stkATOM Fee Model Breakdown: ATOM Liquid Staking on pSTAKE

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  1. Deposit Fee: 0%
  2. Withdraw Fee: 0%
  3. Transaction Fee: Minimal in ATOM & XPRT
  4. Instant Redemption Fee: 0.5%
  5. Protocol Fee: 5% 

pSTAKE is in the works of deploying our new and improved ATOM liquid staking solution, which will allow users to earn on-chain staking rewards on Cosmos Hub while participating in Cosmos DeFi.

The Cosmos ecosystem and its underlying infrastructure lend themselves well to an extremely smooth and enhanced user experience, including lightning-fast transaction speeds and low fees. With our stkATOM product now built using Cosmos technology, the entire fee structure and model changes significantly from the existing Ethereum model, benefitting users across the board.

Let’s take a look at the different fees associated with our stkATOM product. 

Fee Types

As we dive in, it’s important to remember that these fee parameters can be changed at any time through PSTAKE governance as deemed fit.

Deposit Fee

This fee is charged by the pSTAKE protocol when users deposit their ATOM with pSTAKE to liquid stake and mint stkATOM – at launch, this will be set to 0%. We believe that having a non-zero deposit fee will disincentivise users to liquid-stake their ATOM on our protocol.

Withdraw Fee

This fee is charged by the pSTAKE protocol when a user claims their unstaked ATOM after the 21-25 day unbonding period – at launch, this will also be set to 0%. Our priority will be to bootstrap very deep liquidity for stkATOM on DEXs (decentralised exchanges) in the Cosmos Ecosystem following launch. 

We believe it’s not ideal to charge a fee for simply withdrawing ATOM by unstaking stkATOM.

Transaction Fee

Transaction fees may be charged for staking ATOM & unstaking stkATOM, which will be paid in XPRT. With Persistence set to be the liquid staking hub of the Cosmos ecosystem, dApps (decentralised applications) being built on top of the network will need a common transacting asset for a smoother user experience, adding greater use cases and value for XPRT.

Instant Redemption Fee

This fee accelerates the timeline for users who want to redeem their tokens instantly – at launch, this will be set to 0.5%. pSTAKE is creating an innovative mechanism that will allow users to instantly redeem their ATOM for stkATOM without waiting for the 21-25 day unstaking period to end. 

If enough redeemable tokens are available within the daily deposit pool, users will be able to claim their underlying ATOM (and associated staking rewards) equivalent to the current exchange rate. They will also avoid risks associated with volatile price swings during this unbonding period.

Protocol Fee

Staking rewards are automatically compounded when ATOM is liquid staked through the pSTAKE protocol. Validators take their share of profit from accumulated rewards, similarly to traditional staking before rewards are distributed to users. 

These rewards are split into two parts:

  • 95% for stkATOM holders: Rewards are generated through stkATOM’s appreciation over time through staking and auto-compounding with the increase in value of stkATOM relative to ATOM.
  • 5% for the pSTAKE protocol: This 5% fee is charged on generated auto-compounding rewards (not on any other steps, such as staking, unstaking, or claiming). An on-chain proposal manages the protocol fees, which are targeted toward development activities (i.e. hackathons, grants, bug bounties, protocol revenue) to support the long-term growth of the pSTAKE ecosystem.

Protocol Fee Breakdown

To make our stkATOM product a sustainable and viable solution in the long run (along with future stkASSET implementations), it’s crucial to increase the protocol’s revenue. However, revenue-generating opportunities are limited for a liquid staking protocol.

Because pSTAKE will match on-chain rewards and auto-compound them on an epoch basis, users can expect to earn an average staking APY of up to ~19% (after a 5% protocol fee). Users will still earn higher rewards than those provided through traditional staking by simply holding stkATOM. Based on these metrics, a 5% fee would help the pSTAKE protocol sustain in the long run without creating a dent in our users’ yields & also give pSTAKE a competitive edge (this fee model has the potential to be changed down the line via pSTAKE governance).

Furthermore, our main priority is to incentivise users, and we’re doing so by charging minimal fees (some of the lowest in the industry), encouraging more activity on the whole.

Fueling Adoption & Utility

pSTAKE will incentivise stkATOM adoption by integrating with various dApps and protocols across the Cosmos ecosystem. As we look to expand our stkASSET portfolio, this will become the go-to standard for our liquid-staked assets in the future. 

Utility and adoption are the cornerstones of any ecosystem, and pSTAKE is looking to breathe new life into the Cosmos ecosystem with our stkATOM solution.

About pSTAKE

pSTAKE is a liquid staking protocol that unlocks liquidity for your staked assets. With pSTAKE, you can securely stake your Proof-of-Stake (PoS) assets, participate in protocol improvements and security to earn staking rewards, and receive staked underlying representative tokens (stkASSETs) which can be used to explore additional yield opportunities across DeFi.

At present, pSTAKE supports Binance Chain (BNB), Cosmos (ATOM), Persistence (XPRT), and Ethereum (ETH) networks’ native tokens, with a view to support more chains and assets in the future (SOL, and AVAX).

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