While there is liquid collateral for Ethereum and other Layer 1 assets, other Web3 infrastructure assets are largely unavailable. Tenderize solves this problem by providing a non-custodial, liquid staking protocol for Web3 assets, and launched its mainnet in May, serving Livepeer (LPT), The Graph (GRT), Polygon (MATIC) and Audius (AUDIO) Liquid collateral is provided.
Tenderize has nearly $700,000 in TVL so far, spread fairly evenly across the top four assets.
How does Tenderize work?
Let’s use Livepeer, one of the largest collateralized assets on Tenderize, as an example. Livepeer requires a node to stake LPT for transcoding work on the Livepeer network. In addition to this, Livepeer also allows LPT to be delegated to node operators in exchange for a portion of the LPT reward.
Staking via Livepeer
Typically, you (or an institution) will go to the Livepeer network and choose a node to stake. As a delegator, you can follow the most reliable and profitable nodes. When you encounter the following situations, you generally think of re-delegating to other nodes:
- Want to delegate to a node that can share more rewards (more rewards = more money);
- want to delegate to nodes with higher uptime (more uptime = more rewards = more money);
- You want to unstake from a node you don’t agree with. For example, if a node is attacking the network or taking a controversial stance on governance proposals (less staking = less power).
However, the release period of LPT is 7 days, and during these 7 days, you will not get any reward, so you will lose 7 days of profit. For other infrastructure protocols like The Graph, the release period is even longer (28 days). Also, since your LPT is locked in the Livepeer protocol, your collateral assets cannot be used as collateral in other protocols or applications.
These examples show that delegators or potential nodes have to put their funds on hold for a period of time or even lose money if they want to decompress.
Staking with Tenderize
In contrast, with Tenderize, you (or any delegator) will receive tLPT (tender LPT) after staking LPT. LPT staked through Tenderize is delegated to highly profitable nodes, and the staking rewards are automatically compounded, sending more tLPT to the owner in the process of earning. A tLPT owner can exchange back LPT at any time, use tLPT in other DeFi protocols for additional benefits, or be able to sell tLPT immediately. Over time, given its immediate liquidity and potential yielding nature, Tender Tokens may experience some premiums (e.g., tLPT vs. LPT) between their native tokens.
The benefits of liquid staking really boil down to the first lesson of an introductory undergraduate finance course—the time value of money, a dollar today is worth more than a dollar tomorrow. As far as Tenderize is concerned, a dollar you can use today is worth more than a dollar seven to twenty-eight days from now. Investors who cannot wait for the lifting period or wish to effectively utilize their assets for additional income will pay a premium, while those willing to pay less for the underlying LPT tokens will accept the trade-off in time.
Liquidity moats and protocol-controlled liquidity
Web3 infrastructure is also complex. Protocols like The Graph and Livepeer have different long-term holders, and delegation can spur their growth. Tenderize encourages this by enabling greater consistency between capital allocation and node operators, with the protocol automatically compounding interest on a regular basis and managing delegation of nodes based on their profitability and reliability. This simplifies the process for investors and encourages competition among hardware suppliers.
Perhaps most importantly, as Tenderize scales, it naturally accumulates a significant amount of protocol-controlled value (liquidity) that can be used to monetize the wider DeFi ecosystem.
The market size of Web3 infrastructure for decentralized internet stacks is so large that it is often underestimated. Worldwide web infrastructure revenue is estimated to exceed $200 billion in 2022, while Amazon Web Services alone generated $62 billion in revenue last year. Imagine a world where many of the services provided by today’s tech giants are unbundled so that we have compute, storage, bandwidth, indexing, and other data management protocols. Tenderize provides a mechanism to make future Web3 infrastructure more financial.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/web3-infrastructure-for-liquid-staking-and-yield-generation/
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