FIRST OF ALL WHATS PSTAKE
Basically pSTAKE is a platform bilt by the Persistence network to allow holders of POS tokens to securely stake their various network tokens via the pSTAKE application, in this process users earn staking rewards.
WHY USE PSTAKE
For a while now its been established that staking is much more beneficial than simply Holding tokens. HODlers are more often thinned out as new tokens are introduced into supply. through block rewards which are in turn distributed to stakers. essentially this rewards them for securing the network.
nonetheless this long term belief comes at the expense of liquidity. staking positions are usually illiquid in nature(Not easily converted into cash) Though staking rewards). Though stakers earn block rewards(often referred to as staking reward).
The role of pSTAKE in all these is its been thoroughly designed to effectively address the challenges by POS stakers improved the end user experience to drive mass adoption.
Lets look at the pSTAKE design….
PSTAKE UNIQUE DESIGN
lets start with the dual token model unlike the majority of liquid staking solutions that currently exists PSTAKE
Users can deposit their native PoS tokens on pSTAKE to acquire wTOKENs, which are 1:1 pegged ERC-20 wrapped unstaked tokens that represent PoS network unstaked tokens. In Ethereum’s huge DeFi ecosystem, users can choose to use wTOKENs.
Users might, on the other hand, burn these wTOKENs to acquire 1:1 pegged ERC-20 pTOKENs, which represent staked tokens on the underlying PoS network. When users mint pTOKENs, the network stakes an identical number of native PoS tokens deposited with pSTAKE (delegated to multiple highly reputed validators). pTOKENs are always backed 100 percent by a stake of the same value.
The dual token approach not only replicates the functionality of the underlying/supported PoS chain, but it also functions as a catalyst for pSTAKE’s staked representational assets to gain traction. Assets issued by pSTAKE must be interoperable with the broader DeFi ecosystem in order for them to be readily and comfortably integrated into other products such as borrowing/lending in order for pSTAKE to gain adoption.
Let’s look at the essential components of pSTAKE and why they’re necessary now that we’ve gone over the nuances of the dual token concept.
The pBridge and pSTAKE smart contracts are the two main components of pSTAKE.
pBridge: is a PoS network that supports Ethereum and pSTAKE. pBridge can be used to manufacture 1:1 pegged ERC-20 wrapped unstaked PoS tokens (wTOKENs — these are similar to wBTC) and stake the PoS tokens locked on the bridge. pBridge is a multi-party computation-based bridge that is secured by some of the Proof of Stake ecosystem’s top validators.
pSTAKE Smart Contracts: On the Ethereum blockchain, pSTAKE smart contracts are in charge of minting and issuing wrapped tokens (wTOKENs) and staked representative tokens (pTOKENs).
The pTOKENs that have been issued are fungible. Assets staked on the PoS network are delegated over a whitelisted set of validators in a specified proportion to accomplish this fungibility. This stake distribution fraction will be chosen by the pSTAKE team at first, and thereafter managed by the pSTAKE governance token holders.
All pTOKEN holders are affected by the ecosystem’s shrinking hazards. The hazards of cutting are addressed to a significant extent by distributing delegation over different validators.
Over time, pSTAKE will establish an insurance fund, which will be funded by pSTAKE revenue, to cover a portion or all of stakers’ cutting costs in the event of a slashing event.
Security of the underlying PoS network
The security of PoS networks is strongly based on the network’s decentralisation in terms of stake distribution. Most PoS networks strive for more than a third of the network’s stake to be spread across as many validators as possible.
The goal of pSTAKE, on the other hand, is to increase the security of the underlying PoS network by whitelisting not just the largest stakeholder validators, but also smaller validators with a proven track record of consistent performance and uptime, to receive delegations through pSTAKE and further decentralise the network.
When it comes to PoS networks, governance is the most crucial component. While we work on determining the best governance solution for the underlying network, validators will vote on proposals at their own discretion (as to what they wish to vote on).
As previously mentioned, pSTAKE’s dual token format allows its pTOKENs to be used in a variety of DeFi protocols, such as DEXs, borrowing/lending platforms, yield optimization protocols, and so on.
Because the amount of pTOKENs does not change with the accrual of staking incentives, it is compatible with most DEXs that demand a token model with a constant balance.
pSTAKE will be governed by all its stakeholders who will decide on various parameters such as fees, addition of support for other chains, validator whitelist for delegation, pBridge validators, etc.