Amidst the doubts from the ICP community, StakedICP may become a new hope.

Recently, there have been quite a few pessimistic voices within the Internet Computer community regarding the ICP token. As early supporters, many are disappointed with the performance of ICP over the past two years. This is especially true for those users who have staked their tokens for as long as 8 years, who feel even more distressed.

However, with the vigorous development of the liquid staking derivatives (LSD) on mainstream public chains such as Ethereum, Cosmos, and Solana, this innovation has also begun to take root on the Internet Computer. This article will introduce the first LSD protocol in the IC ecosystem - StakedICP.

Overview of LSD

LSD stands for "Liquid Staking Derivatives", which are one of the hottest sectors in the cryptocurrency industry this year. Essentially, it is an alternative to staking PoS tokens, allowing for the earning of staking rewards while maintaining liquidity, and can also be used for trading, providing liquidity, and lending in various DeFi applications.

According to statistics from a data platform, the total locked value (TVL) in the LSD sector is close to $22 billion, remaining the leader in the DeFi sector since early March. LSD not only enhances the security and stability of PoS networks but also improves the flexibility of token holders, helping to incentivize more people to participate in staking and the DeFi ecosystem.

How to Release NNS Liquidity for Staked ICP?

NNS( Network Nervous System ) is the governance system of the Internet Computer, responsible for network upgrades, token economics, and other affairs. Users who stake ICP become "neurons", participating in on-chain governance and earning rewards. Currently, approximately 249 million ICP are staked, accounting for 49% of the total supply, with a TVL of about $821 million based on the current price.

StakedICP is the first LSD protocol designed specifically for NNS neurons. After users stake ICP, they immediately receive the liquid token stICP, which is the only proof for redeeming ICP and can capture the daily earnings generated from staked ICP. In short, holding stICP is equivalent to holding staked ICP.

The protocol is currently in the testing phase, with 123 users staking 2600 ICP, and an annualized return rate of approximately 15.8%.

When users stake through StakedICP, ICP will be staked on the NNS, and users will receive stICP tokens representing their staked shares. Since the neurons of StakedICP on the NNS will continuously earn voting rewards, this means that the value of 1 stICP will gradually exceed 1 ICP.

For example, suppose initially 1 ICP = 1 stICP, the user stakes 10 ICP to obtain 10 stICP. Years later, due to accumulated voting rewards, the total amount of ICP in the StakedICP neuron may increase to 160 ICP. At this time, the value of 1 stICP is 1.25 ICP. When the user redeems 10 stICP, they can receive 12.5 ICP, which includes the NNS voting rewards.

Staked ICP actually provides a more flexible staking solution for IC. Users can stake ICP to obtain stICP, and redeem it at any time to participate in SNS project investments, allowing them to earn staking rewards while not missing out on ecological opportunities. In the future, when IC's DeFi ecosystem develops, stICP may also play a role in trading, lending, and other scenarios, potentially further enhancing the staking rate and DeFi scale of ICP.

StakedICP User Guide

The staking feature of StakedICP is now available, allowing users to stake ICP to obtain stICP.

In terms of redemption, StakedICP currently only supports delayed unstaking. When users redeem ICP, the protocol will burn stICP and begin dissolving the corresponding neuron, with completion time depending on the specific neuron situation. There are a total of 16 neurons with varying staking periods in StakedICP to maintain redemption liquidity.

The quick redemption feature is under development. This feature will build a unilateral liquidity pool for stICP/ICP, where LPs can add ICP to earn fee rewards. Users can directly exchange stICP for ICP in the pool.

It is important to note that StakedICP is still in its early stages and carries certain centralization risks. Currently, the 16 neurons used for staking are controlled by smart contracts, but the contracts are still managed by the development team. In the future, StakedICP plans to launch a public offering on SNS, where the community will take over the smart contracts and participate in governance.

Founder Interview Summary

The founder of StakedICP, 0xAegir, stated that the project was initially aimed at obtaining high returns from 8 years of NNS staking while avoiding long-term token lockup. However, as it developed, he foresaw that stICP, an asset that generates returns and is also liquid, would bring great benefits to the IC ecosystem.

Regarding the operating principle, after users stake ICP to obtain stICP, the ICP will be staked into NNS and rewards will be obtained through voting. stICP adopts the ICRC-1 standard and can be used in DeFi. Currently, users can use the delayed unstake function, and the fast unstake function is also in development.

0xAegir shared the future roadmap:

• Complete core protocol code by December 2023
• Quick unstaking internal testing in January 2024
• Code audit completed by April 2024
• Launch SNS in June 2024 and start liquidity incentives

He hopes that StakedICP can become an important part of the IC DeFi ecosystem. Regarding the application of LSDfi, 0xAegir expressed great anticipation, such as combining stICP with SNS or building stablecoins based on stICP.

0xAegir believes that stICP provides users with a more flexible ICP yield solution, allowing them to participate in both NNS staking and SNS investments simultaneously. He believes that IC's unique technological advantages help bring DeFi into the Web2 world and looks forward to seeing more innovations.