Sat. Jan 1st, 2022
    stTON, Free TON, DeFi

    Another stTON TIP-3 implementation contest from DeFi Subgovernance, launched in June 2021, aims to create a mechanism that will simultaneously take part in staking and at the same time invest those same assets in DeFi services.

    When the first DeFi services were launched, allowing you to invest assets and get rewarded for it, many crypto-enthusiasts saw this as a conflict with the economic model of staking.

    Stakeholders maintain the security and reliability of the network, but if the profitability of DeFi services is significantly higher, then most of the assets will go to the liquidity pools, which will cause a danger to the network. And vice versa, if staking gives a higher reward, there will be no motivation to provide liquidity to DeFi-protocols, and services such as, let’s say, decentralized exchanges or debt services will not work.

    The stTON tokens are a solution designed to eliminate this contradiction and make it possible to get rewards from participating in both processes.

    stTON is a TIP-3 token, which is evidence that the TON Crystal token is invested in the DePool smart contract, that is, it takes part in the staking. stTON is the equivalent of TON, so they are connected 1 to 1.

    It looks like this: Alice sends 100 TON to staking, she receives 100 stTON in return. Every day Alice receives a reward from staking and her stTON balance increases. At any time, Alice can make a reverse exchange and, by returning stTON, receive an equivalent amount of TON. But at the same time, she can dispose of stTON tokens at her discretion. For example, send them to any address that supports TIP-3, or to the DeFi protocol liquidity pool. As a result, Alice will be rewarded for both staking and providing liquidity.

    ETH Tokens: How It Works In Ethereum

    A similar mechanism successfully operates on the Ethereum blockchain thanks to the Lido liquidity staking protocol.

    ETH tokens sent to a special Ethereum 1.0 blockchain smart contract take part in Ethereum 2.0 network staking, and in return, the sender receives an equivalent amount of stETH in Ethereum 1.0. Further, stETH is often sent to the liquidity pools: 1Inch, Uniswap, etc.

    This model has proven its worth by the fact that at the time of this writing, the capitalization of the stETH token is in 77th place in the Coingecko ranking. Other modern blockchains based on the Proof-of-Stake consensus protocol are also developing similar mechanisms, and Lido plans to launch similar protocols for Terra, Solana, and Aave.

    stTON TIP-3 implementation: what it’s all about

    The outcome of the contest will be an interface that allows minting (issuing) stTON tokens of the TIP-3 standard using a smart contract, which is equivalent to staked TON.

    The management and control must be carried out using DeBot, which will work with a formally verified DePool contract.

    Contestants need to develop instructions and publish all their work in the Free TON repository on GitHub.

    In the future, such an interface can become one of the basic elements of the Free TON decentralized finance ecosystem, and economic models built on the stTON token will be an incentive to attract investors and liquidity from other blockchains.

    Compared to other DeFi Subgovernance contests, this one has a rather long 2-month duration.