Liquid Staking

Introduction to Liquid Staking

The Ike Liquid Staking protocol automates the process by which users can pool their Gas Tokens together for network staking via non-custodial smart contracts. By leveraging a decentralized Registry of Validators controlled by the DAO, Ike creates sA0, a liquid version of the core AZERO gas token. As a PSP-22 token, sA0 can be used in DeFi and other on-chain uses cases, while the underlying AZERO is natively staked to earn rewards and secure the Aleph Zero network while simultaneously empowering the community to Stake & Use.

In addition to being liquid, unlike native staking, the super power of Ike and other Liquid Staking protocols is in their composability. This means that developers of novel on-chain use cases and the community as a whole can hold sA0 to stake, or collateralize it in other protocols so you don't need to forgo staking rewards while you DeFi.

Further, collectively the Ike protocol surpasses the minimum required amount of tokens to participate in staking, so there is no minimum stake to participate. No more "you must be this tall to ride." At the same time, those users can participate in other network activities such as DeFi, gaming, and more.

Benefits of Liquid Staking

Increased access

Traditional staking often requires a minimum staking amount, which can be prohibitive for users with limited capital.

Liquid Staking Tokens (LSTs) enable fractional ownership of staked assets. LSTs allow users to stake any portion of their Gas Tokens, even if they don't have enough to meet the minimum requirement of a particular staking protocol. Users can do this by pooling their tokens together with other users in order to meet the minimum staking requirements of the blockchain. By doing this, users earn staking rewards proportionally to their contribution.

Simplified staking

Participation in network staking & validation traditionally requires users to have the extensive technical knowledge and infrastructure setup capabilities required to set up a Validator.

Liquid Staking Protocols allow any user to access staking services simply by interacting with contracts on the blockchain. This shortens, simplifies, and abstracts the process of staking. This is achieved by leveraging providers that offer Staking-as-a-Service. These providers take care of the technical complexities of running Validators.

Mutual benefits

This is a symbiotic relationship. The Liquid Staking Protocol provides Validators with access to mass amounts of Gas Tokens to use for staking. In return, the Validators facilitate network staking and take a commission fee on the yield generated before passing it back through the protocol to users.

Simultaneous liquidity and yield

LSTs represent direct ownership of staked Gas Tokens. Because of this, they can be considered "fully backed" by the Gas Tokens of the network. LSTs themselves are also fungible, so they can be used to participate in other network activities such as DeFi, gaming, lending, and more while simultaneously accruing value from the yield generated by the staked Gas Tokens they represent.

Composable Yield

Because LSTs are liquid representations of yield-bearing staked Gas Tokens, they can themselves earn yield when used for DeFi activities such as lending. Thus, holders of LSTs have the potential to earn yield twice on the same underlying assets.