Proof-of-Stake is a $650B+ industry with more than 60% of all networks adopting PoS today.
$145B+ worth of assets are locked in staking to secure the underlying networks.
The total value locked in PoS ecosystem is ~2x of the TVL in DeFi and generates an average of ~14% returns annually. Cosmos ecosystem alone is larger than the total TVL in Ethereum DeFi.
pSTAKE is a liquid staking solution that unlocks the true potential of PoS tokens by unlocking liquidity of staked assets. Token holders of pSTAKE supported PoS networks can deposit their PoS TOKENs on the pSTAKE application to mint 1:1 pegged ERC-20 wrapped unstaked tokens (pTOKENs) that can then be utilized on the Ethereum network. pTOKENs can be burned to mint 1:1 pegged ERC-20 stkTOKENs (this is the staking action). This results in the deposited PoS TOKENs being staked on the PoS network by pSTAKE. stkTOKEN holders have the right to claim staking rewards accrued with time in the form of pTOKENs (this mirrors the mechanism of most PoS networks where staking rewards are not automatically compounded). stkTOKENs can also be used within the existing Ethereum DeFi Ecosystem to maximise yield and unlock the true potential of staked assets. Assets deposited on pSTAKE are staked with a set of whitelisted industry leading validators.
WHAT MAKES pSTAKE UNIQUE:
pSTAKE uses a dual-token model to mirror the workings of its supported PoS networks. This model allows for multiple benefits such as:
- No forced auto-compounding allowing users to move around the staking rewards
- Market for users to freely use their wrapped unstaked tokens in DeFi protocols. For instance, a borrowing-lending protocol might have different LTV ratios for wrapped unstaked representative tokens as compared to wrapped staked representative tokens. This model allows a user to use both pTOKENs and stkTOKENs in DeFi protocols as per the users’ needs.
- A unique implementation of redemption pool that tackles issues such as Impermanent loss and Peg breakage between the PoS token and its liquid staked representative.
pBridge makes sure that transactions originating at pSTAKE application end (Ethereum), pertaining to staking, unstaking, reward redemption, etc. are instantaneously executed at the protocol end of native chain (e.g., Cosmos), namely, MsgSend, Delegate, Undelegate, Redeem Delegation Reward etc. This enables seamless execution of PoS protocol transactions of native chains like cosmos, remote controlled from Ethereum smart contracts.
The bridge also performs issuance and withdrawal of 1:1 pegged representative tokens. For e.g., Issuance of peg of ATOM, namely pATOM. Native tokens (e.g., ATOM) are sent to the pStake Wallet address by users, which triggers automatic minting of the corresponding pATOM to the user’s designated Ethereum address. Conversely, withdrawal request triggers the burning of peg tokens and native tokens transferred from pSTAKE Wallet to the user’s wallet.
- Fast Transactions:
The inter-chain transaction times are fairly fast, but it strictly follows the blockchain principles. Which means that only after the transaction gets confirmed at one chain, does it progress to send relevant transactions in the second chain. Hence the transaction time will be roughly equal to the sum total of average transaction confirmation times for Native Chain and Host chain (e.g., Cosmos and Ethereum respectively).
The bridge mechanism is highly decentralized, which means it will be secured and managed by multiple bridge validators. These bridge validators collectively maintain a single source of truth for pSTAKE. The transaction signing also follows a threshold mechanism for creating and sending transactions across chains. Only if a threshold number of validators are available and agree on a transaction, is the transaction sent to the blockchain. This invalidates the possibility of a central point of control/failure by any stakeholder.
- Highest Level of Credibility:
pBridge operations are secured by actual PoS validators (e.g., Cosmos, Solana, Polkadot, NEAR Validators). This involves whitelisting of PoS validators which retain the highest level of credibility and performance, to be made participants of the bridge validator pool. Since PoS validators employ the most reliable specifications like maintaining dedicated servers, Hardware Security Modules, highly performant platforms, SLA conformance etc., this provides the highest level of credibility and decentralization that can be achieved in a multi node system.
- Economic Participation based Security:
Following the same principles of incentive powered security protocols used by blockchains, pBridge also provides incentives for PoS validators to maintain the bridge operation. The user staking requests are delegated only to the participating validators in the pool, which can increase their returns from staking commission significantly. Furthermore, a portion of the fee generated on the pSTAKE application will also be shared among the validators at regular intervals to provide an added incentive. These incentive opportunities lead to a large population of willing participants, which provides means for pBridge to whitelist only the top validators for the pool.
- Crash Fault Tolerance:
pBridge has a high crash fault tolerance mechanism baked into it due to the multi validator approach. pBridge data is maintained in a distributed model of Apache Kafka message queue, providing the highest level of data availability. The validators also collectively participate in transaction signing for several chains, with a safe threshold value. This ensures high availability, with the routine robust enough to handle downtime of several nodes, as long as the threshold number is active, thereby providing near absolute uptime.