Introducing LSDs in SFT Protocol - by Ambassador
With the upcoming Ethereum Shanghai/Cappella upgrade in April, Liquid Staking Derivatives (LSDs) have become a popular topic of discussion. The upgrade aims to bring about numerous developments, with a focus on Liquid Staking.
In Proof-of-Stake Consensus, validators are required to lock a certain amount of tokens to secure the blockchain by betting on the next block. If their bet is validated, they earn rewards. However, during this time, validators do not have access to their tokens and only earn rewards from newly formed blocks. The profits are often minimal, and there is little incentive to lock away tokens when they could be used elsewhere, such as trading or providing liquidity on a high APY platform.
The Ethereum Shanghai upgrade aims to solve this problem by allowing validators to stake their tokens and still participate in DeFi, earning rewards from both avenues.
This is the basic concept of Liquid Staking: stake tokens on a protocol and earn rewards. The protocol provides a liquid version of staked tokens that can be traded on open markets or used for liquidity provision. The same token can also be used to redeem the underlying token with the staking rewards accrued on the tokens.
The SFT Protocol will be one of the first to bring LSDs to the Filecoin ecosystem. With affiliations to layer 0 projects like Ethereum, Polkadot, and Filecoin, users can now utilize their coins further.
By staking the original public chain tokens and minting SFT tokens to solve liquidity, users can obtain SFT in the SFT Protocol for SFT transactions, stake mining/liquidity mining, DeFi lending, DAO governance, NFT casting, public chain node application deployment, hardware infrastructure calls, etc. The SFT Protocol supports stake and redemption of native tokens and finally realizes deposit and withdrawal at any time. All operations are performed by the decentralized deployment of smart contracts and verification nodes.
