Smart contract network Fantom has released the latest module in its defi stack. Liquid Staking allows FTM holders to stake their tokens and earn network rewards, before generating a synthetic representation of their stake and using it for yield-generating defi purposes. It marks the first time a layer-1 protocol has made its native asset liquid, allowing it to be staked and used as collateral simultaneously.
After locking their FTM with Liquid Staking, Fantom users can mint sFTM, a synthetic representation of their assets. sFTM can then be traded against the dozen or so synths that Fantom has added to Liquid Staking initially, including fUSD, fGBP, fCNY, fEUR, fKRW, fJPY, fCHF, fBTC, fETH, fLINK, and fBAND. The inclusion of BAND correlates with Fantom’s decision to rely on Band Protocol to provide decentralized oracle pricing for the system.
Fantom Turns on the Liquidity
While various defi projects are exploring ways to make pooled assets, such as Uniswap’s LP shares, liquid, no blockchain has done so with its native asset until now. The launch of Liquid Staking means that Fantom Finance is now a force to be reckoned with in defi, despite – or perhaps on account of – operating outside of the Ethereum ecosystem.
Its blockchain network already supported higher transaction volume, lower fees, and greater scalability than Ethereum, the hub around which the bulk of the defi world still revolves. Now, Fantom users have the tools for interacting with protocols for lending, borrowing, staking, and saving. Many of these capabilities have been integrated into the Fantom Wallet, but Liquid Staking elevates these powers to a new level, allowing users to chase yield and maximize their profits.
Oracles and f-Tokens
The collaboration between Band Protocol and Fantom to deliver Liquid Staking looks set to become an ongoing arrangement, with talk of the two projects working on future integrations.
“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,” said Band CEO and Co-Founder Soravis Srinawakoon.
Fantom CEO Michael Kong, meanwhile, expressed his pleasure at being able to use Band’s oracles to “make sure that Liquid Staking is supplied with high quality pricing data.”
There are plans for over 170 assets to be added to Liquid Staking in due course, but initially around 20 synths have been introduced. These include f-tokens representing fiat currencies, precious metals, and cryptocurrencies.
Recreating Traditional Finance Onchain
Fantom’s breakthrough in Liquid Staking and the f-assets it supports is part of a broader trend towards recreating traditional assets onchain. Projects within the Ethereum, Polkadot, and now Fantom ecosystems have been approaching the challenge from different angles, with the goal of implementing tamper-proof systems for trading stocks, commodities, and indices. For synthetic assets to work faithfully, they must adhere faithfully to the price of the original asset they are paired with. Oracles, which derive data from multiple offchain sources, are instrumental in delivering this.
On the stock market, it is generally not possible to buy fractions of a share. This deters small-time investors, particularly those seeking coveted stocks such as Apple and Tesla that command a high price per share. Tokenization and synthetic asset representation enables traders to buy a fraction of a share, and to buy and sell directly with cryptocurrency such as ETH or FTM. Third party developers building on Fantom will now be able to integrate f-tokens and use them to create new applications for trading and token swapping.