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Polkadot-Linked Project Receives $600,000 Investment To Develop Liquid Staking For Unlocking Staked Coins

A new decentralized finance (DeFi) project based on Polkadot (DOT) token that is redeemable for Bitcoin (BTC) seeks to unlock liquidity which will be tied in staking as part of the consensus mechanism. The Polkadot project received a $600,000 investment for building liquid staking which is a mechanism of unlocking liquidity dedicated to the proof of stake.

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Stafi raised $600,000 to develop Polka ecosystem

The upcoming project is called Stafi which is a short form of Staking Finance and it aims at implementing liquid staking on Polkadot and possibly on other blockchains. However, there is a disadvantage with staking funds for consensus because when they are locked they cannot be used for anything else. Stafi will implement liquid staking which will allow users to transact with their tokens while at the same time taking part in consensus as well as receiving staking payments for their cash.

According to BitMax’s head of business development in Asia Bonna Zhu, Stafi is an option for the incubation program of the exchange that supports the project in various ways. Recently Stafi closed a capital raise of around $600,000 from Spark Digital Capital, Focus Labs and BitMax-affiliated accelerator, B-Tech. The project had previously received support from the Web3 Foundation for the building of the Polkadot ecosystem.

Mode of the functioning of liquid staking

Stafi operates in the same way as other automated yield chasing protocol on Ethereum but it is limited to staking. Therefore users should deploy their funds to the smart contract of Stafi for purposes of staking. They will then receive a rToken like rDOT representing their stake. Interestingly the token is fungible which means it can be exchanged and transferred. Users can redeem rToken at any point for their pool share and additional tokens gained from staking.

According to Stafi CEO and founder Liam Young for the project not to be undercollateralized, cutting losses are reflected on the token. This means it is a form of redistribution and Young added that they will launch algorithms for distribution of the delegators to other validators. Therefore is the validator will be slashed the same applies to the delegator.

Ruchi Gupta

Ruchi Gupta covers various beats from finance to technology and from lifestyle to hobbies. She has an MBA in Finance. Ruchi enjoys writing on celebrities and political news. She likes traveling and exploring places.

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