TL;DR
- An explanation of what liquid staking is and how it works
- Explaining the benefits of Meta Pool as the leading liquid staking solution on NEAR
- Breaking down and comparing liquid staking across top performing Layer 1 blockchains
Overview
Liquid staking is one of the fundamental technologies that makes many blockchains function. Staking is different across each blockchain and most ecosystems have multiple liquid staking providers (LSPs). We will go through what liquid staking is, highlight the benefits of staking $NEAR with Meta Pool, and explore what can be learned from other LSPs.
Liquid Staking Explained
Even if you are new to crypto, you may be familiar with the term “mining” in relation to cryptocurrencies like Bitcoin or Ethereum. To “mine” a token means to participate in the blockchain’s consensus mechanism. This is a slow, energy intensive process using high-powered computers to verify and validate new blocks. These proof-of-work (PoW) mechanisms have drawn widespread criticism for their environmental impact, high barriers to entry and slow processing power.
Newer blockchains like NEAR, Solana and Avalanche use a fundamentally different process, proof-of-stake (PoS), to achieve consensus. PoS models require users to stake their tokens in the protocol’s native wallet, which are then used by the network’s validator nodes to provide transactions and maintain the blockchain’s performance. Stakers are then rewarded by the ecosystem, and upon unstaking receive back their original tokens plus whatever amount was earned during the staking period.
The current APY for staking on NEAR is about 10.6%. In this traditional model, tokens are locked on the smart contract until the user decides to unstake, which for NEAR takes about 2 days. Traditional staking generates reliable returns, but it renders the user’s capital illiquid, and limits earning potential to the basic APY provided by the protocol.
While great returns are available through native staking, the traditional staking model forces users to choose between staking and participating in the larger ecosystem. Liquid staking providers (LSP) solve this problem by issuing users who stake through their validators.
On August 23rd, 2021, Meta Pool introduced liquid staking to the NEAR ecosystem to solve this problem. Meta Pool’s model changes the way that staking is done, and can truly unlock the power of the NEAR DeFi ecosystem. You can read a more in-depth explanation of liquid staking on our blog here.
Liquid Staking on Meta Pool
Before outlining the advantages of using stNEAR, we will first explain how it works mechanically. When staking on an L1, in this case NEAR, your tokens are delegated to a validator, who uses them to secure the network. Meta Pool works to make this process more capital efficient and rewarding.
When a user stakes with Meta Pool instead of the native wallet, we still send your NEAR to a validator. However, we then issue you stNEAR, our liquidity token. This means that you are still securing the network by participating in the PoS mechanism, and avoid locking your capital up. You are then free to participate in the DeFi ecosystem with those stNEAR, and earn additional yield!
Our fundamental value proposition is that you can earn more passive income than just staking with your native wallet. When using Meta Pool, you earn the ~10% APY, and additionally have a liquid asset to trade. Instead of having locked tokens, and being forced to wait a number of epochs to return your tokens, you can immediately use your stNEAR.
We have worked hard this last year to integrate stNEAR across all NEAR DeFi projects so that you have even more ways to earn. One core partnership is with Aurora, the EVM built on NEAR. Our platform allows users from Aurora to stake their wNEAR and participate in the NEAR DeFi ecosystem.Also, we are currently partnered with Ref Finance, Aurigami, Bastion, Jumbo, and many more. To find out more ways to leverage your stNEAR, check out this post.
The State of Liquid Staking on NEAR
This week, Meta Pool celebrated its first anniversary! While we were the first liquid staking solution to launch on NEAR, less than 2% of total staked $NEAR has been staked on Meta Pool. This statistic illustrates just how much value there still is to be discovered. There is still a very large portion of staked NEAR that is illiquid, but could be used on the ecosystem through Meta Pool.
As NEAR continues to grow, Meta Pool will be an integral part of unlocking the liquidity of the network and a cornerstone of the ecosystem. As a native NEAR project, Meta Pool is dedicated to finding new ways for the NEAR community to use stNEAR to support and grow the ecosystem.
One example of this is our lossless staking rewards-based fundraising platform Meta Yield. On Meta Yield, individuals can financially back new NEAR projects by only giving away their staking rewards, not their underlying crypto assets. In exchange of the financial support, the backer receives native tokens or NFTs from the project, as well as their initial investment returned at the end of the vesting period.
The State of Liquid Staking Beyond NEAR
Most other PoS layer 1 blockchains have similar projects that mint liquid staking tokens. Among them are Avalanche, Ethereum, Klaytn, Solana, and many more. As we build out our project, we look to the state of staking across ecosystems to better understand the needs of markets. One way we can do this is with TVL.
This chart is a helpful indicator of how large the community is, and what the general defi ecosystem looks like at a particular L1 chain. Remember that the NEAR ecosystem still has a great deal of TVL staked through their mainnet wallet. As such, it becomes clear that liquid staking is very valuable across ecosystems, and their is tremendous growth potential for Meta Pool.
There are potential problems within the realm of liquid staking as well. The largest liquid staking solution, Lido FInance, was not listed on the graph as they have a TVL of $6.2b USD. While this level of success demonstrates the demand for liquid staking solutions, centralization issues can arise. We outlined these issues and their potential ramifications in a previous blog post, which you can find here.
There are a few factors that set Meta Pool apart from other L1 staking solutions. The first is the raw potential for growth. While many liquid staking projects offer a similar APY, the choice then becomes the strength of the ecosystems central asset. In our case, the NEAR token has already demonstrated an ability to hold above $10 in a bull market. With our growth potential, and the growth potential of the NEAR ecosystem itself, the real explosive value of $stNEAR – and earning 20%+ APY – becomes more clear.
So, what are you waiting for? You can stake your NEAR and unlock your capital right now.
Keep on Staking!
About Meta Pool & stNEAR
Meta Pool is the leading liquid staking solution for $NEAR and wNEAR token holders. With Meta Pool you earn NEAR staking rewards and maintain your liquidity to participate in DeFi protocols on NEAR and Aurora.
Users staking $NEAR and wNEAR with Meta Pool receive in exchange stNEAR (staked NEAR) tokens.
stNEAR simultaneously accrues staking rewards and unlocks users’ liquidity enabling them to participate in DeFi activities (e.g. lending, farming, borrowing) on NEAR and Aurora.
Stake $NEAR on Meta Pool
~11% APY
Get stNEAR
Yield-bearing token
Go DeFi on NEAR & Aurora
More APY and more rewards
Meta Pool also solves the problems associated with Proof-of-Stake networks staking: illiquidity, immovability and accessibility. Meta Pool also aims to distribute staking in multiple validators to improve censorship-resistance of the NEAR network.
With a TVL of ~9 Million $NEAR and growing, Meta Pool has become in just a few months a cornerstone element of the NEAR ecosystem. Meta Pool is making NEAR Protocol more decentralized and therefore more secure.
In February 2022 Meta Pool has been successfully audited by BlockSec, confirming the implementation of the highest security standards.
For more information visit https://metapool.app.
