Summary

pSTAKE has launched liquid staking solutions for ATOM and OSMO since it went live natively on the Persistence core-1 chain in January 2023. Currently, pSTAKE has ~$5.94M TVL in Cosmos, representing ~54.7% of the protocol’s total TVL.

Onboarding new networks to pSTAKE’s liquid staking has always been community-driven and based on the eight key pillars of expansion.

This is a signaling proposal to expand pSTAKE’s liquid staking support in Cosmos by onboarding dYdX with the launch of stkDYDX.

stkDYDX Details

Security

• stkDYDX will be a non-custodial liquid staking solution leveraging the Inter Blockchain Communication (IBC) tech stack, similar to stkATOM
• pSTAKE on Cosmos is audited by leading security firms like Halborn and Oak Security
• pSTAKE on Cosmos has an active Immune bug-bounty program

Product Features

• Liquid stake DYDX to mint stkDYDX
• Unstake stkDYDX subject to a ~30+ day unbonding period
• Flash Unstake stkDYDX for DYDX on pSTAKE with an innovative mechanism that matches daily deposits with withdrawals
• Autocompound DYDX staking rewards with an exchange rate model
• Autocompound USDC staking rewards by swapping them for DYDX on DEXs like Dexter and staking

Protocol Fee

To incentivize DYDX holders to liquid stake with pSTAKE, it is proposed that stkDYDX have a 0% protocol fee on DYDX staking rewards generated for the initial two months after launch.

The PSTAKE governance can then decide to change the protocol fee that strikes the right balance between being competitive and the protocol's long-term revenue sustainability.

Incentivization

Initially, the priority will remain to bootstrap deep stkDYDX liquidity on DEXs like Dexter, Astroport, etc. DeFi utility will added via integrations across multiple protocols in Cosmos. Taking stkDYDX to Ethereum DeFi will also be considered in the months after launch.

PSTAKE incentives will be used from an earlier proposal passed by the PSTAKE governance to increase the adoption of pSTAKE in Cosmos.

DYDX Stake Delegation

As a liquid staking provider, pSTAKE should not be a validator gatekeeper and should deselect bad actors/validators rather than trying to select the right validators. stkDYDX will launch with the automated validator delegation strategy that focuses on decentralizing stake on the dYdX network.

A weighted scoring mechanism with decentralization parameters like voting power, commission, uptime, slashing history, and governance participation will decide the final validator set and the amount of stake delegation to each validator in this set.

In the case of stkDYDX, the DYDX deposits into the pSTAKE protocol will be staked across ~30 dYdX validators (50% of the active set) considering the following parameters:

• Voting Power - 0.05% to 5%
• Commission - 5% to 10%
• Uptime (last 30 days) - 95% to 100%
• Governance Participation - 60% to 100%
• Part of the active set without any slashing instance (last 30 days)

Final Thoughts

The launch of stkDYDX is expected to bring a new array of seasoned DeFi users, traction, and more eyeballs to the pSTAKE protocol. The pSTAKE community is encouraged to share their opinion by participating in this important governance proposal.

Vote 'FOR' if you support onboarding dYdX to pSTAKE with the proposed launch of stkDYDX.

Vote 'AGAINST' if you are against onboarding dYdX to pSTAKE with the proposed launch of stkDYDX.

Vote 'ABSTAIN' if you do not want to participate in this proposal.