Expand pSTAKE liquid staking support to Osmosis with the launch of stkOSMO

Summary

pSTAKE launched natively in Cosmos in January 2023, with stkATOM going live as the first stkToken on the Persistence core-1 chain.

The adoption, incentivization, and growth of stkATOM in the last nine months have been crucial for pStake contributors to better analyze and understand the current liquid staking market in Cosmos and users’ needs.

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

stkOSMO Details

Features

Security

• stkOSMO 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
• pSTAKE on Cosmos has an active Immune bug-bounty program

Product

• Liquid staking OSMO to mint stkOSMO
• Unstaking stkOSMO subject to a ~14+ day unbonding period
• Instantly redeem stkOSMO for OSMO on pSTAKE with an innovative mechanism that matches daily deposits with withdrawals
• Autocompounding OSMO staking rewards with an exchange rate model for stkOSMO

Protocol Fee

The pSTAKE team proposes a 10% protocol fee on OSMO staking rewards generated. A 10% fee strikes the right balance between competitiveness and the pSTAKE protocol's long-term sustainability.

Incentivization

Initially, the priority will remain to bootstrap deep stkOSMO liquidity and expand its utility to other DeFi primitives later.

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

OSMO 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. With the launch of stkOSMO, pSTAKE will implement a new automated validator stake delegation strategy that focuses on the decentralization of stake on the underlying 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 stkOSMO, the OSMO deposits into the pSTAKE protocol will be staked across 47 Osmosis validators considering the following parameters:

• Voting Power - 0.05% to 5%
• Commission - 5% to 10%
• Uptime (last 30 days) - 95% to 100%
• Governance Participation (last 20 proposals) - 60% to 100%
• Part of the active set for the last 180 days without any slashing instance

Final Thoughts

pSTAKE is all set to expand its presence in Cosmos, starting with the launch of stkOSMO and expected to follow with liquid staking support for DYDX, TIA, and XPRT. The pSTAKE community is encouraged to share their opinion by participating in these important governance proposals and forum discussions.

Vote 'FOR' if you support onboarding Osmosis to pSTAKE with the proposed launch of stkOSMO.

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

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