will take a total of 36 months to release. That is to say, all will be released in February 2025.

Recent collaboration: BTC re-staking new narrative

Recently, pSTAKE has expanded its business, focusing on BTC re-staking and reaching a cooperation agreement with BTC staking protocol Babylon. This cooperation is an entry into the current new narrative and may bring large-scale and long-term TVL growth to the project.

Babylon is a Bitcoin staking protocol founded by Professor David Tse of Stanford University. It has received a total investment of US$96 million from first-tier crypto investment institutions, including Paradigm, Hashkey, Binance Labs, Polychain, IDG, etc. Babylon is similar to the Eigenlayer status in Ethereum and is currently in the testnet stage. After its mainnet is launched, TVL is expected to grow rapidly.

A series of cooperation agreements will emerge around Babylon, and the business scale of these agreements will grow. At the same time, there will be competition between the agreements. At present, many agreements have announced cooperation with Babylon on BTC pledge, including BTC second-layer B²Network, Merlin, ZK-driven BTC execution layer Chakra, AI re-pledge agreement Mind Network, etc.

pSTAKE's liquidity staking solution will provide Bitcoin income. Users deposit BTC into pSTAKE and can obtain corresponding liquidity staking tokens to participate in other DeFi projects on the chain and earn income. After the Babylon mainnet is launched, the BTC deposited in PSTAKE will also be staked into the Babylon protocol to obtain corresponding income.

Binance also responded to pSTAKE’s latest business development direction. Binance Research mentioned this change in its weekly market highlights summary on May 19.

Valuation comparison

The following is the valuation of Ethereum re-staking protocols launched on Binance. The dimensions that affect the valuation include: narrative popularity, business data, liquidity premium (whether it is listed on Binance), financing valuation, track competitive advantage, etc. pSTAKE is not much different from the previous institutional financing valuation, and is generally underestimated. A brief comparison of the valuation of Ethereum staking tokens is used as a reference. It should be noted that the actual TVL of pSTAKE is very small at present, which is a big gap compared with Ethereum re-staking projects.

Price changes of pSTAKE and FDV changes under different market value assumptions:

in conclusion

1. pSTAKE’s current market value is low, and the tokens are basically fully circulated. The token was launched in February 2022, and has experienced the decline of the entire bear market. The current market price is close to the seed round private placement price, which is much lower than the public round price. It received investment from Binance in 2022.

2. The business has added a new narrative of hot spots. pSTAKE’s early business was the liquid pledge of BSC and Cosmos ecosystems, and these two pledge businesses were not hot spots. In May 2024, a new BTC re-pledge business was added, cooperating with the BTC pledge protocol Babylon. This cooperation may bring about rapid and sustained growth in the scale of the business.

3. pSTAKE received strategic investment from Binance in 2022, with low market value + high circulation + new narrative: BTC staking heavyweight protocol cooperation + Binance strategic investment, and has the opportunity to become a project selected by Binance's public recruitment plan for listing projects.

4. The main risk is that pSTAKE’s current TVL is very small, and the subsequent development will mainly rely on the development of babylon; babylon is still in the testnet stage and requires a certain amount of waiting time. At the same time, there are multiple protocols cooperating with babylon, and pSTAKE may not be in an advantageous position in the BTC re-staking track, and the business growth data is not as expected.