STAFI PROTOCOL — Unlocking Liquidity of Staked Assets

Chukwunelo Ebuka Alpha
4 min readSep 30, 2021


Have you ever wondered if there’s a decentralised finance protocol that unlocks liquidity of laid-out capitals? Don’t worry much, it does exist. StaFi protocol is the answer, the first-ever decentralized finance (DeFi) protocol focused on unlocking liquidity of staked assets.

So the acronym ‘StaFi” stands for Staking Finance and with strictly the motive to bring solutions to the negation in respect to Mainnet security and token liquidity in the Proof-of-Stake consensus. However, there are holders that wagers through staking contracts that are designed within the StaFi protocol which gives them a ‘liberty’ token. Tokens such as rATOM, a Cosmos rToken launched by Stafi Protocol. The rTokens are also called “reward-Tokens” which means users can stake their PoS based tokens, for this example ATOM, where rATOM represents the staked Cosmos token.

Also, StaFi has been working together with several ecosystems to also release the rToken version of their original coins. Meanwhile, recently, it joined forces with Binance to release the rBNB, which brings solution to the liquidity problems that happens due to the fact that users stake their BNB. Also,It is no longer news that many Binance community members often tend to stake their BNB to empower the whole system and gain its rewards handsomely. When they stake their coin, the liquidity of the staked coin is stuck (locked). Once the explorer stakes his/her coin, they would be denied permission to use it for trading, lending and other decentralized finance operations. They just receive staking rewards and that’s it. This is not just unique to Binance. The gems of Solana, Polygon, Cosmos amongst others also have this issue. The staked assets remain locked.

A Case for StaFi Protocol

StaFi Protocol has been birthing creativity into the decentralized finance space by bringing in the ideas of rTokens. On a normal day, Proof of Stake networks frowns from liquidity issues due to the fact that their ‘coded’ members tend to stake their tokens to get their benefits from it and safeguard the platform. This by implication simply means that the capital won’t be accessible until the end of the staking period, thereby leading to risk of illiquidity. It recently released the rBNB rToken that makes it possible for holders of BNB to get rBNB once they stake using the StaFi dapp. By implication, when you stake your gem, you receive representatives of that staked coin for use in the DeFi space. This is massive.

The StaFi layers

StaFi is made up of three layers, the bottom layer, the contract layer, and the application layers. The bottom layer is mostly based on a blockchain system that was invented by Substrate, a blockchain architecture designed by Parity that integrates many development modules, including the consensus module, P2P module, and staking module.

The contract layer helps in supporting and creating various staking contracts for varieties of assets such as ETH, ATOM, SOL and DOT. Digital asset keepers can stake through a staking contract that is made up of the incentives gotten by the ordinary stake. However, the only difference is that the holder can also receive rTokens. As described earlier, rtokens are representative tokens obtained by the staker through the staking contract. If you stake ATOM, you can get rATOM, for example. The ratio for these assets is 1:1. Holder rTokens means you can get incentives from tokens staked. Inclusively, rTokens can be traded on the market. After the transaction, the staking contract will adjust the reward and the redemption rights.

And lastly, the third layer, the application layer. That layer supports third-party StaFi-based APIs or customized APIs to design a decentralized bonded asset trading market for rTokens to circulate, transfer, and trade on the StaFi Protocol.

More on StaFi Protocol

Furthermore, this protocol runs wholly decentralized and is directly linked to Polkadot as a parallel chain. In order words, it shares Polkadot’s underlying consensus, plus, Polkadot also securing the main security and performance.

Now talking about staFi being built on Polkadot, although there are so many projects that are built in polkadot because of its swiftness in making a parachain with the help of substrate.

Other reasons are its compatibility, its ability to connect to Polkadot as a parachain effortlessly when Mainnet comes. Also, The runtime is Wasm binary stored on-chain and can be updated using the chain’s governance mechanism. That is, upgrading a blockchain without a hard fork is possible.

Polkadot also allows interchain connectivity, which means that by connecting a blockchain to Polkadot, the blockchain will pass arbitrary messages to other chains within the network. And Substrate gives permission to any network to key in the functionalities when needed while keeping the freedom to customize.

Finally, it is possible to write blockchain logic in any language that can compile to WebAssembly.

In summary, Staking, delegation, and cryptocurrencies involve a high degree of risk, and there is always the possibility of loss, including the loss of all staked digital assets. Additionally, delegators are at risk of slashing in case of security or liveness faults on some protocols. Therefore, it is important to be aware that due diligence is advised before choosing a validator.

StaFi once again is the DeFi protocol that is capable of unlocking liquidity of staked assets or capital. Let’s #UnlockLiquidity together


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Chukwunelo Ebuka Alpha