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Rock X and IoTeX: Liquid Staking
Recorded: Nov. 21, 2023 Duration: 0:47:49Space Recording
Full Transcription
Yeah.
That's a lot of us.
If you're doing that, we're going to do it.
Let's take a look at what staking is, right? So in a very, very simple terms, staking is just a process, right? That a token holders like you or me, which hold IOTX, we commit our tokens to someone. Here it is a validator, so that it can support the whole network operation. And this is what staking is. But after we commit the token, the tokens are locked and cannot be trained.
validator so so that it can support the whole network operations and this is what staking is
but after we commit the token the tokens are locked and cannot be transferred before it is
on stake or unlock this happened in the traditional staking and this is very important
to ensure that the blockchain is secure but now there are some limitations to that and liquid
staking is here to solve this issue so as the name is implies liquid staking liquid this solve the
liquidity issue of the stake token so before you stake a token on validators you cannot transfer it
but now with the liquid staking mechanism after you stake a token on the protocol you will receive
actually another token which is a liquid staking token that represents your stake assets so for
instance if you stake iotx on uh on our bedrock protocol what you will receive in return will be
uni iotx so that is the the mechanism of how liquid staking works and it actually differs quite a lot
from uh from uh from traditional thinking uh because of the liquidity right so this will increase the
capital efficiency so uh your stake token is still on the blockchain but with your liquid staking token
you can use it to participate in many other defy activities while still enjoy the seeking rewards
um second is that uh with staking you may want you may need to come in quite a lot of the amount of
the token for instance on ethereum staking you need to stake 32es um at the current token price that is
around 60k us dollar and it may be more uh more expensive in the future and that's a lot for uh many of
us but for liquid staking uh people can stake any amount of the token they have so this opens the door
for more people or token holders to actually participate in the process to ensure blockchain security
and lastly liquid staking is a lot easier than staking uh because we don't need to select the
validators which validators we have to delegate to or we don't need to think about how to maximize
our staking rewards so liquid staking especially uh it's just a like a one-stop solution you provide
your token and you get a receipt with the receipt you can earn the staking rewards and also enjoy all
the uh liquidity and the benefits yeah i just see that operate in one word to summarize it's like it's
a staking but it's liquid so the user can use the liquid token to do uh additional uh stuff yeah so my
my second question about like the basic concept right so pretty like uh audience will be interested
uh how do you see liquid staking derivatives can contribute to the rt that's ecosystem or any other
other changes as well and why this is very important to uh to the to the uh crypto ecosystem we would
like to hear your thoughts on this uh i i yeah uh maybe jin or tim you guys can uh take it
yeah sure sure so actually this is quite important uh in three uh dimensions right so first liquid staking
uh as we just mentioned previously it lowers the barriers or the entry level for users to
stake their tokens because it is liquid so those who originally might be hesitant to lock up their tokens
uh maybe we're more willing to participate in in staking and we know more people participant which may
uh help increase the uh help increase the staking ratio and thus rents the network securities um secondly
is that with uh liquid staking derivatives the d5 projects or the other d5 d apps or protocols can
actually use the liquid staking token as a collateral uh to develop other d5 uh products or combinations
for instance they can use the liquid staking tokens to build lending uh stable coin projects or even
uh other rr real world access projects so it opens up uh many other um possibilities
and lastly uh i think with liquid staking uh it is important for users that they know don't need to
uh handle or understand the whole delegation process they just need to decide they get a token
they want to stake it they want to protect the network but at the same time they want to earn the
staking rewards so i think this will help more people uh to enter the door of liquid staking and thus
eventually contribute to the staking ratio of iotex if i remember that correctly of iotex currently the
staking ratio is roughly 35 percent um i think this will continue to grow as more adoption of the
uni iotx uh comes in the future yeah thank you for answering that yeah we do track the staking ratio
internally and do notice that there's an increase in our staking ratio and hopefully i pray in the in
the q1 or q2 i think we pray can see a higher staking ratio for rts chance so i think it's a good for all
the others rts holders because like everyone is locking the rts into the staking and turn it into a
liquid tokens uh in terms of uni rts so i i would love to see uh pray on the other another very uh another
question is how do you see your solution uh address a common criticism of the uh uh lsd around uh
centralization and also the security 12 because we know that in uh in the in the liquid shaking of the
ethereum's we see the drama of the lindal criticize for for being the dominance in this marketplace so how
do you address this uh the the the rise of the centralization and security track of issues i think
this would be uh interested to some of our audience here yeah i think andrew that is very important and
we take that into consideration uh when we start designing the the products or how it works so firstly
to avoid the centralization issues uh like we we see in lidl we actually allocate the tokens uh to different
validators and i'll briefly mention the criteria and these are all very transparent on our white paper
or websites so anyone can take a look at that so first after the user um or the token holders uh
stake their iotx or means uni iotx with the token that we get we will delegate or vote to the validators
that is ranked among 10 to 36 on iotx so this will avoid uh the chances that uh we will keep helping or
boosting uh the votes in a certain large validators so those validators uh will be benefit uh equally as
long as long as they are ranked amongst 10 to 36 in terms of the in terms of the validators ranking
and secondly uh we also take a look at the performance and the commission fee of the validator
charge they need to be lower than a certain ratio which is five percent at this moment so so that we
ensure or we protect our users our benefits the rewards uh need to be protected and lastly the
validators have to use hermes so all of this uh we try to ensure the fairness and also help um
build the ecosystem so that many of the validators will get a chance to be voted and at the same time
our users or token holders benefits are protected that's for the centralization part uh for the
security part so basically what we are doing uh is to continuous working on the smart contract audits
so uh before we launch actually we have finished uh several rounds of testing uh we have engaged with
our partners our partners or uh a third party uh uh uh audit company uh peg shield uh to conduct a audit for
a smart contract to ensure that everything or the risk is uh examined and we have the white paper uh listed
on the website uh besides that i think last thing i can mention about the uh security is that
although users usually will withdraw from the uh the app or our platform but we also allow the user
to initiate on stake and the pay debt feature by themselves if they would like to claim back their
tokens or on stake uh by themselves so this actually prevents the oracle risk and we hope this kind of
design will maximize the transparency and boost the confidence of our users to use the
uni iotx products very cool awesome yeah our next set of questions here we just want to go into
get a bit more product understanding i'll just say from my side the ease of use of your guys's product
has been uh really really good compared to a lot of the traditional staking is it's had to be a very
phased approach to the way we take it we need to educate people whereas liquid staking certainly there's
an education component that is required here but the actual ease of use of the product have been
really impressed with can you comment on the steps that a user needs to go through when doing liquid
staking with bedrock
sure sure so i will say just three simple steps uh so first uh user visit the web bedrock website and connect
to their wallets uh let it be metamask or iopay that's the first step um second the token holders
just need to select the amount of the token they wish to stake and then confirm the transformation
and lastly they'll be able to see that uh their tokens in their wallets and start to enjoy the rewards
so it's basically very very simple and can be done within i think 30 seconds
yeah yeah literally it's it's really quick and like i said i've been really impressed with it
and next do you mind going through the actual unstaking process and what the steps they go
through to do that yeah definitely so to unstake uh again the users need to return to our
websites or their platform and then they connect their wallet and select the amounts they wish to
unstake but uh i need to highlight that to unstake uh it has to be in a unit of one million iotx
so after they confirm the unstake process and then the unstake period will start
the unstake period will take 94 days after the 94 days period end the users will need to come back to
the website and claim their uh principal or interest they earned so that's the whole unstaking process
awesome and one thing i'll add to that is memo the leading decks on iotex has now added support
for bedrock and rockex so i'm able to announce that today so now if you have your union iotex and
you want to switch it back to iotex or switch to another token you're able to do that now through
memo decks so that's really helpful um you don't necessarily need to go through the whole unstaking
process you can just swap it for other tokens which is the amazing thing about liquid staking in my
opinion great um so yeah i understand this is the first uh beta phase um but what are the exact
timelines here and what are the next phases can you give us a bit of a roadmap for um your guys's launch
yeah definitely so actually we have been constantly releasing new features uh in this week so yesterday
we support iopay and at the same time we are continuously doing some stress testing to ensure
that everything goes right that is the uh main goal that we want to achieve in the beta launch so that's
why we we called it this uh beta phase so after this we will start to incorporate new features to the
the apps uh for instance you mentioned the memo uh if uh if there is liquidity then we may have uh
features that the users can swap their io uni iotx token with iotx token directly on the d app page
so this will improve the user's experience and also we may want to provide a
notification system uh so that in case the the users initiated on stake uh and then they will get a
notification uh 94 days after so that they won't remember they won't forget that they have the token
uh that is due to them yeah so more features are coming and we will let everyone knows once it is uh
ready awesome yeah jim i think you uh ruined my little surprise there i was gonna save it till the end
but yeah happy to announce like i guess within in conjunction with you guys that uh now iopay supports
bedrock so that's also um really big news and we're happy to have our iopay users uh be able to
use bedrock in order to do liquid staking as well yeah yeah sorry for ruining the surprise but i think
that's really really important especially for the the iotx community 100 100 awesome and i think
andrew wants to go into a few more uh of the of the advanced concepts here so i'll let andrew take the
stage again here yeah thank you for like what on the products and so i privilege to dive into what
advanced concept of liquid staking so how do you see the liquid liquidity pools or in internal uh liquid
staking derivatives yeah so for liquidity pools for instance like curve or uh the balancers this this
kind of liquidity pool they will help uh the trading of the derivatives they actually provide a market
for users to enter and east their staking positions like we just discussed uh like memo uh users with the
uni iotx can swap for iotx inside of the liquidity pools so that they don't uh need to wait for the
unstaking period and during the process there will be transaction fees the transaction
fees generated uh from the pool's trading activity will be distributed to the liquidity providers
as the incentives for them so those who provide liquidity will be rewarded and lastly uh although
the users provide liquidity to the liquidity pool they will still be getting the original staking rewards
um for their uh lst token so that is actually a place where people provide liquidity swap and also at the
same time earn the uh liquid staking rewards they are entitled to yeah thank you for your answer on that
one so i think the last one i'm very curious to learn uh about your thoughts uh on the challenges uh you see
in the market adoption of the liquid staking derivatives i know this space is quite kind of very competitive
you see like lino as the first and you you see like uh rocket pool uh and then the others have
follows how do you see uh foresee the market adoption of the lst uh in general uh to to to the to the to
the trend and also to the other trend and also the outer chance yeah yeah definitely so i think uh as
you mentioned we see lots of players here and we have been and those players have been devoting quite a
lot of time and money and resources to this uh for at least one one or two years uh what i think the
issue here is the liquid staking although it is getting more and more market attention but the
market size is actually uh highly related to staking because liquid staking uh on the other hand is
actually a staking it's just uh liquid right this will not change the essence or the fundamental that
it is still a sticking product so i think the issue of the math adoption will still be back on staking
for example uh there are some regulatory uncertainty of whether staking is uh uh it's taxable or is a or is
a derivative that needs to be regulated so this is still an issue that needs to be addressed and
also there is still some entry barrier for users to understand the concept of blockchain and staking
so from my opinion i think a clear regulations and more uh user uh educations are critical for max
adoption liquid staking is solving the pain point and staking but there's still a long way to go
although there's a long way to go but i think i do have faith in this and we all are trying to work
to solve this issue and bring the mass adoption which we all hope to the liquid staking derivatives
yeah i'd love to dive in a bit more on the education side of things like i brought up recently with
somebody who's actually pretty into bitcoin but not so deep into like i guess the crypto side
and i was like yeah i'm gonna be doing a podcast talking about liquid staking it's like oh i don't
even know what staking is so like how do we um get to that kind of reach and understanding and education
for that kind of phase to at least get them to understand staking and then liquid staking
um any ideas from your side i think we're all working on that problem but we'd love to hear your
perspective on that yeah i think that's one thing that we be all working on but uh so for for now i
we have seen more and more uh like the kols doing some knowledge sharing uh to their users in very very
simple words and also we have seen lots of events happening uh the large conference uh i still remember a
few years ago when i first joined the the blockchain week it's all it's most focusing on the developers
and the exchanges but gradually there are more more uh students joining or the people who are interested
in the technology joining so i think those are uh making a change but it actually do takes time and from
different uh stakeholders perspective uh we educate our the users in in different ways
yeah so so that's what what uh what i think now maybe team uh not sure you have uh you also have
attended lots of events in this space for a while not sure if you can share your thoughts on the
education part sure yeah i i think um i think there are two two i guess two ways to look at uh how you
would really educate someone regarding this right um i think the first part is definitely on a
fundamental level which is uh what jim went through already uh what is staking um especially like a
proof of stake staking mechanism um how you know it's used to secure the blockchain fundamentally people
understand that uh and then you i think it's easier for them to understand how this is almost a
almost a risk-free rate equivalent on the blockchain so i know my ceo he's extremely bullish on the idea
that in the future um down a few years down the road um people won't own native uh tokens anymore
like like for example ethereum or iotx they won't own the native token but they would all earn the
um uh liquid staking equivalent of it because there's in a sense there's a risk-free rate for
you to capture with your native token unless you're a developer who needs it for gas or you know who
needs it uh to deploy it for other purposes right so i think that that really is the bullish sentiment that
i've been hearing um and and it seems like there are people there are consortiums of groups working
on this idea and this education piece uh with the hope that you know eventually that you know not
many people will own the native token itself but the liquid-staking equivalent which is why we decided
to come up with bedrock to meet this demand that we believe will be the future of um i guess uh the
cryptocurrency scene uh so as a sector liquid-staking has been blown up especially after the chapella
upgrade on the ethereum side and we believe this trend will really follow on to a lot of pos tokens
because really um you know if the risk is slow and there are lagos for you to build on top to earn
more yield uh there's there's no reason why you should own the native token unless of course for
utility purposes as opposed to owning the liquid staking token itself so i think a lot of it comes
to people understanding the fundamental concept and understanding this as a risk almost risk-free option
to earn a a premium on top of their native token yeah that's that's honestly a super super
fascinating perspective that your ceo has um i'm guessing there's a few barriers that we already
talked about there but is there any other that you would add that is preventing us to get to that
time when there's um you know all liquid liquid stake tokens versus the native token
yeah i i think um there there are a lot of people on the sidelines trying to find their way in
uh maybe for one people are still i mean the chapella upgrade was not more than a year right
not more than a year ago so i think there are people who have have doubts still um but without
a doubt you see the volume just trickling in quite um significantly i believe back in august uh the the
wait to to stake or get a validated up and running was was insane it was like maybe four or five times
of what it used to be uh because there was so much interest uh and then of course like the other uh
things that jim mentioned are regulatory concerns uh and especially changes so uh i think if people
who have an institutional standing or or carry some sort of standing uh that does not allow them to
easily uh enter into products with uncertainty uh then probably they're not incentivized or the risk
is a bit too high for them so if there's more regulatory clarity uh more education uh reliability is
a big thing um you know people understand that actually hey this is very robust uh this is this
works very well and uh there's almost no risk to doing this uh you know why wouldn't we put our
our tokens there so i think those are all a combination of factors that will i think continue
to be ironed out throughout the years and then eventually we arrive at a point where you know liquid
staking tokens may um account for more market share than the native token itself yeah and i 100
agree from my side as well like experiencing you know liquid staking myself and getting our
community to try for the first time over the past few weeks it's been so well received and just the
ease of use compared to you know especially from someone coming from an like newly getting into
staking i think it's like a few clicks of a button and and just you you definitely want to have the
understanding before you do it but at the end of the day it's a few clicks of a button and you're
good to go and you have a token and it's not like it's not like you're sending the token out into the
ether like you are with staking necessarily you actually got something tangible there that you can
see which is you know i think it's a big bonus and i think that's why it's uh it's such a powerful
thing and my next question is about some of the other d5 protocols out there and how you plan to
drive some more adoption and integrate with some of those other d5 protocols and from our side like
that's one of the biggest things and our drivers of growth is trying to integrate with some of the
like-minded projects in the space um guessing from your side it's it's similar yeah i think i'll take
this one right jim yeah sure i believe you are the expert on this oh no no no by no means um but yeah
so i think we've been uh working with a few different protocols uh on different angles for what
um this kind of mutualistic um mutually beneficial uh relationship could be uh so we we try to figure
out you know the many touch points an average user will go through uh perhaps you know like even on
a wallet level right uh having it natively integrated to a wallet is a big difference uh so you know when
users are able to use multiple wallet options say for example they want to use a multi-sig they want to
use a coinbase wallet um you know for whatever reason if we can integrate natively that really helps
with um you know starting getting getting our users familiar and also like uh they see it as a reliable
product and then of course we can also work with uh other uh dex's maybe those are important i think
like memo anything that allows users to uh build on top of the yield they get natively from uni iotx
that would be very important so if they are able to earn further rewards by providing liquidity by
getting the swap fees or even further incentives from any partner i think that's very very important
for users so they see it as a very low risk but uh more moderate to even higher rewards uh based on this
current market right now we also do uh you know co-marketing campaigns you know you can work with
other protocols who share the same values uh you're targeting the same types of users i think those are
also very beneficial when you get uh this kind of relationships with people within the ecosystem
especially if they're trusted and then of course campaigns right like like recently we've been working
with um a few different partners most notably sushi swap uh you know we we have the same idea to
increase liquidity on their platform for our token on their platform so we see benefits to both
sides and you know we're each willing to to give out some incentives to get users to come on
uh so so that we think you know would be a key kind of partnership or or integration into these
protocols which ultimately benefits the users right when we add liquidity it means users get the best
swap rate possible uh so you know users like you mentioned don't have to observe the 94-day
unstaking period they get immediate liquidity uh for their uni iotx so considering you know like the the whole
all the touch points a user is involved in and kind of building out a a buffer on each end or making
optimizing a user journey there uh really i think will do us very well and serve us very well uh and
i think is the playbook that a lot of d5 protocols have that many successful d5 protocols have observed
at a tier two so we believe uh you know taking the same route will also help with bedrock's success
and of course by virtue of that uni iotx's success yeah 100 i think there's also like some kind
of a snowball effect there like as you get more and more users of liquid staking and more understanding
of liquid staking and there's more liquidity pools for liquid staking there's going to constantly be
more and more users getting on board and then you know just snowballs from there i think you guys are
definitely on the upswing right now 100 percent awesome so i just want to ask one last question
before we open it up to the floor to see if there's any other questions from the audience but this
question is just around what other future trends and developments in the liquid staking derivative
space do you see in the short term and in the long term sure i think this uh jim would probably be
able to speak better to that ah thanks tim yeah i'll try to speak from the opinion so for the future
trends uh we are closely monitoring on two technologies first is about the dvt the decentralized validator
technology uh this we are working closely with obo or ssp uh because we want to further decentralize
the the validators and understand how it will be working but we do think that uh from the economic
perspective this will be an issue uh needs to be addressed uh before the dvt technology uh is uh mass
uh adopted and second is we are also looking at the restaking applications like eigenlayer uh because
that will generate the liquid staking holders uh with more deals and increase the capital efficiency
so yeah those are two uh critical technologies that we are currently uh looking at awesome awesome
great so let's open up to the audience here if anyone has a question you can put up your hand
and uh we can add you as a speaker i think
any questions guys
all right jim and tim do you guys have any questions for our side
uh yeah so not sure if you can uh you you mentioned about
there uh we may have some projects exploring this liquid staking uh tokens perhaps with uni iotx not
sure if you can share a little bit more about uh what your vision on this what how do you envision
that uh more different d5 projects uh will be leveraging the liquid staking derivatives on iotx and
build a better uh or build a good product that benefits the economic the uh ecosystems
yeah i think the first thing is getting traction um with our current liquidity pool so between iotx
and uni iotx i think that's going to be a big first step and then just traction in general on the uni iotx
and i think we're already well on the way to achieving that traction um and then from there
we have a number of projects and and have a huge increase in liquidity on our chain over the last couple
months as we're trying to enter this decentralized physical infrastructure space essentially like
iot related crypto devices um and providing crypto based incentives for
the exchange of data effectively especially device data so i could definitely see a world where uni iotx is
used in conjunction with some of those other tokens and some of those other projects um i think there's
definitely some some symbiosis that we can see there over the next little bit i think it's just a matter
of first getting um uni iotex officially to become a large project on our chain and bedrock um and then
continue to grow from there anything you would add to that andrew yeah for me i'm very excited to see
uh the uh the use case of uni rts uh over like the others the file labels like landings or even you can
be used as a collateral of uh i think stable coin i know that in in a recent community post i think
uh our community community members actually proposed uh rts native a stable coin and then the underlying
collateral will be out here so that will be very interesting to see uh rts and also like the uh the liquid
staking version of rts can be used as a collateral like conflict increase more utilities of the uh
rts as well as the uni out here so i didn't do something very excited uh me and then to see the the
start of the i think the the defy ecosystem for dipping projects uh yeah so that's it for me
yeah yeah 100 awesome uh just to quickly uh add on and and sorry this is just
answering one of the questions or or a statement uh on war made in this thread um he basically asked
like if you stake less than one million iotx uh the uni iotx in your wallet can be liquidated or
converted swapped um to iotx through memo swap so that's correct on what your understanding is correct
yeah so if you just jump into memo there you'll see uh uni iotex is one of the liquidity pools and then
from there you can swap it so exact that's exactly you don't need to wait until you get that one
million um which is obviously a large amount so that's why it's beneficial
any other questions on there let's see i don't think so
okay
awesome guys thank you so much for joining jim and tim this was a fantastic discussion i think it
was illuminating for both our community and your guys community to get a bit deeper onto what this
liquid staking is all about and we really appreciate your technical understanding on this
thank you for having us thank you for having us thank you for having us all right thank you guys
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