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LIQ Finance is a new financial primitive enabling the creation of a liquid wrapper for locked staking. The protocol tokenizes any locked staking position into an NFT so that everyone can trade it in the open market.
Locked staking is widely adopted by crypto projects, this approach is extremely useful to not only reduce sell pressure but also reward long-term investors.
The longer the lock, the higher yield. Yield could be from token inflation or protocol revenue.
Locked staking scares a lot of people because their assets are completely illiquid.
That is not good for both sides because:
- Investors miss a chance to earn a high yield.
- For crypto projects, fewer tokens are locked so more sell pressure.
- By leveraging on NFT and Smart Contract wallet mechanism, our protocol allows users to create an escrow (position) that will lock tokens on their behalf. Escrow will accrue yield.
- Each escrow is associated with an NFT, that is minted to users when they created the escrow.
- By owning the NFT, as the key, users are effectively owning the escrow that owns underlying locked tokens.
- Upon maturity, users can claim to retrieve locked tokens + yield as long as they are still holding the associated NFT.
- Users can sell the NFT to other investors for an early exit position.
Staking through our protocol doesn't harm the tokens of the crypto project, it even encourages users to lock more tokens.
- Investors have a way to exit early without dumping tokens, no more worry about locked staking anymore.
- For crypto projects, more tokens are locked so less sell pressure.