LiquidStake, a new lending initiative supported by DARMA Capital, will allow ETH holders to stake ETH directly from its platform and to take out USDC loans to stay liquid during the staking period for ETH 2.0 launch.
LiquidStake announced the news on Wednesday, November 11. Through LiquidStake, ETH holder can stake their holdings directly and borrow USDC loans against their staked ETH.
Ethereum blockchain has started its lengthy migration from PoW to PoS blockchain. This migration will take place in phases, the first of which will be Phase 0 in late 2020. Phase 0 will implement one of the most fundamental components of Eth2一Proof of Stake (PoS).
As Crypto Economy reported, for Phase 0, developers have already launched a deposit contract and beacon chain.
When Phase 0 will gove live, ETH holders will be able to stake ETH and begin earning rewards. While the deposit contract collects the ETH required to launch the genesis block, the beacon chain will keep track and confirm all network validators. To become a validator on this new PoS network, users must deposit at least 32 ETH to this deposit contract address.
Once staked, ETH can’t be accessed or leveraged as the capital as funds become locked and cannot be withdrawn for a currently-unspecified amount of time.
The motive behind this is to ensure that Eth2 blockchain succeeds in its earliest days with a minimum of 524,000 staked ETH. This scenario creates a kind of liquidity problem for stakers as they won’t be able to sell or borrow against their holdings during this period.
LiquidStake offers a solution to this liquidity problem by allowing ETH 2.0 to take USDC loans by using their staked ETH as collateral. The platform will pool clients’ funds together and delegates them to the most trusted staking providers including Bison Trails and ConsenSys. For this, LiquidStake has also partnered with ConsenSys’ Codefi Staking. Users can take out loans at the moment ETH is staked, or at a later date in time.
LiquidStake noted:
“There are no minimums or thresholds to begin staking; clients may stake less than 32 ETH, or stake in imperfect multiples of 32. We mitigate the risk of any single validator failure by spreading clients’ ETH across multiple nodes among our vetted validator partners. We offload the technical complexity of staking, and we provide a portal to view regular updates on the status of rewards and node behavior on the Eth2 network.”
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