Liquid staking is by no means a new kid on the block and has opened up staking for many new users. Reducing friction by issuing a token representing staked assets which can then be used in DeFi or instantly swapped for the underlying.
Existing liquid staking protocols, Tenderize V1 included, have been a remarkable evolution for staking as more network participants and better capital efficiency naturally leads to healthier networks.
There’s a major problem still yet to be addressed. We don’t see validators or node operators using liquid staking protocols and tokenizing their stake, whilst they are the user group that stands to benefit the most from liquid staking. This is because liquid staking protocols today exist as yield vaults that allocate funds deposited by users to a (whitelisted) set of validators and issue a token representing the shared stake and revenue of that set.
In a lot of networks, how much stake you have directly impacts how much work you can potentially receive and thus your revenue. In other words, sharing stake with a set would negatively impact your competitive advantage as a validator.
In essence, what we see today is that liquid staking protocols are using validator services, but if we really want to unlock the true potential of liquid staking for everyone, then validators must also become users of liquid staking protocols themselves.
To achieve this we need a liquid staking experience that feels as if it were (almost) native to the underlying protocol, without interference to existing user flows for validators or delegators or negative impact on competitive advantage. We need a liquid staking protocol that is neutral, without potential adverse effects on decentralization and network security.
Hello World, Tenderize V2
Tenderize V2 seeks to extend the experience of natively staking in web3 protocols with the utility and use cases made possible by tokenizing stake. These use cases can create new business models for validators and increase their capital efficiency, allowing them to reinvest in the networks they support, fostering further decentralization and growth.
Learn more about Tenderize V2 by following us on Twitter and joining our Discord, we’ll soon be releasing the litepaper which goes in depth on how this radical new approach to liquid staking will work.
If you are a validator/node operator on one of the networks we support we’d love to hear from you, reach out to us or sign up for our launch partner program.
Find out all about tenderize at https://tenderize.me.