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Stafi protocol as a solution to ETH 2.0 Staking Liquidity.

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ETH 2.0 will soon be underway, this is something almost all crypto enthusiasts have been looking forward to (except bitcoin maximalists of course).

It is to be an upgrade to the ETH blockchain (Ethereum 1.0), called ETH2 at times. The features of Ethereum 2.0 is to make the Ethereum network more scalable, efficient and faster than it is already. Which means more transactions can be done without the fear of congestion.

Ethereum 1.0 uses a PoW(proof of work) but the Ethereum 2.0 will use PoS(proof of stake) consensus mechanism.

PoW(proof of work) involves a party proving to other parties that a particular amount of computational effort has been made for a purpose. The other parties will then have to confirm this, the concept behind this is mining. It is consumes a large amount of electricity as it involves miners using computer hardware processing power to solve complex mathematical puzzles and verify new transactions.

The first miner to solve a puzzle adds a new transaction to the record of all transactions that make up the blockchain. Then the miner get rewarded with cryptocurrencies.

Learn more on PoW

PoS(proof of stake) consensus mechanism is about achieving distributed consensus. A cryptocurrency blockchain network using Proof of Stake means that the creator of the next block is chosen through various combinations of their stakes. The owner of the selected stake validates the next block and earns incentives for it.

Read more on PoS

Many networks making use of proof of stake have a small group of validators, this gives room to centralization and makes the network less secured.
Ethereum 2.0 will require at least 16,384 validators, giving room to decentralization and making the network secure.

It is to be noted that those that staked their coins will not be able to make withdrawals until ETH 2.0 reaches Phase 1.5. Many hodlers are waiting for third parties to launch withdrawal-enabled staking services. And this where StaFi comes in.

Introducing StaFi

StaFi is the first DeFi protocol unlocking liquidity of staked assets. Users can stake PoS tokens through StaFi and receive rTokens in return, which are available for trading while still earning staking rewards.

FIS is the native token on StaFi chain. FIS is required to provide security to the network by Staking, pay for transaction fees on the StaFi chain, mint and redeem rTokens.

rToken is short for reward-Token. When users stake PoS tokens through StaFi, they will receive an equal amount of rToken in return. For example, rEth represents staked Eth.

rToken allows users to receive staking rewards and access liquidity any time by trading rTokens directly. Users also have the right to redeem the corresponding amount of staked tokens at any time.

ETH 2.0 Staking liquidity solution: Users can stake ETH using StaFi's Staking Contract and still get liquidity for doing so through rToken.

Whenever a user stakes ETH to the Staking Contract (StaFi's), a certain amount of rETH will be minted and sent back in return. There will be no fee charged for claiming the rETH mint, and this is to avoid any frictions for participants.

Since transfers and unstaking on Ethereum 2.0 are not supported until Phase 2 starts, stakers are only allowed to redeem ETH from rETH when such functions are available.

rETH received can be exchanged and traded on DEXes (Decentralized exchanges) and CEXes (centralized exchanges) in the near future, as well as integrated in other DeFi Protocols.

Pairings like rETH/ETH and rETH/USDT would be enabled to bring liquidity to stakers.

To know more about how this works, read here

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