Ilja Krasnov
8 min readMar 19, 2021

StaFi Protocol is the first #DeFi protocol unlocking liquidity of #Staking assets #FIS

PoW and PoS

To understand all the genius and potential of this service you need to clearly understand the differences in PoW and PoS. These are the two most well-known consensus algorithms in cryptocurrencies. They offer differently structured proof-of-work mechanisms.


This is an alternative consensus mechanism, first implemented in 2012 in the cryptocurrency PeerCoin. The idea is to use a “share” (stake) as a resource that determines which node gets the right to mine the next block.

In the Proof-of-Stake approach, nodes also try to hash data in search of a result less than a certain value, but the complexity in this case is distributed proportionally and according to the balance of the given node. In other words, according to the number of coins (tokens) in the user’s account.

Thus, a node with a larger balance has a better chance of generating the next block. The scheme looks quite attractive, first of all, because of the low requirements for computing resources, and also because there is no issue of “wasted” capacity.

About the project

StaFi aims to solve the contradiction between Mainnet security and token liquidity in PoS consensus. The token holders are staking through staking contracts built in StaFi protocol, and then get alternative tokens(rToken ,such as rXTZ, rAtom, rDot, etc.), rTokens are tradable and it can get staking rewards from original chain at the same time. Users can stack PoS tokens via StaFi and receive rTokens in return, which are available for trading, while receiving a staking fee.

Stacking assets are a type of deposit asset that make up a large share of the market. We know what validation is, and our team has been validating in various PoS chips since early 2018, and found a big problem between token liquidity and Mainnet security, most pos-chains run an incentive mechanism to reward the staking owner, higher staking rate brings better security but lower liquidity.

StaFi issues a staking derivative to the user when he stakes through a StaFi staking contract, the staking contract will record and maintain the link between the derivative holder and the staking asset. Staking derivatives can be traded, but staking assets cannot, they are locked in the pos-chain, the ownership of the assets will change when the derivatives are exchanged, which is what StaFi does.

Not long ago, they released the rETH and rFIS liquidity solution for ETH2.0 stacking and the StaFi FIS native token. In less than a week, the total deal reached $5 million!


rToken is a derivative asset issued by StaFi based on stacking tokens. Having rTokens means that you can apply to redeem your own staking tokens at any time. It also means that rTokens holders are entitled to income from staking tokens.

The rToken represents the right to exchange native staked assets at any time and receive the corresponding staking income. In addition, rToken holders also have the right to continue to participate in onchain management on the source network.

StaFi is a leader in placing stacked derivatives, and they have many unique projects to unlock stacked assets.

We don’t think every stackable derivative is a copied solution. We need to know its consensus and how it works. We already have a lot of experience with validation, so that may be one of our advantages.

Code is no longer a barrier to entry because open source is required. Competitors can shell out for your code as soon as you release it, so the community will play a key role. StaFi has a large community, and it’s growing. They are called StaFi warriors because the people in the group offer a lot of help for StaFi.

What problems does StaFi solve?

1) No need to worry about the liquidity of staked assets (rTokens liquidity is an additional issue, which will be discussed later).

2) There is no need to wait for a long time to unlock funds as before. Users can immediately exchange rToken /Token at current exchange rates on available markets.

3) StaFi Staking Contract Pool automatically engages validators with the highest yields in the network, which can optimize users’ staking yields.

4) The current NPOS staking mechanism adopted by the StaFi network is difficult for the average staker to understand, especially regarding the consensus mechanism, the maximum number of nominators a validator can have, the factors that determine rewards, how to get rewards, how to select the best validators, etc. However, with the introduction of rFIS, FIS participants can participate in the FIS staking with the click of a mouse.

This also solves some other complexities. Thanks to rToken, users will have the desire to stak. This will further increase the percentage of staked assets in PoS projects and increase the security of source networks.

Regardless of how many assets are blocked in a StaFi Staking Contract, the security of the source network will not be compromised because those assets are distributed across multiple validated validators.

StaFi will not encroach on the validators in the source network because StaFi is not involved in validating the source network. This also allows us to build collaborations with existing ecosystems and validators in the spirit of DeFi’s open source development, rather than taking away their business.

Liquidity for stakers \ validators

For a particular staker, when he steams ETH on SC, he automatically receives a certain amount of rETH tokens (ERC20 version) in return, which is a synthetic representation of his ETH steaming balance and the corresponding steaming rewards. The rETH token can then be sold on various trading venues and can be used in other DeFi protocols.

For validators, StaFi initiates a liquidity program through which they can also sell a portion of their ETH placed in SC back to StaFi. The relevant information is specified in the initial part of the validator.

Thus, StaFi’s competitive advantage has its own competitive advantage over other ETH2.0 stacking solutions. Simply put, a StaFi rETH solution will have greater liquidity for stakers, relatively reasonable lower collateral and greater liquidity for validators, and most importantly, security of funds solutions for both stakers and validators.

Here is an interesting infographic comparing the various ETH2.0 stacking solutions to StaFi.


Moreover — rToken is the best solution to protect your funds from volatility! Let’s imagine that you bought 1000 EOS in 2019 at the rate of $8 per coin. So you bought $8,000 worth of EOS. After that you blocked them in your wallet for a year and started mining. Approximately you get 10% of the deposit. You block your funds, start staking and you are given the same amount of rEOS coins. You go to the exchange and sell these rEOS coins. You have $8000 on hand. And on your balance you have 8000 more EOS. Suddenly a year later there was a drop in EOS and now it’s worth about $2 a coin. Now, that you take your EOS from your wallet, by buying rEOS, you need not 8000$, but only 2000$! And don’t forget about the profit that you get from a year’s worth of mining! This is the best way to block this kind of volatility and secure yourself. Few people talk about it — use it to your advantage. Do you realize the magnitude of the project now?

Income distribution

As a DeFi protocol widely supported by the community, they will distribute profits back to those they support in the following ways:

1) 70% will be given back to FIS token holders in the form of buybacks and burns or exchanges with token holders.

2) 20% will be transferred to the StaFi treasury to support the further development and promotion of the StaFi project and rTokens.

3) 10% will be allocated to the StaFi team.

StaFi aims to become a full-fledged DAO with long-term incentives for both developers and liquidity providers. Thus, StaFi has long been convinced that the smart treasury model option, well explained by Placeholder, is the way to go. Now do you understand why I praise this project so much?

Results and Future

StaFi completed a bunch of tasks in Q4 2020 and have a new roadmap for Q1. They plan to do: rToken development, RBridge development, StakingDrop development, rToken integration and connectivity with Polkadot. One of the priorities is rToken integration. Bridges are being built to connect to the ecosystem, such as the ERC20 bridge. It’s functioning right now at Mainnet, and integrating rToken with BSC and Solana would be an interesting effort.

StaFi’s vision is to provide liquidity solutions for stashed funds, using rToken and then creating liquidity and utility for them as collateral, for example. In addition, rToken as an interest-earning asset can also be used as an underlying asset for various index funds, futures, and other derivative products in the digital asset world. For now, however, StaFi should focus on building rToken for some key PoS projects. There is no immediate need for us to create proprietary DEX, credit or other products. Instead, we can work with trusted partners and grow together.

In the future, StaFi will explore the idea of a standalone DEX and credit platform, as there may be many rTokens circulating in the cryptosphere, 50–100 or even more. This gives an impetus to the possibility of a StaFi DEX and credit platform.

I hope that after reading this article, I don’t need to mention that I am calling everyone to join such a great project. Projects like this are the future — and these are not buzzwords, they are already our reality. Do not miss your chance!

Author PabloZscobar (pablozsc#2103).

StaFi Team : Founder Young Liam (Liam | Stafi#6437), Co-founder Tore Zhang (Tore | Stafi Tore#7980), DaJun (Engineer), Blank Lee (Chief Researcher), Kael (Engineer), Howie He (Engineer), Karl (Operator), Sara- Zhu (Marketing).

Stafi Official Site

StaFi In Discord, Github, StaFi Explorer, StaFi APP, Twitter, Telegram.

FNS Team (fast-node-service) : samakrutti#9800 (Co-founder FNS/Blockchainhouse), erijan88#2664 (Engineer-MM specialist), pablozsc#2103 (Engineer), AyahuascaGirl#7922 (Marketing-Manager).

FNS meetup in Saint-Petersburg