Name of Project
LiquidStaking.ONE
Proposal overview
Describe in less than 2,000 words on how this will benefit the blockchain ecosystem. Be specific about the goals and outcome of the proposal, with go-to-market and/or user-acquisition strategies if possible.
Summary: LiquidStaking is a dApp which allows users to stake their ONE tokens while retaining liquidity. Users will deposit their ONE and in exchange receive drONE (derivative ONE). Each drONE represents a claim on the staked amount and the accrued rewards, and can be exchanged for ONE easily. The overall aim is to integrate drONE into the wider ecosystem, through partnerships, to let everyONE use their drONE as they currently do their ONE. This is being made technically feasible due to PR#3906 on Harmony, which was authored by our team and has been approved for inclusion.
Rationale
- The current process for delegating ONEs involves locking them up with a validator, and prevents any transfers until they are undelegated. Anyone who wants to both stake their ONEs and use them for another purpose - such as lending, market-making - is unable to do so. If it were possible to use these locked ONEs (or rather, claims on them and the associated rewards) in DeFi products, the yield would increase.
- Conversely, if DeFi has higher yields, users prefer to participate in DeFi over staking, thus lowering the number of ONEs needed to take over the network. This compromises the security of the network.
Solution
- We propose freeing up locked liquidity by minting drONE, or derivative ONE, whenever ONE is delegated through our dApp.
- Each drONE is a claim on the locked ONE balance plus the associated rewards, and each drONE can be burnt in exchange for ONE and rewards.
- Thanks to auto-compounding of rewards in our dApp, the yield of drONE is marginally higher than that of simply staked ONE. It is easy to calculate that this increases the yield by ~51 bps if compounded weekly. More importantly, this lets users stake and forget - a feature that we’ve seen many users ask for, on Harmony’s Discord.
- Again, the broad aim is to partner with other projects on Harmony to let people use drONE everywhere.
- Key distinction of our solution, unlike current implementations of liquid staking on Harmony, is that it is completely trustless and does not require users to trust a third party to custody their ONEs for staking.
The gory technicals
- A user deposits ONE into our contract, and receives drONE in exchange. Initially, the exchange rate is 1 drONE per 1 ONE, but later, the number of drONE received decreases as each drONE incorporates into itself more rewards of ONE.
- To get back ONE, a user deposits drONE, and the contract (1) burns the drONE, (2) undelegates the ONE, (3) returns (auto-) compounded rewards. Since an undelegation results in a locked balance (for 7 epochs), the contract provides “tickets” which can be redeemed after 7 epochs, or redelegated just 1 epoch afterwards.
- Alternatively, it is possible to use a DEX to swap out drONE and ONE directly, for instant withdrawals. We plan to consider the operation of an incentivized pool ourselves by offering users the option to immediately undelegate at a fee, a la Marinade.finance’s “Unstake now!”.
- The contract owner (which will eventually be the DAO) can decide the
rebalancer, who can decide the allocation of the ONE portfolio across different validators. This way, users don’t have to concern themselves with choosing a diverse validator portfolio, we do it for them. The algorithm for choosing this allocation will aim to maximize the yield and minimize the possibility of slashing; the frequency of rebalancing, that is undelegating and then delegating, shall be kept to a minimum. We don’t plan on requiring any form of whitelisting of validators for inclusion in this portfolio.
Team details
We are a team of 3 people.
- @maxmustermann2 has been working on adding the necessary precompiles to harmony-go to make liquid staking possible. His work can be seen in PRs #3906 and #3939, as well as pyhmy.
- @raquelmueller is our UI/UX expert who works on the React app for our platform.
- @imaki is working on the smart contracts for liquid staking. He has contributed to various defi protocols on Ethereum in the past.
Proposal ask
$50K, as per the launch category.
$10K after launching a feature-complete product on our testnet
$10K after forming a DAO with 5-out-of-9 multisig with our DAOs
$10K after launching on our mainnet with audit
$10K after 1K daily active users (with launch video, full PR promotion)
$10K after 10k daily active users (with a detailed roadmap, governance process)
Metrics for success
We are currently testing our contracts on a locally modified node, and the PRs for the precompiles to add liquid staking written by @maxmustermann2 have been approved by the Harmony team. Our goal is to get the contracts audited and thoroughly tested over the next month.
Since our primary goal is to make harmony more decentralized by incentivizing new users without much spare capital to participate in said decentralization, the number one metric we are focused on is the total number of stakers on our platform. We hope to reach 10k stakers in the next 3-6 months.
External links
Website: https://liquidstaking.one [Coming Soon]
Demo:
Staking
Unstaking
