On November 11, DARMA Capital, a digital asset risk management company founded by former ConsenSys employees Andrew Keys and James Slazas, launched their new Ether staking platform LiquidStake. Investors who stake their ETH into Beacon Chain can now safely borrow USDC loans to ensure liquidity, as their deposited assets will be locked until the full Eth2 rollout.
Since the start of Phase 0 of Ethereum 2.0, investors can engage in transferring and staking their ETH into Beacon Chain. For the genesis event to trigger and the new mainnet to take over, at least 16,384 validators should stake a total of 524,288 ETH. However, if the rate at which the community is currently depositing to the protocol continues, the threshold will be met months after the end of 2020.
Currently, one of the main reasons why people are cautious of staking their digital assets into Ethereum 2.0 is the uncertainty brought by the one-way nature of the ETH deposits. While the launch of the protocol is expected to happen in about a month, if complications occur, the full rollout process may prolong and take months or even years. Losing liquidity over assets for such a long time possesses a great risk for investors, which is why at present, most of the community is on standby and we have not yet seen a sudden spike in the deposited amount aside from the one that closely followed the announcement of the deposit contract.
In order to speed up the validating process and ensure that investors can securely stake their digital assets into Beacon Chain while maintaining liquidity and mitigating risk, DARMA Capital has come up with the idea of offering intermediated staking to retail and institutional investors. Stakers interested in this opportunity can deposit their ETH into Beacon Chain and use it as collateral to receive USDC loans.
In order to enable the project, DARMA Capital partnered with some of the leading staking providers on the crypto scene, including Bison Trails, Codefi, Figment, and ConsenSys. As the ETH cannot be moved, the platform currently operates through margin calls and liquidation. To become eligible for taking out loans, investors are required to go through the LiquidStake platform when joining Ethereum 2.0.
The launch of LiquidStake is expected to provide the required solution for the low staking activity, which Ethereum 2.0 is experiencing thus far. While the platform is still strongly centralized and charges interest and “performance fee” on the staking yields, it offers Eth2 investors a great opportunity to safely transition to the new protocol and enjoy all the features that it will provide in the future.