What is DeFi Staking? How does a DeFi Staking Platform Work?
DeFi or decentralized finance took the crypto world by storm in the summer of 2020. Not only did it open up opportunities like lending and borrowing to everyone but it also changed the staking game. Just like centralized staking, DeFi staking software enables users to earn interest on their crypto holdings. The DeFi staking platform uses smart contracts for managing the staking and distribution of rewards.
Staking on DeFi protocols is popularly known as liquidity mining or yield farming. This is a win-win opportunity for both DeFi token holders as well as the protocol operators. That’s because while the token holders earn interest and rewards, the process provides liquidity to the DeFi protocol. If the DeFi tokens are staked on a decentralized exchange (DEX), the liquidity providers or token stakers earn a part of every transaction that is made on the DEX in addition to the Liquidity provider tokens (LPTs).
If you plan to develop DeFi staking platform, here is the list of benefits for you:
1. Higher Liquidity
2. You earn revenue from stakers and token networks
The most important factors that govern the staking reward generation on the platform are:
1. Staking duration
2. The asset which the user staked
3. Inflation rate
4. Issuance rate
Two ways in which DeFi staking software can yield interest include the following:
1. Just stake
The DeFi stakers can choose just to stake their tokens in a particular liquidity pool which can help them generate high interest rates annually. This is the simplest method.
2. Staking strategies
The stakeholders can keep moving their assets between pools to maximize the interest generation. Some DeFi staking platform development services also provide robo-advisers that guide the stakers to more profit yielding pools.
Different models of DeFi staking platform
1) Stablecoin DeFi Staking platform
This kind of decentralized finance development platform enables users to borrow stablecoins against crypto assets like bitcoin. The protocol basically has its own primary stablecoin which can be borrowed. This stablecoin is staked by yield farmers or liquidity providers and then borrowed by other users. The platform charges interest to the borrowers and a part of which is then distributed to the LPs.
2) Synthetic tokens staking platforms
Certain DeFi protocols are designed to issue synthetic assets. These assets represent physical assets like fiat, stocks and cryptos. The same is pooled in by the liquidity providers who earn interest for staking their assets.
3) DeFi Staking aggregators
These platforms do not facilitate lending and borrowing of crypto assets but they help stakers pool the assets and then distribute them to the protocols where the yields are maximum.
3 most important aspects of Defi Staking Platform Development
1) Intuitive interface
DeFi protocols are generally not designed to be simple enough. But by complicating the interface, you are actually shooing away your users. Thus, it is very important to simplify the user’s experience. For example, users are not required to manage the private keys, do not have to deal with complicated wallets, and the reward withdrawal should be pretty easy.
2) Security of assets
With the increasing number of DeFi exploits, DeFi users are looking to put their money in only well audited DeFi protocols. Make sure that your smart contracts are well audited to avoid any kind of exploits.
3) Higher Yields
The competition among the DeFi staking protocols is really high. However, by choosing the right pools you can always help liquidity providers generate higher yields and that is the best way to engage more users.
The traditional financial system users have never been able to participate in the lending and borrowing process. But DeFi has changed this forever. Anyone can become a lender and a borrower on a lending platform. Effectively, DeFi attracted a lot of users from traditional finance and DeFi staking is expected to catalyze the unprecedented growth of DeFi which will finally translate into mass adoption of crypto.
However, for that to happen, decentralized finance development must take place in a manner that ensures that the users feel DeFi is easy and safe to use. This is where the experience of blockchain developers and financial experts at Antier Solutions comes in. We leverage our deep domain knowledge and breadth of expertise to deliver mission-driven DeFi staking software development solutions.
If you have an innovative idea for the DeFi space, connect with our subject matter experts to put your idea into action.