Similar to Lido and Anchor Protocol, pSTAKE brings liquid staking to the Cosmos ecosystem and enables greater integration of ATOM and XPRT holders with DeFi.
Since the launch of Bitcoin (BTC), one of the most significant transitions in the cryptocurrency ecosystem has been the growing dominance of proof-of-stake (PoS) protocols over proof-of-work (PoW) protocols, primarily due to the PoW model’s energy requirements and growing concern about its environmental impact.
As more projects adopt the PoS model or migrate to it, a new class of protocols has evolved that focuses on giving liquid staking solutions that enable token holders to access the value stored in their staked tokens while still earning a yield on their assets.
pStake Finance is one of these platforms, and here’s a quick look at its long-term goal of bringing value to the proof-of-stake paradigm, as well as how it differentiates from comparable protocols.
Heavy hitters back the project with a $10 million seed funding round
pStake is a component of the Persistence (XPRT) protocol, a multi-chain technology stack that supports Cosmos (ATOM), Ethereum (ETH), and other Tendermint-based chains. Persistence’s long-term goal is to build an ecosystem of multi-chain Web3 products that will increase global liquidity and facilitate value exchange.
In November 2021, the project received a boost when it successfully raised $10 million in seed funding from investors including Three Arrows Capital, Galaxy Digital, Coinbase Ventures, and Alameda Research.
The seed round money were utilized to establish the reserves necessary to bootstrap the protocol’s liquidity staking and ensure that there was sufficient liquidity for users to engage with the platform.
Since its inception, pStake has offered liquid staking for Cosmos and XPRT, which currently earn 13% and 32% annually, respectively. Users that deposit ATOM or XPRT on the protocol obtain stkATOM or stkXPRT, which can be used for a variety of decentralized finance (DeFi) services, including borrowing and lending.
According to Defi Llama data, the pStake protocol has a total value locked of $48.63 million at the moment.
The project’s developers are actively working on adding support for more coins such as Ether, Terra (LUNA), and Solana (SOL).
The Cosmos ecosystem now supports liquid staking
While it is desirable to have new protocols that enable liquid staking, one critical concern is how this initiative differentiates itself from the competitors.
For example, Lido is a liquid staking system that already supports Eth2, Terra, Solana, and Kusama and boasts a $9.35 billion TVL.
The primary distinction for pStake is that it emerged from the Cosmos ecosystem and is primarily focused on enhancing liquidity for other protocols that are part of the Inter-blockchain Communication Protocol (IBC) by adding compatibility for the Ethereum Virtual Machine (EVM).
While Lido does support Terra, the only protocol that supports ATOM and other Tendermint-based applications is pStake.
Once acquired, stkTOKENs can be used across a variety of decentralized finance protocols inside the Ethereum ecosystem, allowing holders to earn additional revenue.
pStake airdrop and current events
In the future, pStake will focus on growing its community and expanding its capabilities by providing support for further Cosmos ecosystem initiatives.
To help build community support and reward early adopters, the project announced an airdrop of its pStake coin. 30 million pStake will be issued over the next six months to a variety of addresses, including ATOM, OSMO, and XPRT stakers.
1/ $PSTAKE Airdrop Explained
Beginning Feb 24, 30M $PSTAKE will be airdropped over 6 months to:
♦️ $ATOM, $XPRT, $OSMO stakers
♦️ stkAAVE, $CRV (including yveCRV, cvxCRV) holders
♦️ pSTAKE early adopters
♦️ @Cosmos $XPRT StakeDrop participants
— pSTAKE Finance (💧,💰) (@pStakeFinance) February 18, 2022
On the development side, one of the primary collaborations being investigated at the moment is with Terra’s Anchor Protocol (ANC), a savings protocol that mints the TerraUSD (UST) stablecoin.
— pSTAKE Finance (💧,💰) (@pStakeFinance) February 5, 2022
ATOM tokens could ultimately be used as collateral to issue UST on Anchor, which is presently only possible using LUNA or Ether.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.