Fantom is introducing new staking tools that allow for staked assets to add liquidity to the markets. This marks the first time that staked assets can become liquid, and be used in the DeFi ecosystem. The new tools are powered by Band Protocol, which offers a fully scalable oracle technology.
According to Fantom,
“Fantom users can now mint sFTM, a synthetic asset, in a 1:1 ratio to their delegated FTM, before deploying sFTM within the Fantom Finance ecosystem.”
Liquidity is the lifeblood of any market, and staking has created challenges for the crypto ecosystem. While staking does allow token holders to generate passive returns, it also takes tokens out of the market and increases the chances of low-liquidity events.
Fantom CEO Michael Kong commented,
“The launch of Liquid Staking marks a big step forward for Fantom’s community. We believe it will play a crucial role in illustrating the speed of our network, and drive usage of fUSD. However, with such an important application, we know that malicious actors will be trying to attack and break things. That’s why we’ve opted for BandChain oracles to make sure that Liquid Staking is supplied with high quality pricing data.”
Fantom Creates Liquidity Solutions
Many DeFi platforms require users to stake major tokens, like Ethereum, in order to gain returns from their tokens. While the ETH 2.0 development process is addressing this desire for passive income by pivoting to a Proof of Stake (PoS) based system, the DeFi arena also has a range of tools to create income.
The problem is that when a token is staked, it is effectively removed from the liquidity pools that allow for smooth price movements. By creating new ways to use staked tokens to provide liquidity, Fantom and Band Protocol are working to ensure that the crypto markets remain as liquid as possible.
Band Protocol CEO and Co-Founder Soravis Srinawakoon stated,
“Band Protocol is thrilled to work with Fantom to provide critical oracle infrastructure to secure an ecosystem of decentralized finance products starting with fMint and Liquid Staking which are live on Mainnet, in the production environment. Leveraging the scalability of Band Protocol, we look forward to continuing our deep collaboration with Fantom to secure many more applications and products to come.”
Liquidity is the Life-Blood of the Markets
One of the reasons why many investors think of crypto as a volatile asset is that for many years, the sector didn’t have a tremendous amount of active liquidity providers. While this is changing, the DeFi ecosystem that requires large amounts of tokens to be locked up for varying amounts of time.
Fantom has identified this as an issue and has created tools that address the potential conflict of interest that staking may have with a liquid market. As a layer-1 protocol, the new tools that it has introduced will function to add liquidity to the DeFi ecosystem.
Comprehensive Tools for a Growing Market
Both Fantom and Band Protocol have a lot to offer the DeFi development space. Their latest innovation will support FTM, fUSD, fGBP, fCNY, fEUR, fKRW, fJPY, fCHF, fBTC, fETH, fLINK, fBAND, fBNB, fGold, fSilver and fWTI at its launch, and 176 assets will be added as the platform grows.
Fantom allows trades to be settled in a few seconds, and also offers ultra-low fees, as well as a great wallet that operates with a range of existing tools, like MetaMask.
As the crypto and DeFi space grows, more advanced liquidity tools will be needed to keep the markets operating with maximum efficiency.
Fantom and Band Protocol’s latest addition to the DeFi space is a great start to making sure that staked assets don’t impact the overall liquidity environment, and is a starting point for the industry as a whole.