💱02. Staking

Staking is one of the most common financial forms in the blockchain application field.

Introduction

Staking is one of the most common financial forms in the blockchain application field. Users store and lock their crypto assets in the corresponding blockchain protocol to gain relevant benefits. This behavior is called "staking." When users need to withdraw their crypto assets, the associated benefits will be terminated.

Staking is the foundation and necessary condition for minting "so" synthetic assets. In the Solaris ecosystem, to mint synthetic assets, participants need to stake mainstream assets as collateral.

The entire execution and management process is handled by blockchain smart contracts, ensuring a decentralized nature and eliminating the possibility of any human intervention. The staking data is public and transparent on the blockchain.

Assets for Staking

Solaris1.0

Solaris 1.0 supports staking mainstream cryptocurrencies such as SOK, BTC, ETH, and BSC on the BSC chain, as well as the mainstream crypto asset in Solaris DEX (for more details, please refer to Solaris DEX).

Solaris2.0

Solaris 2.0 will adopt cross-chain technology to support staking mainstream assets on multiple chains, including BSC, Ethereum, Cosmos, Arbitrum, Optimism, TRON, etc.

Solaris3.0

Solaris 3.0 will support staking assets from other fields, such as foreign exchange, commodities, stocks, gold, silver, futures, etc.

Which assets can become collateral for synthetic assets in the Solaris Network will be determined by DAO in a decentralized manner.

• Multi-chain assets

Mainstream assets on chains such as BSC, Ethereum, Cosmos, Arbitrum, Optimism, and TRON.

• Mainstream cyptocurrencies

on BSC

SOK、BTC、BNB、ETH……

• Multi-chain assets

Mainstream assets on chains such as BSC, Ethereum, Cosmos, Arbitrum, Optimism, and TRON.

• Physical financial assets

Foreign exchange, stocks,

gold, etc.

Staking Rate

Due to the price volatility of staking assets, the entire value of staking assets cannot be used to mint synthetic assets. Instead, the value of the mintable synthetic assets should be calculated according to the staking rate. The specific calculation is as follows:

𝑉𝑠𝑚𝑎𝑥𝑉𝑚 =𝑅𝑠

Here, maxVm represents the maximum mintable value (the maximum value that can be minted); Vs represents the value of the collateral assets; and Rs represents the staking rate.

For example:

• If the staking rate of SLR is 667%, then $100 worth of SLR collateral can mint synthetic assets worth $15;

• If the staking rate of BNB is 160%, then $100 worth of BNB collateral can mint synthetic assets worth $62.5;

• If the staking rate of USDT is 125%, then $100 worth of USDT collateral can mint synthetic assets worth $80.

The specific staking rate is calculated based on the volatility of the staking assets and is ultimately determined by the DAO in a decentralized manner.

Interest Rate

Although the process of users staking mainstream assets and minting synthetic assets may resemble collateralized borrowing, it is fundamentally about minting synthetic assets on the blockchain backed by mainstream assets. Therefore, users do not need to bear interest costs.

Interest rate = 0

Redemption

When users redeem their staking assets, the synthetic assets minted during staking will be withdrawn and destroyed on the blockchain.

Liquidation

During the process of staking asset prices falling or synthetic asset prices rising, if the user's staking asset value/synthetic asset value is less than the staking rate, and the maximum mintable value is less than the actual minted synthetic asset value, on-chain liquidation will occur.

liquidation condition: 𝑉𝑠 < R𝑠𝑉𝑚

Here, Vm represents the value of the synthetic assets minted by the user; Vs represents the value of the collateral assets of the user; and Rs represents the Staking Ratio.

For example: If user Tom were to stake 1 BNB when its price was $400 and mint a synthetic asset worth $200, and then the BNB price were to fall below $320, the collateral asset value to synthetic asset value ratio would go below the 160% collateralization ratio, leading to Tom's BNB being liquidated.