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The evolution of the proof of stake (PoS) narrative in the crypto space has been phenomenal. As a result, staking, which is a critical aspect of PoS blockchains, has also experienced explosive growth since it provides a direct way to secure networks against attacks by involving the masses.
However, despite the ever-growing market capitalization of PoS networks, a multitude of challenges remain, such as the centralization of staking and the complexity of stake management for delegators.
It’s in the backdrop of these challenges that Stader Labs is building an end-to-end staking management platform that will simplify delegating tokens across multiple blockchains. Further, its architecture will provide a simplified layer to allow anyone to build staking DApps.
Let’s learn more.
Stader Labs is a noncustodial, multichain staking platform designed to provide middleware staking infrastructure that will help solve challenges facing stakeholders on PoS networks.
Its modular approach allows third-party apps to leverage its architecture and interact with its smart contracts to build simple-to-use staking solutions.
Initially, Stader started out by offering a liquid staking solution on the Terra blockchain, where users could stake LUNA to get LunaX which could be used to earn yields from different DeFi platforms.
However, since the Luna crash in 2022 following the de-pegging of UST against the U.S. dollar, Stader has expanded to other platforms. It’s currently live on Polygon, Fantom, Hedera, BNB Chain and Terra 2.0, with plans to launch on Ethereum, Avalanche and Solana.
Strategically positioned to make a name in the rapidly growing DeFi niche, Stader Labs has built two notable products; staking pools and liquid staking. In the larger crypto market outlook, the liquid staking narrative has become quite popular due to its ability to let people maximize yields from their locked tokens.
Further, retail and institutional investors can lock funds in staking pools on Stader to increase their staking power and computational resources which boosts performance.
Ultimately, Stader Labs aims to provide a platform where DAOs and developers can create customized staking solutions and staking-based cross-asset ETFs in a similar way as the S&P 500 Index in the stock market that pays out additional interest.
Though relatively new in the market, the concept of liquid staking (also known as soft staking) has caught the attention of investors. In traditional staking, you can’t access your funds once you have staked them until the lock period is over – early redemption may lead to penalties.
However, with liquid staking, you can access your funds freely without a waiting period, being penalized or going through a lengthy unstaking process. It provides a unique value proposition to DeFi where token holders can earn staking rewards without locking away their capital.
Stader’s liquid staking solutions have made staking more rewarding. Case in point; Let’s say you stake BNB on Stader. You’ll receive liquid tokens (BNBx) to represent your amount of staked assets. Stader will then spread your staked BNB optimally across multiple validators on its network. Consequently, the validators generate rewards that are channeled back into the BNB staking pool, which in turn raises the value of BNBx in circulation. Hence the value of 1 BNBx against 1 BNB will grow over time as your staking rewards accrue.
Meanwhile, you can use the BNBx that you’ve received for various DeFi opportunities.
Through liquid staking, you can participate in yield farming across various protocols by wrapping your tokens or using a tokenized version of your funds.
As one of the most popular DeFi strategies, yield farming through liquid staking allows you to earn additional rewards by locking up the tokenized assets simultaneously on multiple platforms.
You can also use your liquid staking tokens to access crypto-backed loans on crypto lending protocols. Tokenized assets can be used as collateral when borrowing funds on these platforms without selling off your assets.
At Stader, there are even more ways to earn with your liquid tokens through its partnerships with various DeFi platforms such as OpenLeverage and Delta Theta. Through leveraged trading on OpenLeverage, you can amplify your BNBx tokens with 10X leverage for instance, and go long or short on BNB to earn more returns. You can also try options trading on Delta Theta to maximize your profits with low risks via hedging.
As a DeFi platform, Stader is using a flexible and innovative modular approach to open up staking to the masses where developers can plug into the network’s existing components to build customized staking solutions. Its technical blueprint consists of a system of highly interactive smart contracts that connect the entire Stader ecosystem.
These different contracts separate the base capital from the rewards, which ensures that the capital is isolated when interacting with other protocols. Some of the core smart contracts currently on Stader are: Delegator contract, Validator contract, Pools contract and Strategies contract.
Stader’s modular architecture of different smart contracts provides third parties the opportunity to build products that provide extra staking use cases. The flexibility of this structure allows for extensive staking services, from customized staking products for institutions to simple one-click staking services for apps and even a more decentralized staking infrastructure layer for blockchains.
The SD token is the native governance token for the Stader protocol. As an ERC-20 token, the SD token is used to power various operations on Stader. Its core utilities include:
Governance – By staking SD tokens, holders receive xSD, which are auto-compounding tokens with voting rights.
Staking – As a validator, you can stake your xSD tokens to receive preferential delegations and provide insurance against slashing. An xSD holder can also stake xSD on your preferred validator’s behalf.
Liquidity pools – Liquidity providers for xSD or SD pairs with native tokens and stablecoins will receive SD tokens as rewards and pool fees.
Infrastructure – Third party protocols can stake xSD to benefit from Stader’s smart contracts and architecture.
Following the successful switch by Ethereum to a PoS consensus mechanism through The Merge, the dynamics of staking ETH have changed significantly. After The Merge, liquid staking has emerged as one of the preferred ways to stake ETH tokens.
As a result, quite a number of protocols offering liquid staking derivatives (LSDs) have cropped up. However, the market share is skewed where only a single protocol, Lido, dominates with around 76% of the staked ETH on its liquid staking platform.
As a result, Stader Labs saw the need to create ETHx which would provide delegators with a robust alternative to participate in liquid staking.
ETHx is an LSD created to provide more diversity on Ethereum and reduce the concentration of staked ETH on a few entities. ETHx has a multi-pool architecture that allows the token’s node operations to be decentralized, scalable and resilient. The three pools are: permissionless pools for home stakers, permissioned node operators, and Distributed Validator Technology (DVT) Pools. DVT Pools distribute validator duties across multiple nodes to facilitate decentralization. Stader has collaborated with SSV Network to launch a testnet for DVT pools.
ETHx provides value to the following Stader stakers:
To empower home stakers (independent node operators), Stader allows anyone to operate a node in a permissionless way without having to go through a whitelist. Further, home stakers need to only bond 4 ETH to operate a node which is the lowest bond requirement in the Stader ecosystem.
This reduced amount is sufficient to protect staked funds on the network from risks such as poor validator performance and inactivity.
Further, the ETHx design allows home stakers to enjoy an improved yield since they receive a commission on a higher user deposit. The low bond requirement ensures that operators with less capital aren’t locked out and can also enjoy enhanced staking yields.
As Stader works on scaling ETHx to become fully permissionless, the network has created a stake pool for permissioned node operators. These operators are already established entities that have a reputable track record.
As such, they won’t need to bond any ETH to operate. Their main role is to supplement the ETHx home stakers. They earn a competitive commission of 5% from staking rewards, MEV and tips.
Stader ensures that there is high adoption of MEV to allow liquid staking users to earn the best possible yields. Through Stader’s strategic integration with 40+ DeFi platforms, ETHx users will get to experience a multichain DeFi experience at a competitive rate of 10% of the yield generated.
SD entered the crypto market in March 2022 at a price of $5.88. In the first week of trading, the SD token dipped to a price of $4.17 before rallying to its highest price to date of $30.17.
Thereafter, the price dropped sharply to a low of $3.09 at the end of April. SD token wasn’t spared from the price dump in May 2022 following the Luna crash where it dropped to $0.89.
SD's price didn’t recover for the rest of 2022 but began to rise at the beginning of 2023. SD token has been bullish in the first quarter where it has gained over 480% within the first six weeks of 2023.
Price forecasting experts are bullish about SD token price. Analysts at DigitalCoinPrice believe that the token could hit $12.90 by 2030 while those at PricePrediction forecast a higher price of $25.39 within a similar time frame. While these price predictions seem enticing, they shouldn’t be taken as financial advice, and we highly recommend that you do your own research before investing in Stader or any other crypto token.
That said, the SD token seems promising, especially with the upcoming Ethereum Shanghai Upgrade that will enable withdrawals of staked ETH on the Eth 2.0 contract which significantly reduces the risk of staking ETH.
Even with the upgrade, demand for liquid staking solutions that require a low barrier to entry will remain since they provide a profitable alternative to the costly process of staking on the Ethereum Beacon Chain.
You can buy SD tokens on leading crypto exchanges such as Bybit. To trade the SD token on Bybit, you’ll need to sign up and fund your account with USDT. You can then proceed to trade SD token as a Spot Trading pair (SD/USDT) on the exchange’s easy-to-use interface.
Over the years, there’s been a significant increase in the demand for staking, and Stader provides a profitable and simplified way to maximize staking yields without locking your capital. Its ETHx product provides a robust alternative to spread out the current staking solutions that are concentrated by a few entities, such as Lido.
Further, Stader’s smart contract-based modular approach places the network in a strategic position in the DeFi niche where it can create multiple opportunities such as institutional-grade staking, a web3 API layer for building protocols, staking ETFs and DApps staking.
PoS blockchains are expected to proliferate the crypto market in a big way, and Stader is positioned to help its users reap this growth through efficient stake management.
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