Background

The Ethereum Shanghai upgrade heralds a new era for ETH, characterized by risk-free yield of underlying assets, introduces a series of paradigm shifts that are reshaping the crypto landscape.

For institutions and individuals seeking stable returns, yield generated by Ethereum’s PoS mechanism is undeniably compelling. At the same time, as new liquidity mining opportunities arise, it becomes challenging for users to forgo PoS rewards in favor of providing liquidity with ETH directly.

Furthermore, for the next generation of DeFi protocols, Liquidity Staking Tokens (LSTs), which bear ETH staking yields, are emerging as the preferred choice for liquid assets. LSTs, based on Ethereum's native yields, and their derivatives, Liquidity Restaking Tokens (LRTs), are poised to become superior alternatives to ETH in the realm of liquidity reserves.

With the rise of emerging scaling solutions such as Layer2 and other blockchain networks, the demand for LST liquidity is set to surge, solidifying its importance in the evolving DeFi ecosystem.

The Problem

Ethereum's transition to Proof of Stake (PoS) has been hailed as a revolutionary step forward for the blockchain industry, promising a more sustainable and scalable network. However, despite its groundbreaking potential, significant structural challenges within the current market landscape have hindered the full realization of these benefits.

For Stakers

Individual stakers aim to secure risk-free staking returns. However, the growing opportunities for additional yield through liquidity provision are more likely to arise on Layer 2 solutions or blockchains other than Ethereum. Thus creating a dilemma where users must choose returns between providing liquidity (LP) or staking, thereby incurring opportunity costs.

LRTs provide users with innovative mechanisms to enhance capital efficiency by enabling them to restake their assets across multiple protocols, effectively allowing them to earn multiple streams of yield. However, due to the fragmented nature of liquidity across different LRT pools, users often encounter a complex and disjointed experience. The introduction of new tickers and the intricate processes involved in managing liquidity across multiple platforms add layers of complexity to the user journey.

For L2s and other EVM-compatible blockchains

Emerging blockchains will face greater challenges in acquiring sufficient ETH liquidity due to the need to cover the opportunity cost of the risk-free yield for migrating native ETH from the ethereum ecosystem to projects such as L2s and other EVM compatible chains for TVL. Notably, with the widespread adoption of restaking, the opportunity cost linked to the risk-free yield could reach up to 10% to 15%.

For Developers

Developers often encounter various hurdles when integrating LRTs, particularly due to the constant introduction of new tickers for various pools by the same project founders, which complicates integration efforts and leads to inefficiencies in both the user journey and developer workflows. The frequent changes in tickers create a fragmented and cumbersome development process, making it difficult to maintain a stable system.

Integrating cross-chain ETH further exacerbates these challenges, as obtaining price feeds without relying on oracles is complex. Furthermore, rebase tokens, which algorithmically adjust their supply, are particularly difficult to integrate and pose significant obstacles to achieving true omnichain operations, adding another layer of complexity.

The Solution: Yield Bearing Liquid Assets

StakeStone presents a comprehensive solution by introducing a yield-bearing liquid asset: STONE. STONE is designed to address the core issues faced by users, protocols, chains, and developers, creating a more efficient and seamless experience across the board.

For Stakers:

The introduction of liquid assets by StakeStone eliminates the traditional opportunity cost associated with choosing between liquidity provision and staking. Users no longer have to compromise between earning staking rewards or participating in liquidity pools.

With these yield-bearing liquid assets, users can simultaneously earn optimized returns on top of the risk-free yield from staking. This innovation not only maximizes potential earnings automatically for users but also allows for the full utilization of liquidity within the relevant ecosystems.

For L2s and other EVM-compatible blockchains:

StakeStone simplifies the complex challenges of liquidity management and user acquisition that protocols and chains often face. By leveraging liquid assets, these ecosystems can more easily bootstrap liquidity and attract users, creating a more organic, robust and sustainable environment for growth. The streamlined process reduces the barriers to entry for new projects and helps established protocols maintain a steady flow of liquidity, ensuring the stability and efficiency of the ecosystem.

For Developers:

For developers, StakeStone's STONE token serves as a rebalance token, offering a powerful tool for integrating liquidity and staking mechanisms within dApps. The STONE token's design facilitates omnichain functionalities, not only reducing the complexity of integrating rebase tokens but also provides a more sustainable infrastructure to be fully adaptable to the dynamic nature of the blockchain space.

In summary, StakeStone's yield-bearing liquid assets provide a holistic solution that addresses the key challenges faced by users, protocols, chains, and developers alike. With our liquid asset STONE, StakeStone is poised to play a pivotal role in the evolution of the blockchain ecosystem.