In this article, I would like to fully explore the topic of staking STON tokens on STON.fi! Additionally, we will analyze one aspect without which a DEX cannot exist. So, let’s get started!
What is Staking?
Staking is the process of “freezing” cryptocurrency. A user locks their cryptocurrency in a smart contract for a specific period and receives some benefit in return.
Where is Staking Used?
Token staking plays a key role in ensuring the security and stability of blockchains operating on the Proof of Stake (PoS) system. Validators (users who stake) verify the authenticity of transactions and create blocks, for which th’ey receive rewards in the form of tokens.
The TON blockchain operates on this system.Token staking is sometimes a “gateway” to a DAO community, which makes decisions about the future of a project. To become part of a DAO community, one needs to stake the project’s tokens.
In our case, staking STON tokens on STON.fi serves as the gateway to the DAO community.
Why is a DAO community necessary for decision-making if decisions can be made individually?
From the perspective of CEXs (centralized exchanges), this is indeed the case. A DAO is not essential for decision-making. Users of CEXs inherently agree to a centralized system with centralized management by accepting the user agreement during registration.
However, from the perspective of DEXs, having a DAO community for decision-making is absolutely essential. The core of DeFi protocols (including DEXs) lies in their decentralization. If governance were centralized, it would contradict the very essence of a DEX.
How Does a DAO Community Govern a DEX?
This is done through voting, in which only DAO community members can participate. The power of each vote depends on the number of staked governance tokens (as on STON.fi) or the total number of governance tokens in a wallet (as on Uniswap).
Governance tokens are tokens that grant their holders the right to participate in the governance of a DEX. These tokens are native to the exchange, meaning they are created by it.
The governance token of the STON.fi DEX is STON.
The governance token of the Uniswap DEX is UNI.
DAO community members can create and vote on proposals related to DEX updates, adding new blockchains, fee models, and the addition or removal of tokens.
How Does a DAO Work in Practice?
The DAO of STON.fi is still under development, so there are no examples of its application yet.
Let’s take the Uniswap DEX as an example since it already has its own DAO.
To be part of the Uniswap DAO, you need to hold UNI tokens in your wallet. This gives you the right to create proposals or vote on changes to the Uniswap protocol. The more UNI tokens you have in your wallet, the stronger your voting power.
There is also a system for delegating votes (tokens). This process allows you to transfer your voting rights to another user so they can vote on your behalf, while the tokens remain in your wallet. This system increases the activity of tokens in voting.
To submit an official proposal (create a vote) in the Uniswap DAO, a user must hold 2.5 million UNI tokens, which is 0.25% of the total UNI token supply.
For a vote to be considered legitimate, a quorum is required. A quorum is the minimum number of votes (expressed in tokens) needed to approve or reject a decision. For a protocol change to be accepted in Uniswap, at least 40 million UNI tokens must participate on one side — either for or against.
Before voting, the proposed protocol change is discussed on the Uniswap Governance Forum. This allows community members to express their opinions, both for and against, and clarify details of the vote. This process helps form more informed decisions and increases awareness before voting.
Voting takes place on snapshot.org and tally.xyz.
A Practical Example:
In February 2023, the Uniswap DAO community held a vote on a proposal to deploy the Uniswap protocol on the BNB Chain blockchain. The decision was supported by 66% of participants. The vote involved 84.8 million UNI tokens, with 55.88 million in favor, making it legitimate.
Outcome: On March 1, 2023, the BNB Chain was added to the Uniswap DEX.
This example demonstrates how effective a DAO can be.
DAO STON.fi
Currently, the DAO of STON.fi is still under development, but there are some aspects we already know.
First of all, it is safe to assume that the DAO of STON.fi will resemble the DAO of Uniswap, as most DEX DAOs operate on a similar system.
Here’s what we already know:
To become a member of the STON.fi DAO community, you need to stake STON tokens on STON.fi.
Governance will be carried out through voting.
The strength of your vote depends on the number of STON tokens you stake and the duration for which you lock them in staking.
Staking STON tokens on STON.fi allows users to create and vote on proposals related to protocol updates, adding new blockchains, fee models, and the addition or removal of assets.
Staking on STON.fi
Although DAO governance is still under development, you can already stake STON tokens on STON.fi here.
When staking, STON tokens are locked for a period ranging from 3 to 24 months.
1 — The strength of your vote 2 — The number of GEMSTON
After staking, the user’s wallet receives an ARKENSTON NFT, which grants the right to participate in the DAO. The NFT serves as proof that you have staked STON tokens.
Additionally, the staker immediately receives GEMSTON tokens in their wallet.
1 STON staked for 24 months = 1 GEMSTON.
A user can also extend the staking period of already staked STON tokens. The voting power of the ARKENSTON NFT is updated according to the new lock-up duration. Additionally, the user receives GEMSTON tokens for extending the staking period.
The issuance of GEMSTON tokens is theoretically unlimited, and the DAO of STON.fi is interested in implementing various mechanisms that will regularly remove GEMSTON from circulation and increase demand for these tokens.
According to STON.fi, they intentionally do not provide a detailed description of possible use cases for GEMSTON to encourage the community to engage in open discussions about their utility.
Guide on how to stake STON tokens on STON.fi
When will the STON.fi DAO start operating?
There is no exact information yet. However, I have a guess.
According to the STON.fi Whitepaper (Section: 13.1.1 STON token vesting), we know that the DAO Treasury holds 20 million STON tokens, staked for 24 months, after which they can be partially used at the discretion of the DAO.
The STON token was issued on August 11, 2023. Therefore, it’s likely that the STON.fi DAO will be launched before or around August 11, 2025, so the DAO Treasury tokens can be utilized as intended. For this to happen, the DAO must already be operational.
This is just my guess, so don’t take it too seriously! :)
STON.fi social networks:
Twitter - @ston_fi Telegram - @stonfidex Reddit - r/STONFi
#TON $TON #DAO
