From Liquidity Staking to Re-staking Innovation: How Does Persistence Influence the Cosmos Ecosystem?

Persistence

Ecosystem

The Map of Zones visualization highlights Persistence’s significant impact within the Cosmos ecosystem:

Official data reveals a Total Value Locked (TVL) of $14.78 million and a recent 30-day IBC transaction volume of $15 million, with transaction costs averaging under $0.005.

Map of Zones analysis shows that Persistence.one has formed 121 channels across 44 different zones within the Interchain network, establishing itself as a well-connected node capable of extensive multi-channel interactions.

A substantial 74.7% of network tokens ($XPRT) are staked, indicative of robust network security and high user engagement, with staking yields at 16.7% annually.

The network’s infrastructure includes 6 nodes and 100 validators, collectively enhancing its decentralization and security.

IBC (Inter-Blockchain Communication) serves as a pivotal protocol within the Cosmos ecosystem, facilitating interoperability between disparate blockchains. This protocol enables seamless token and data transfers across independent chains, crucial for developing cross-chain applications. IBC’s transaction volumes provide a gauge for the scale of external value transactions linked to the Persistence chain.

Over the past 24 hours, Persistence logged $260,800 in IBC transactions across 4955 transactions, with 932 active addresses including 86 specific to IBC. Notably, IBC inflows consistently outpace outflows, highlighting growing stakeholder engagement and investment.

The staking platform, pSTAKE, stands out as a cornerstone product for both Persistence and the broader Cosmos ecosystem.

Technical Support

Persistence harnesses the CosmWasm framework, enabling developers to craft secure, interoperable smart contracts in Rust. This framework supports DApps that operate across blockchains via IBC, ensuring application cross-chain interoperability and offering robust support for liquidity staking processes.

Persistence links to 54 Cosmos application chains through IBC, enabling decentralized communication and facilitating token transfers, staking, and re-staking—foundational to the ecosystem’s staking operations.

The platform also incorporates Interchain Accounts (ICA) for ICA Liquid Staking, allowing chain-specific accounts to perform cross-chain actions, thus streamlining staking processes significantly.

Liquidity Staking

Staking and Network Security in the Cosmos Ecosystem

In Ethereum’s ecosystem, the threshold to become a validator requires staking at least 32 ETH. Liquidity staking platforms like Lido enable users to stake smaller amounts of ETH, pooling these funds into units of 32 ETH that are allocated to validator operators. This practice helps increase the number of Ethereum validators, enhancing the network’s security and decentralization.

In the Cosmos ecosystem, liquidity staking includes two key roles: validators and delegators.

Delegators, or stakers, select a validator node to delegate their stakes to.

Validators run hardware and blockchain applications based on the Cosmos SDK, reaching consensus with other validators to propose and validate new blocks on the blockchain.

Should a validator exhibit negative behavior, their delegators will face corresponding penalties. Minor infractions, such as accidental or intentional downtime, might result in a 0.1% reduction of the delegator’s stakes. More severe misconduct, like double-signing a block (signing more than once for the same block height), can lead to a 5% reduction of staked funds.

Clearly, liquidity staking in the Cosmos ecosystem deters malicious behavior through a combination of economic incentives and potential penalties. Both validators and delegators bear joint responsibility for maintaining the network’s efficiency and security, and they receive token rewards as compensation for their roles.

pSTAKE staking

pSTAKE ($PSTAKE) is part of the investment portfolio of Binance Labs and Coinbase Ventures.

It streamlines the staking process within the Cosmos ecosystem, allowing users to easily select the token and chain for staking.

Once staking is initiated, the pSTAKE protocol credits the user’s wallet with the relevant staking rights tokens. For instance, staking ATOM earns you stkATOM.

Automatic Reinvestment

Consider stkATOM as an example: a user’s daily staking returns in ATOM are automatically reinvested, allowing for continued accrual of returns. This reinvestment increases the quantity of ATOM tied to each stkATOM, meaning the user can redeem more ATOM upon unstaking. Thus, the return on staking is reflected by an increase in the stkATOM/ATOM ratio.

Withdrawing Stakes

Users must wait between 21 and 25 days to withdraw their stakes, or they can opt to pay a 1% fee for immediate withdrawal. When stakes are withdrawn, the corresponding stk assets are destroyed.

Staking Returns

The following table lists the assets supported by pSTAKE staking and their current rates of return:

The projected annual compound return is calculated based on the day’s unchanged rate of return, using compound interest formulas.

Precautions

pSTAKE currently supports staking for several tokens: ATOM on Cosmos Hub, OSMO on Osmosis, DYDX on dYdX, STARS on Stargaze, and HUAHUA on Chihuahua. These tokens are minted on the Persistence chain.

When the user chooses the native chain to pledge tokens, pSTAKE pledge goes through two steps. The assets are cross-chained to the Persistence chain through IBC, and then the liquidity staking module of the Persistence chain is called to pledge the assets.

As such, staking any assets on pSTAKE requires holding a specific amount of Persistence chain’s base token, $XPRT, to cover the transaction fees, which are notably low on the Persistence chain.

Staking Derivatives

Persistence and the wider Cosmos ecosystem have introduced additional derivative products based on stk assets.

For example, within DEX platforms, stkATOM can be directly swapped for ATOM without the need to unstake or incur a 1% fee. Furthermore, pairs of stk assets and their corresponding native assets can contribute liquidity in DEXs, leading to higher returns. For instance, on Dexter, part of the Persistence platform, the projected annual yield for the stkDYDX+DYDX pair is 45.82%.

$XPRT Staking

Persistence operates as a standalone blockchain that enhances its network security through staking. Users can easily stake $XPRT using either the official Persistence platform or through the Keplr wallet.

To stake, simply select the Persistence network and choose a validator to delegate your $XPRT to.

Staking Safety

Persistence is a pivotal element of the Cosmos ecosystem’s security architecture, particularly through its role as a liquidity staking platform. Both Persistence and its staking platform pSTAKE are open-source, which bolsters their security. The pSTAKE software is maintained by 72 developers, with the latest update made just two days ago.

Additionally, Persistence and pSTAKE partner with a wide range of security firms to ensure robust safety measures for their staking and restaking operations. These include:

•Renowned blockchain and cryptographic security audit firms such as Halborn, PeckShield, •Certora, Hexens, and Notional;

•The global security research and consultancy, Trail of Bits;

•Specialists in smart contract security audits and consultancy like Solidified, ConsenSys Diligence, and Oak Security;

•Immunefi, a leading platform for DeFi vulnerability bounties;

•Forta, a network dedicated to real-time blockchain security monitoring and alerts.

Restaking

The Persistence project team is developing a Restaking infrastructure within the Cosmos ecosystem, as detailed on their blog. This setup allows users to deposit liquid staking tokens like stkATOM, stTIA, and stkDYDX into Persistence using platforms such as pSTAKE, Stride, and Quicksilver. By doing so, users can restake their assets to secure additional blockchain networks and earn further rewards.

The Persistence Restaking module accommodates a variety of asset types for staking, including staking equity tokens, stablecoins, and liquidity provider tokens.

Restaking Alliance

Persistence’s Restaking module is built upon the Alliance module—an open-source module of the Cosmos SDK developed by Terraform Labs. This module allows assets to be staked from one blockchain to another, thereby enabling blockchains to establish symbiotic staking relationships.

For instance, stakers of $XPRT, stkATOM, and stkTIA who stake their assets on Persistence become part of the Persistence Restaking Asset Alliance. This membership allows them to earn additional restaking rewards and $XPRT.

The Restaking Alliance pools and shares the staking revenues according to the designated reward weights of each asset. The reward weight for $XPRT is set at 1, while the weights for other assets are decided and adjusted via decentralized governance processes.

For example, if stkATOM and stkTIA have reward weights of 0.4 and 0.2, respectively, and only $XPRT, stkATOM, and stkTIA are in the alliance, the distribution of rewards would be:

$XPRT： 1/(1+0.4+0.2)=62.5%

stkATOM：0.4/(1+0.4+0.2)=25%

stkTIA： 0.2/(1+0.4+0.2)=12.5%

This reward distribution mechanism within Persistence’s staking asset alliance forms a collaborative group that shares mutual benefits, which is crucial for enhancing the safety and decentralization of the Cosmos ecosystem.

Sources of Restaking Revenue

Tokens allocated for restaking are locked and subsequently minted into native tokens, which are then staked on behalf of the users through a delegator role with validators.

For instance, tokens like stkATOM and stTIA, when staked by users, are secured by the restaking module on the Persistence chain and are proportionally converted into $XPRT. These $XPRT tokens are then staked with validators, and the earnings from this staking process are distributed to the holders of stkATOM and stTIA.

This mechanism serves as the foundation for Persistence’s restaking revenue and enhances the security and liquidity of the Cosmos ecosystem.

Final Thoughts

The Persistence chain has established a robust and secure economic foundation for liquidity staking and restaking activities within the Cosmos ecosystem. By leveraging liquidity staking products, Persistence is progressively expanding its impact on the Cosmos ecosystem, thereby enhancing security, liquidity of assets, and overall engagement within the ecosystem.

Moreover, Persistence has introduced innovative restaking initiatives that have forged an economic alliance among restakers. This alliance creates a cross-chain community with aligned interests, which not only bolsters mutual security but also enhances the decentralization across the Cosmos ecosystem within the restaking alliance.

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