rSOL, a decentralized DeFi product produced by StaFi that solves the liquidity problem of staked SOL on Solana mainnet.
rSOL token is a synthetic staking derivative issued by StaFi when users stake SOL through the StaFi rSOL App. rSOL tokens are anchored to the staked SOL assets and the corresponding staking rewards. rSOL tokens can be transferred and traded at any time.
rSOL App can help SOL stakers solve two major issues:
1) There will be no need to wait for a 3 days cooldown period to withdraw the staked SOL assets. rSOL App users can transfer and trade rSOL assets at any time to liberate liquidity and hedge price risks.
2) There is no need to learn the complicated Tower BFT consensus mechanism or staking reward calculation rules if you want to maximize staking rewards. With rSOL App, users only need to follow a few steps to deposit SOL into the rSOL contract, which will automatically select the best validator to delegate by the profit maximization strategy.
When a user deposits SOL into the rSOL contract, StaFi will calculate the amount of rSOL to issue to the user based on the current exchange rate between SOL and rSOL. When a user holds rSOL, StaFi will calculate the amount of redeemable SOL based on the real-time staking reward of SOL.
The rSOL exchange rate Ci grows with the increase in staking income. It is determined by the total number of SOL locked in the staking contract Qstk, the total number of redeemed SOL Qred, the number of staking rewards Qrew, the number of slashes Qslh, the commission rate Rcom, the total number of rSOL issued M, and the total number of burnt rSOL N. The calculation formula is as follows:
Through rSOL, StaFi solves the following problems for SOL holders:
1) There is no need to worry about the liquidity of staked SOL. Users can trade rSOL on Uniswap at any time in the future.
2) The rSOL contract integrates a strategy for maximizing staking rewards, which automatically selects a group of Original Validators with the highest rewards on the chain for staking.
3) The current Tower BFT mechanism of the Solana mainnet is rather complicated for ordinary stakers to learn, such as understanding the consensus mechanism, whether restake is allowed or not, the determinants of reward, how to select the best validators, etc. The rSOL App can save users all these hassles, and maximize the staking rewards for users who want to stake on the Solana chain in a one-stop manner.
rSOL App serves to solve the liquidity of SOL staking. The core participants are as follows:
Validators on the Solana chain who are choosen to be validators of rSOL products are called Original Validators (OV). For details, please refer to StaFi rToken Paper.
StaFi Special Validator (SSV)
The validator who controls the asset relationship in the Staking Contract is called an SSV. SSV mechanism adopts a distributed key management solution with the panel rotated on the chain. For details please refer to StaFi WhitePaper SSV.
Based on the Tower BFT consensus mechanism of Solana and the influencing factors of staking rewards, the rSOL App adopts the following staking rewards maximization strategy:
The SOL tokens deposited by the users in the StaFi rSOL pool, which is managed by multi-signature scheme, will be distributed to several (M) mini staking accounts. Each staking account will then select several (N) validators for delegation by the profit maximization strategy.
M will be set based on the scale of the SOL token deposit, and N will be set at 1 according to the Solana delegation rules.
Diversified delegations will help to reduce the slashing occurrence probability of a single node, and also increase the decentralization of Solana validators' staking power.
The rSOL App will evaluate the on-chain performance data of original validator candidates from the metrics including online duration, slashing record, self-bond ratio, node identity, commission ratio, etc., to ensure that excellent validators with relatively low commission are selected. StaFi will rank all the Solana’s validators according to the evaluation scores and select the top M+5 validators as the Original Validator candidates.
OV Candidate Choosing Criteria
Validators will set the identity information which will be reviewed to judge the proficiency and credibility.
Excellent records will be preferred
Validators will charge certain commission from the stakers' staking rewards for their service.
Lower than 10% will be preferred
When a validator double-signed will be slashed by the PoS chain. And the delegated tokens of the validator will also be slashed.
OV candidates with any slashing record will not be chosen
Self-bond Ratio shows the amount of tokens delegated by the validators to themselves. Higher self-bond ratio means more dedication.
Higher self-bond ratio will be preferred
Uptime Rate shows the time that the validator keeps online to do the validation duty. It will affect the staking rewards.
Higher then 98% will be preferred
StaFi will always monitor the top M+5 OV candidates’ staking power and re-rank the M+5 OVs according to the staking power from low to high in each epoch, then choose the lowest M validators as the official OVs to delegate.
When the system detects that the node is slashed or the online rate is lower than the standard in a period, the rSOL staking contract will automatically initiate the redelegate operation and re-select other qualified validators in the M+5 OV candidates for delegation.
Users could redeem the staked SOL and corresponding rewards at any time through rSOL App. After receiving the request of redemption, rSOL contracts will automatically unstake and withdraw SOLs from the Solana chain, then send the SOL tokens to the user’s Solana address after 2 Epoch of Solana blocks, which may be around 5 days.
When users redeem the SOLs, there will be a redemption fee charged at 0.2%, of which the details are listed in rSOL Charge chapter.
Although the Partial Slashing function has not been deployed on the Solana Mainet Beta chain, StaFi rSOL contracts already have been inserted with the strategy of minimizing the slashing risks.
Through rSOL, StaFi can help users avoid slashing in the following ways:
1) Staking Contract favors those validators who do not have slashing history to become official OVs.
2) Validators with a higher proportion of self-bond will be preferred for OVs so that OVs are motivated to avoid slash.
3) Staking contracts will select several OVs for each nomination so that a certain slashed OV will not have a huge impact on user funds if it gets slashed. Therefore, even if an OV is slashed (the probability is very low), staking rewards will not be affected.
4) When slashing is detected on a delegated node, the rSOL contract will immediately execute the redelegation on the above node to minimize the loss.
Users do not need to claim staking rewards when using rSOL App, and the on-chain staking contract will automatically re-stake the rewards to generate the higher APR
When a user mints rSOL, the nodes of the cross-chain bridge service need to monitor the Solana on-chain services in real-time and pay related cross-chain fees. Therefore, the commission in minting rSOL can be calculated through this formula: N * (StaFi chain Gas Fee + Solana Chain Gas Fee), and the payment is made by FIS, StaFi mainnet token.
N is a flexible parameter:
1) In most cases, N is set to 2. Under this circumstance, the user only needs to pay twice the gas fee on the two chains as the service fee for the cross-chain bridge service node.
2) However, when there are frequent dust attacks, StaFi will set N higher in order to increase the cost of external malicious attacks. When the attack disappears, N will be restored to 2.
The rSOL App will charge part of staker’s staking rewards as the commission, which includes the commissions charged both by the validator and StaFi. The commission collected by StaFi and Original Validators will not exceed 20% of staking total rewards.
When a user redeems staking assets, s/he only needs to apply for redemption on StaFi’s staking dashboard. The redemption process is mainly divided into two steps:
Step 1: Enter the amount of rSOL , which can’t exceed your rSOL balance.
Step 2: Confirm and apply. The system will burn the rSOL token you applied, and calculate the amount of redeemable SOL by the exchange rate. The balance, after deducting the service charge, will be sent to the user’s wallet address.
The service charge (Feered) is determined by the users’ applied quantity for redemption M, the current rSOL/SOL exchange rate Rc, and the redemption rate Rr :
Rr is currently set at 0.2% in the initial stage.
StaFi will create rich, multi-level circulation scenarios that stretch across different chains for rSOL holders:
1.When the rSOL App is launched, rBridge will at the same time support rSOL two-way cross-chain bridge function from StaFi chain to Ethereum, so that users can have access to DeFi applications on Ethereum by using rBridge App.
3.StaFi will not only support the circulation of rSOL in the Solana ecosystem but also empower rSOL’s engagement in the DeFi protocol of Ethereum/Polkadot/BSC chain through cross-chain bridge services.