Following all the frenzy around yield farming and complex strategies, many thought that decentralized finance (DeFi) would not surprise investors in the short term.
Nevertheless, it could not be further from the truth, as the rise of new projects powered by innovations such as staking, PoS networks and non-fungible tokens are drastically changing the scenario.
With colossal anticipation of the launch of the Ethereum 2.0 update and a fast-paced adoption of cryptocurrencies by more enthusiasts around the world, many companies in the segment are creating blockchain-based solutions to lay down the foundation for a new world of possibilities.
Bitfrost Finance – Staking Liquidity Powered by Interoperable Parachain
As a growing number of public chains adopt PoS consensus to improve project availability and decentralization, more than 80 PoS-based chains have been born recently – generating more than $145 billion in total market value.
Each year, staking generates over $2.5 billion in rewards, while DeFi’s market boom is stimulating the market to unprecedented levels.
Considering the rapid growth of DeFi and staking markets, both mechanisms are starting to interact more, frequently overlapping each other to create composability in blockchain-based operations.
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However, this interaction is not perfect- and that’s where Bitfrost enters the game. Substrate-build Bitfrost is a project that takes advantage of staking as the early stage to provide liquidity in the form of staking derivatives.
As a DeFi project built on Polkadot, Bitfrost launches the vtoken (staking derivative voucher token), which are digital assets that permit users to exchange PoS token to vtoken while obtaining liquidity and staking rewards through the platform.
Nowadays, there are still three main problems that affect PoS networks, which are:
- Competition between DeFi and staking rewards
- Conflicts between liquidity and security in PoS mechanisms
- Conflict between staking and cross-chain operations
Typically, users can only choose one option between staking and DeFi before the arrival of staking derivatives. Hence, if DeFi rewards cannot cover the costs of staking bonds, users will naturally move their assets from DeFi to staking by higher reward selection.
On other hand, users can go the other way, transferring their assets from staking to DeFi products, which leads to insufficient stake rates causing security problems in PoS network consensus.
Additionally, the PoS mechanism determines that the security of a network is maintained by the mechanism of staking, meaning liquidity and security are mutually exclusive.
If the staking rate is too low, nodes may have a higher risk of centralization, which will cause users’ loss by their safety concerns arise. Simultaneously, high staking rates lead to liquidity deficiency in the market.
With the rise of Polkadot and cosmos, users have more enthusiasm to participate in cross-chain scenarios. Nonetheless, users may lose their original staking rewards by converting cross-chain tokens.
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Nowadays, they not only need to pay commissions and other fees but also the cost of time is incurred during staking. As blockchain gradually breaks down the barriers, assets can flow effortlessly on-chain.
Bitfrost solves it by providing an intermediate layer between staking and the application layer.
This way, the reward competition between DeFi and staking is resolved by making the relationship between staking and the application layer – built on the underlying protocol – compatible instead of parallel to each other.
Bitfrost unique mechanism allows that users can convert PoS tokens to vtoken at any time through Bitfrost parachain via Bitfrost protocol, making each PoS token correspond to a different vtoken, such as vDOT bridging Polkadot token or vETH bridging Ethereum token.
Ultimately, users only need to hold vtoken and they can obtain staking rewards by providing vtoken liquidity, PoS network liquidity, and security can be fulfilled.
Figment – Building the Foundation of Web3
Figment networks provide infrastructure services for PoS networks. For token holders, they provide staking services, and for developers, they provide API services that make it easier to build against these networks.
With a lot of experience in the internet segment and a team willing to leave their mark in the industry, the project decided to focus on staking and PoS networks with a pioneering vision, considering the segment is still developing.
Launched in 2018, the company was co-founded by Lorien Gabel, Andrew Cronk, and Matt Harrop, which have more than 25 years of experience in starting and scaling internet infrastructure.
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In the team’s words, Figment’s mission is to lay the foundation for web3 by supporting the adoption, growth, and long-term success of its ecosystem. Ultimately, the platform wants to make it simple for people to build on the next generation of blockchain-powered solutions.
Based in North America, the company provides an exclusive set of enterprise-grade node and staking infrastructure, as well as developer tools to facilitate the development of new web3 applications.
A factor that makes figment stand out amid competition is its focus on community governance and the active participation of members in the decisions that will determine the future of the platform.
However, what about common folk and retail investors? Figment wants to bring web3, staking, and PoS to the masses, so users can stake their tokens to earn rewards across different blockchains.
Currently, there are more than 20 main nets available via Figment for staking, including:
- Band Protocol
- Injective Protocol
- The Graph
When it comes to facilitating building and developing whatever on web3 infrastructure, Figment provides a lifetime dream set of developer tools. This way, developers do not need to run their own infrastructure, which permits them to focus on building DApps.
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Plus, Figment eliminates the necessity to run several nodes, as developers just need to subscribe to the platform’s API suite to submit transactions and make queries on-chain. Other advantages brought by the platform include:
- The possibility to explore and learn more about web3 in a seamless and transparent way
- Accessing the platform’s Hubble to become an active participant, assessing proposals and being part of on-chain governance
- Comparing and selecting several protocols available to discover the ideal network for developing a decentralized application
- Accessing staking and transactional data uploaded in real-time
- Discovering new possibilities to build decentralized applications while being rewarded for completing figment’s tutorials
Fractional Art – Why Owning Fractions of Non-Fungible Tokens Will Change the Industry’s Landscape
In early August, a Zombie CryptoPunk sold for 1,144 ETH, which is worth $3.2 million. Although this specific auction did not attain the most expensive price for an NFT, it will certainly go down in history as one of the most important NFT auctions ever.
Why? In the past, NFTs could have only one exclusive owner, as it was impossible to fraction a non-fungible token like you would do with a Bitcoin, for example. This auction marked the first time an NFT was sold for multiple buyers, a total of 478 buyers fitting together as a group.
While there are some investors involved in the purchase, most of the buyers are unknown individuals, who remained anonymous throughout the entire process. Once they bought the NFT, they got tokens representing shares of the digital asset, so they can proceed to buy or sell these tokens (with the ownership of a fraction of NFT) as they wish.
Fractional.art is an up-and-coming marketplace where they can do magic by allowing users to create, buy, and sell fractions of non-fungible tokens.
The project believes that fractioning is a revolutionary method of unlocking NFT liquidity while expanding access to parts of iconic blockchain-based pieces of art. This way, retail investors who could not afford to purchase an entire NFT can have partial ownership of ever-appreciating collectibles.
Moreover, fractioning gives NFT owners the freedom to decide what they want to do with their fractions while also exposing them to different digital art collections composed of one or more NFTs – all fractioned.
When someone buys a fraction of an NFT, this fractional ownership is represented by ERC-20 tokens. Unlike NFTs themselves, these tokens have no visual representation, as they serve only to represent an NFT fraction.
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So far, only the ERC-721 standard is available for fractionalization, but the platform aims to expand its support for ERC-1155 tokens soon.
Fractional art has no custodians, as the platform is entirely based on fully decentralized and audited smart contracts. All pieces exposed in the marketplace are priced in ETH and users are required to pay a small curator fee.
In layman’s terms, Fractional curator fees are essentially management fees. Yearly, a curator earns a percentage of the total ownership token supply. It is important to note that the platform’s governance mechanism prevents extremely high fees.
Owning NFT fractions opens a wide array of possibilities for investors. For instance, let us say someone has an NFT worth 30 ETH. While this specific NFT is still bullish, there are also other opportunities in the market.
With Fractional, this investor can fractionalize and sell 50% of his NFT, investing the obtained funds to take advantage of other opportunities.
Undoubtedly, the post-pandemic scenario showed that it is impossible to stop the blockchain industry. Despite the efforts of many governments and other sectors to regulate and centralize the segment around the world, blockchain technology is proving no one can dare to preclude its evolution.
In this context, considering the massive popularity of NFTs and the growing adoption of PoS networks and staking solutions, projects are focusing more and more on tools associated with cross-chain interoperability, composability, and blockchain integration.