Unlocking Liquidity of SOL on StaFi Protocol
On the 6th of July, 2021, StaFi announced that rSOL (staked representatives for SOL) would be launched on StaFi mainnet. It is a move that ticks all the boxes but how exactly is this a great move? To understand this, let’s talk about StaFi and Solana.
Solana is an open-source and decentralized public blockchain platform that uses the proof of stake and proof of history consensus mechanisms. Built for decentralized apps (DApps) to improve the scalability of blockchain, Solana has actually carved out a niche for itself within the blockchain and cryptocurrency space knowing fully well that interoperability and cross-chain functions would be the biggest goal for blockchain technology. Solana’s native currency SOL has skyrocketed in value (and is still rising). When we talk about speed, security and efficiency, we are definitely referring to Solana. Most other blockchains work with one mechanism but Solana works with two (2) and that would most likely be the basis of its success. Solana uses the proof of stake (PoS) mechanism as well as the proof of history (PoH). With the proof of history, there is no preference for speed (as with the proof of work) or the size of your stake (as with the proof of stake). It uses time and as such transactions are processed just as they come. This ensures that the blockchain is very fast with a transaction speed of up to 50,000 transactions per second.
rSOL is the representative of SOL on the StaFi protocol. To receive this staked representative, you would have to stake SOL through Stafi’s staking contract. This would ensure that you can earn rewards for staking SOL while you use the rSOL to trade or carry out other DeFi operations (lending, borrowing and LP). This is also possible because like other rTokens, rSOL would be ERC-20 compatible.
The staking contracts on StaFi are connected to Solana directly. The moment the staking proof is validated by the staking contract, rSOL would be issued to the user who staked SOL. This rSOL would serve as a receipt that they would use to claim their staking rewards and collect the SOL that they staked.
Benefits of the StaFi rSOL App
1. It helps its users to transfer and trade rSOL assets at any time to get liquidity, unlocked and hedge price risk.
2. To maximize staking rewards. With rSOL, you earn double rewards. Rewards for staking your SOL and rewards for using your staked representatives for DeFi yield.
3. rSOL App also helps stakers to not worry about the liquidity of the staked SOL as users or traders can trade at Uniswap at any time in the future.
4. When a trader or user deposits SOL into the rSOL contract, StaFi will calculate the amount of rSOL to issue to the user based on the current exchange rate between SOL and rSOL. This is usually 1:1.
5. When a trader or user holds rSOL, StaFi will calculate the amount of redeemable SOL based on the real-time staking reward of SOL.
6. The rSOL contract integrates a strategy for maximizing staking rewards.
For StaFi protocol, it’s about providing holders of various asset classes access to liquid staking so that they can Unlock Liquidity and maximize rewards. Get your SOL ready and make the best use of it