TENET: Maximizing Yield With Diversified Staking

Blockchain technology holds limitless opportunities, especially in the realm of decentralized finance (DeFi). One game-changing blockchain that opened up the world to a whole new financial realm is Ethereum, with its introduction of smart contracts that enable token holders to earn passive income through staking and providing liquidity to decentralized exchanges.

In addition, there’s an increasing number of blockchain projects that have adopted proof of stake (PoS) consensus mechanisms to power their smart contract–based ecosystems. Ethereum’s switch to PoS blockchain via The Merge led to the birth of liquid staking derivatives (LSDs), a capital-efficient alternative to traditional staking.

Now, another innovative narrative has entered the space. Known as Diversified Proof of Stake (DiPoS), it lets you restake your staked assets on another chain through the Tenet blockchain.

Let’s learn about Tenet and how its DiPoS concept can help maximize returns from LSDs.

Key Takeaways:

• Tenet is the first Layer 1 blockchain to introduce the Diversified Proof of Stake (DiPoS) model, which lets LSD holders become validators by staking across a basket of assets.

• Tenet’s immediate target is the LSDfi niche of DeFi, which has become increasingly popular post-Ethereum Merge.

• Tenet has also entered into strategic partnerships with top blockchains like Ankr, Conflux and Qtum to help integrate LSDs.

What Is Tenet?

Tenet is a Layer 1 EVM-compatible blockchain running on the Cosmos SDK. It’s designed to increase liquidity and provide various yield opportunities to LSDs by providing a way to use them as collateral to network validators.

Tenet uses a highly secure and inclusive concept, called Diversified Proof of Stake (DiPoS), which allows validators to reach a consensus by staking across a basket of assets. With Tenet, those who have locked tokens in LSD protocols such as Lido and Rocket Pool can restake these assets across other chains to increase their yield. This dramatically improves the LSD staking experience, as users can freely move their LSDs between chains to leverage more yield opportunities. Stakers can triple their yield with Tenet, as it provides three sources of yield; LSD yield, Tenet validator rewards and tLSD DeFi usage rewards.

Furthermore, Tenet’s native stablecoin, LSDC, is minted by staking LSDs on the network, allowing holders to benefit from other yield opportunities across the DeFi ecosystem. To increase liquidity even more, Tenet intends to launch a decentralized exchange (DEX) for LSDs.

How Does Tenet Work?

Tenet builds on the concept of PoS consensus, popular for its scalability and cost-efficiency, with its novel DiPoS concept. Despite countless innovative projects entering the space, there have been few improvements to the PoS model. Hence, Tenet’s enhanced DiPoS framework introduces a potentially groundbreaking approach to DeFi.

To understand how Tenet works, let’s first look at two critical terms.

Diversified Proof of Stake (DiPoS)

With DiPoS, validators on Tenet’s network reach a consensus by staking across a basket of assets. In the traditional staking model, only one type of native asset can be locked to a given blockchain. However, DiPoS makes interchain staking possible because multiple assets can be locked across different chains.

One of the greatest strengths of such a model is enhanced security, since there’s distributed market strength across different assets, making it difficult for a single entity to control the basket of assets. The supported assets are Ethereum (ETH), Cosmos (ATOM), Polygon (MATIC), Polkadot (DOT), BNB Chain (BNB) and Cardano (ADA).

Liquid Staking Derivatives (LSDs)

LSDs are a tokenized form of staked assets that allow you to accrue rewards from an underlying staked asset. Unlike traditionally staked assets, which remain locked for a fixed period, LSDs can be moved around different DeFi protocols to earn additional yields while still providing stability and security to a network. Some of the most popular LSDs in the space include stETH, rETH and cbETH.

Implementation of DiPoS Using LSDs

Via the DiPoS module, Tenet is able to wrap around a native blockchain’s staking module without making major modifications or needing consensus on the core modules. To validate transactions, Tenet targets LSD holders, who can stake their assets to become validators or delegate to other nodes.

Tenet aims to boost liquidity to the LSD market and help LSD holders maximize the yield they can earn from their LSD tokens. On top of the original LSD yield, LSD providers can earn from transaction fees and block rewards for securing the Tenet network. The amount of the DiPoS asset reward is determined by veTENET holders, who set parameters for the reward gauges.

Furthermore, Tenet provides an in-house liquid staking protocol that allows you to liquefy your staking position in any of the supported baskets of assets. The zero-fee feature helps you bypass the 10% management fee that you would incur when using other LSD protocols.

What Is the Liquid Staking Dollar (LSDC)?

Liquid Staking Dollar (LSDC) is the USD-pegged native stablecoin of the Tenet Stablecoin Protocol, a DApp on the Tenet blockchain that allows you to use LSDC stablecoins to borrow interest-free loans collateralized by yield-bearing assets.

The Tenet Stablecoin Protocol is capital-efficient and unique, since it’s noncustodial and governed through an omnichain decentralized system. LSDC is minted against LSD assets. such as ETH (twstETH/tcbETH) and BNB (tankrBNB) that have been staked to secure Tenet’s network. 

After staking the LSD assets, you’ll be able to borrow an LSDC amount proportional to the amount of collateral deposited into the Collateralized Liquid Interest Position (CLIP), which you can then deposit in the Stability Pool for rewards such as liquidation gains and minting and redemption fees. With CLIP in place, you can keep generating interest from the LSD assets, even though you’ve borrowed LSDC against the LSD tokens, as the LSDs are staked via the CLIP smart contract.

Following are some of the benefits of LSDC, as compared to stablecoins of protocols such as MakerDAO:

• Positive interest rate, since you’re borrowing LSDC interest-free and still earning a yield from the underlying collateral

• Governed by the security of the Tenet blockchain’s DiPoS model

• Can be minted to provide utility across DeFi protocols

• Can be easily redeemed at the face value of the underlying asset

Source: Tenet Medium

What Is the TENET Crypto Token?

TENET is the native utility token for the Tenet blockchain. You need TENET tokens to pay gas fees to execute transactions on Tenet. In addition, you can stake TENET tokens in order to become a validator and help power Tenet’s DiPoS consensus mechanism.

Once you stake TENET with a staking provider on Tenet’s network, you’ll receive Tenet’s LSD, known as tTENET, which helps you earn staking rewards for securing the network. In short, TENET is the crypto token that acts as the base layer of the Tenet protocol’s operations.

TENET Tokenomics

Tenet operates based on a model known as vote-escrowed tokenomics (veTokenomics), which incentivizes users to participate in a network’s governance. The two main tokens in this model are tTENET and veTENET.

tTENET

tTenet is the LSD token issued once you stake TENET to become a network validator and earn validator rewards. As a staker, you also get to vote on selecting new LSDs to add to the Tenet blockchain. 

You can lock your tTENET tokens into a vote-escrowed account to receive veTENET tokens, opening you to a wide range of income streams in the TENET ecosystem. Per the schedule in the chart below, you can lock tTENET for a maximum of four years as follows:

Source: Tenet

veTENET

You can lock your tTENET tokens to receive veTENET, which helps you access various benefits and gives you voting rights for Tenet’s governance and reward gauges. 

To maintain a healthy ecosystem, new TENET tokens are continuously sent to a reward sink (gauge), and as a veTENET holder, you get to participate in voting on which gauge will receive the new tokens and how they’ll be distributed.

Apart from gauge voting, veTENET holders also participate in governance voting over blockchain decisions, including changing validators. As a reward for their participation in governance, VeTENET holders receive revenue from activities across the network, such as chain fees from Tenet validators and various protocol fees in the Tenet ecosystem.

TENET Token Price Prediction

As of Jul 18, 2023, Tenet’s price was $0.16, which is a 54% drop from its all-time high (ATH) price of $0.346 on May 25, 2023, and over 100% increase from its all-time low (ATL) price of $0.076 on Jun 14, 2023.

Price experts forecast a general increase in Tenet’s future price. According to DigitalCoinPrice, the Tenet token’s price could hit $0.57 in 2025 and rise to $1.67 in 2030. CoinDataFlow projects more fluctuations in Tenet’s price, predicting it to increase to $1.15 in 2025 but falling slightly below $1 by 2030.

However, these price predictions aren’t guarantees of TENET’s future prices. We highly recommend that you do your own research before you buy TENET or any other altcoins.

Is TENET a Good Investment?

Tenet is one project to watch, because it’s a pioneer in creating a DeFi ecosystem for liquid staking assets. The rapidly growing LSD market presents vast opportunities for asset holders looking for a way to grow returns in a capital-efficient manner. Tenet’s novel DiPoS model offers an innovative approach to maximize yield for LSDs.

Furthermore, Tenet has entered into strategic partnerships that will help scale the LSDFi market. Tenet’s partnership with top blockchain infrastructure provider Ankr will help discount the integration costs of LSDs by blockchains. Tenet has also partnered with China-endorsed Conflux Network and Singapore-based Qtum to open up their stakers to Tenet’s ecosystem.

In addition to these strategic partnerships, Tenet’s innovative approach to LSDFi doesn’t seem to have any significant competitors. As such, Tenet is a good investment for investors looking to explore DeFi in a unique way.

How to Buy the TENET Crypto Token

You can buy TENET tokens as a Spot pair (TENET/USDT) on Bybit. Not only will you get to interact with the platform’s user-friendly interface, but you’ll experience a whole new web3 world. Simply sign up to trade TENET, in addition to many other cryptocurrencies.

Closing Thoughts

The LSDFi niche in DeFi is rapidly growing, as investors look for capital-efficient ways to utilize their assets. Tenet’s DiPoS model opens DeFi protocols to a wide range of yield opportunities backed with increased security by staking across a basket of assets. 

With a strong team forging substantial partnerships and keen on scaling LSDs, Tenet is on the right growth trajectory and is a DeFi project to watch.

#Bybit #TheCryptoArk