Bitcoin (BTC) first drew attention to the proof-of-work (PoW) consensus algorithm, a process that demonstrated users could maintain a secure, decentralized blockchain if only at the expense of large amounts of energy. As history would have it, Bitcoin grew in popularity and faced trouble scaling to accommodate the sheer number of transactions needed. Recognizing the gap in technology, alternatives were developed, the most popular being proof-of-stake (PoS).
With staking, holders of a crypto asset could participate in the transaction validation process by locking their funds. Each participant would receive compensation in proportion to the amount staked, eliminating the need for highly intensive processes. Although a positive step for user adoption, the process is still far from ideal.
At present, one of the major concerns with staking is the unbonding period, which may require an investor to wait up to 28 days (for some protocols) between the time their token is sold to when it is returned to a user’s wallet. Of course, the unbonding period was proven to be just the beginning, with some centralized exchanges adding lock-in periods on top of the wait, some of which may add on another 30 days or more. The consequence? Given cryptocurrency’s volatility, some investors have been forced to sit idle as the prices of their assets tank before their eyes.
For this reason, liquid staking has become popularized for ensuring investors have access to their funds even when they are being staked. Under this setup, liquidity was improved, since funds could remain in escrow but were no longer “locked” and inaccessible like they otherwise would be with PoS staking. To achieve this, the team piloting the liquid staking project introduced a series of derivative IOU contracts that could be traded in a 1:1 ratio with their underlying assets.
It only became evident that another revolution was needed following the event of the Terra network collapse, in which derivatives pegged to Ether (ETH) were found to be worth next to nothing, unlike their peg.
Although not a perfect solution, the release of liquid staking improved the process significantly, increasing liquidity and optimizing the security of Ethereum 2.0. However, for the community, this raised the question, “What’s next?”
Assets free from the binds
XGo, a team aiming to accelerate the world’s decentralized financial future, made an aim to provide an answer to that question throughout 2022. After several rounds of development and battle-testing, XGo unveiled its solution, Superfluid Rewards, the logical next evolution for staking.
To achieve this, XGo Superfluid proposes a model without lock-ins that are tradeable in and out of any positions and completely without derivative pegs. The intent is that by providing all of these features, Superfluid could empower people to generate yields directly from their personal XGo wallet without taking any unnecessary risk. This means that, unlike traditional staking offers, users have the option to deposit and withdraw at their convenience.
To illustrate the difference this development will make, a member from the XGo team shared:
“20-plus days of not being able to move assets has an adverse impact on portfolio management. The inability to move one’s assets swiftly if the price of the token is capitulating or worse, the protocol is compromised, is a limiting factor for users when it comes to mass adoption for staking.”
Given that the world is entering a Web2.5 limbo, limitations like the ones mentioned above must be improved to cater to the wider crypto community. If not, staking runs the risk of being a process for the whales rather than the everyday person.
From Web2.5 to Web3
To date, XGo recognizes the launch of Superfluid, a product completely unheard of on the market until today, as being their most significant achievement.
Over the next 12 months, XGo aims to continue positioning itself as a Web2.5 bridge with the ultimate goal of onboarding people to everyday blockchain usage. Although XGo was born as a trading venue with its Superfluid flagship offering, there are several additional yield products on its roadmap that are set to build an environment that promotes widespread blockchain adoption now and long into the future.
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