Persistence's pStake lets holders trade staked coins without unbonding

Ashton Addison: What has Persistence been building since we last spoke, and how did it get here?▶ 00:21

Tushar Aggarwal: First came Comdex, a decentralized commodity trading platform geared towards institutional traders. In building it, we realized a lot of infrastructure was missing, which is how Persistence came about, as an infrastructure layer for building multiple products in DeFi. We came out of stealth on 1 January 2020, and then the March 2020 crash hit. For about six months we found it extremely difficult to fundraise, so we started a staking-as-a-service business to create cash flows to cover expenses and pay salaries. It has grown into one of the largest staking-as-a-service providers in Southeast Asia and South Asia. After the Compound token launch in June 2020, we raised capital aggressively in Q3 so we didn't have to rely only on staking income. In Q4 2020 we ran a stake drop campaign where stakers of coins such as Luna, Atom, Kava and Matic received a targeted airdrop of the Persistence coin. Within three months, more than a billion dollars' worth of staked coins were participating. That showed us the huge demand for generating additional yield from already staked assets, and that's how pStake came about.

Ashton: What friction in staking is pStake trying to remove?▶ 05:18

Tushar: A lot of people face a trade-off between staking and liquidity. Many proof-of-stake blockchains have a 21- or 28-day unbonding period, so even if you unstake, you don't get your coins back immediately. That illiquidity causes a lot of people not to stake, and that's the problem we're trying to address. We want people to stake and earn staking rewards but still have the flexibility to be liquid. If markets are falling and you want out of your position, the platform lets you sell the representative coin to someone else. Whoever you sell it to gets access to the underlying staked coin. Essentially, you're transferring ownership of a staked coin without unstaking it.

Ashton: Which proof-of-stake assets will pStake support?▶ 08:57

Tushar: Historically, we've had our strongest community in the Cosmos ecosystem. That includes Cosmos Atom, Terra Luna, Injective Protocol, Crypto.com's CRO, Kava, Iris and Akash, which are all proof-of-stake coins that will be part of the pStake platform. Outside Cosmos, you have the Polkadot ecosystem and Solana. But the largest ecosystem today is ETH2, with Ethereum's transition from proof of work to proof of stake. That is of course the largest addressable market as far as liquid staking is concerned.

Ashton: How does delegating to validators work, and what risks do stakers face?▶ 10:11

Tushar: Validators are the equivalent of miners in proof of work. They validate transactions, hence the name. This is the biggest difference people don't get. Staking within DeFi is just staking a governance token so you have a say in what the platform does. In proof of stake, when you stake a coin, you're actually doing what the miners do, and that's where the risk comes from. If the validator you delegated to becomes malicious, or has poor infrastructure and downtime, your stake can be slashed, meaning it gets reduced. A lot of people don't understand these risks, but I think they will become clearer with the move to ETH2. Proof of stake in production has only been active for less than three years, and nearly every new chain now follows some form of delegated proof of stake.

Ashton: What role does the XPRT token play in the Persistence ecosystem?▶ 12:38

Tushar: XPRT is the staking token of the Persistence chain, which is Tendermint-based. Our journey is similar to Terra's. Comdex is our non-crypto user-facing application, and pStake and a couple of other applications are aimed at crypto-native users. XPRT is the consensus token that binds the whole ecosystem together, and fees from these applications are shared with XPRT stakers. It has inflation built in, starting at 35% for the first two years and halving every two years, so from 2023 onwards it's 17.5%. To account for that decrease in staking rewards, we want to grow transaction fees substantially so the effective APY of staking XPRT stays the same for holders and stakers.

Ashton: What are the milestones for pStake for the rest of 2021?▶ 15:20

Tushar: A lot of people ask about our plans for the next five years, but there's so much uncertainty in crypto that it's difficult to answer, so we plan internally for the next three to six months. We're recording this on 22 June. On 15 June we launched a pre-alpha bug bounty, where we want users to play with the product and find bugs in both the code and the UI. We'll incorporate those changes and run a staking competition from the beginning of July. Between 10 and 15 July we plan to launch a beta where actual financial assets are at risk. The launch will be capped, maybe around 10,000 Atoms, with Atom as the first currency. Over Q3 we'll expand the assets covered and add features. In parallel we're getting security audits done, so users feel secure supplying large amounts of liquidity. We also want the representative coins accepted as collateral in other DeFi products for borrowing and lending, and supplied as liquidity on decentralized exchanges.