How Liquid Staking Works
Last updated
Last updated
When a user liquid stakes with Pi Staking, their PLS is directly utilized for the expansion of the PulseChain network and the launch of more validators.
Their PLS is committed to a deposit pool. These funds are then used to pair with node operators aspiring to become validators for PulseChain's primary network. For additional details on how PulseChain employs proof-of-stake validation, refer to PulseChain's official documentation.
Every validator on PulseChain is crucial, and currently, there is no streamlined method for connecting validators with opportunities. Pi Staking addresses this gap by motivating node operators to engage in the protocol, thereby creating a group of validators dedicated to supporting the PulseChain network. Our community of liquid stakers plays a vital role in this mission.
stPLS is an ERC4626. When users stake PLS, stPLS is minted and allocated to them in return. This token is liquid and can be used like PLS, allowing users to:
Hold it to accrue staking rewards.
Sell it for liquidity.
Utilize it to generate additional yield.
Upon depositing PLS as a liquid staker in Pi Staking, the PLS is invested in the TokenstPLS contract, also known as the deposit pool. When a new Pi Pool is initiated, 16,000,000 PLS is withdrawn from this contract. Combined with the Pi Pool owner's 16,000,000 PLS, this meets PulseChain's minimum requirement of 32,000,000 PLS for validator status. Pi Staking's advanced multisig technology facilitates the transfer of these funds from the smart contract to the protocol, registering the Pi Pool as a validator on PulseChain.
Every 15 days, a Pi Pool concludes its validation period. The Pi Pool funds and the rewards it garnered from validating are then transferred back to the smart contract. The 16,000,000 PLS from the deposit pool, having contributed to the validation, earns a portion of the rewards. These rewards, along with the original 16,000,000 PLS, are reinvested into the deposit pool. Over time, the deposit pool's value increases due to these accumulated rewards, and stPLS gains value accordingly.
When funds are available in the pool, stPLS holders can exchange their stPLS for PLS. If all funds are actively engaged in Pi Pools on-chain, users must wait until a Pi Pool completes its cycle before exchanging. Successful redemption of stPLS for PLS results in the burning of the stPLS token.
