Introduction
The Liquid ICP is staking bridge, built on EVM compatible blockchains, it allows users to earn staking rewards on NNS without locking ICP or maintaining complex staking process on Internet Computer.
Users can bridge ICP through the Liquid ICP smart contract and receive ICP-20 tokens in return. The smart contract then stakes the required portion of ICP coins in IC's(Internet Computer) NNS(Network Nervous System) by creating a Stake Neuron with maximum available voting power. Users' deposited funds are pooled and staked by the Liquid ICP DAO, moreover the DAO ensures reverse convertibility of ICP coins.
After bridging users can stake their ICP-20 tokens and receive liquid version of their assets, st-ICP(staked ICP) tokens. Unlike staked ICP, the staked ICP-20 token a.k.a st-ICP is free from the limitations associated with a lack of liquidity and can be transferred at any time. The st-ICP token balance corresponds to the amount of bridged ICP coins plus NNS rewards. Liquid ICP community has Fractional Reserve ledger of ICP coins on Internet Computer which is bought from the governance token sales and it will ensure limitless withdrawal of ICP coins from EVM compatible blockchain by locking/burning equivalent ICP-20 tokens in the smart contract.
Example : User A bridges (deposits/wraps) 100 ICPs on s-Bridge. User A receives 100 ICP-20 tokens representing 100 ICP deposited onto the Liquid ICP platform. As long as the user has 100 ICP-20 tokens, he/she can redeem 100 ICP coins (1:1) from the platform back into his/her Dfinity wallet by burning off all his/her ICP-20 balance.
Now after User A received 100 ICP-20, he/she decides to stake the underlying bridged asset of 100 ICP on the Dfinities NNS to earn staking rewards (assume ~10% Annually). Upon staking ICP-20 koken is L-Stake(liquid staking) contract, User A receives 100 st-ICP tokens and his/her ICP-20 balance is now changed to zero. Over time User A can redeem ICP-20 tokens with rewards acquired by simply providing st-ICP tokens and unstaking his/her ICP-20 tokens.
Let’s assume there’s an st-ICP/USDC liquidity pool on Quickswap. User A now supplies all her st-ICP along with an equivalent amount of USDC into the Quickswap pool to become a liquidity provider (LP). A portion of the trading fees generated on Quickswap is distributed to all the LPs (Assume that this results in 15% yields annually).
This means that after a year, User A would have earned (10+15)% yield on her 100 ICP holdings instead of the usual 10% he/she would have received by simply staking (and not liquid staking).
Last modified 1yr ago