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What is Superfluid Staking?

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The superfluid pledge mechanism allows OSMO holders to pledge their tokens and provide liquidity at the same time

Understanding what Superfluid Staking is, then, Staking.

The tao of the meta-universe

Staking, Liquid Staking, Superfluid Staking...

These are three forms of Staking, where Staking is the original and least capital-efficient Staking, and Liquid Staking is an alternative, starting this year, that allows a user to pledge any amount of ETH (or other PoS asset), Without having to worry about lock-up issues, users can immediately take pledged derivative assets (such as stETH) and deposit them in third-party DeFi apps (for capital efficiency) on behalf of projects such as Lido.

So what is Superfluid Staking? This is a core concept under osmosis, a new AMM project led by Paradigm.

1 introduction of Osmosis

Osmosis is a cross-chain AMM built using Cosmos SDK. Launched in June 2021, the AMM is currently connected to a blockchain that supports THE IBC protocol. To date, the AMM has locked in more than $650 million OF TVL and daily transactions are growing steadily.

Osmosis's AMM is an iterative version of Balancer, which allows customization of weights and pools of more than two assets (as well as Balancer's LBP functionality).

On top of Balancer's design, Osmosis uses Curve's meter design to distribute liquidity rewards and allows external protocols to load their own rewards into Osmosis's meter.

By the end of 2021, Osmosis will be the first DEX to eliminate MEV attacks. There will be no front-running, sandwich attacks or gas wars, and traders will enjoy trading privacy.

What is superfluid staking

Osmosis will also introduce a mechanism called "Superfluid Staking," which allows OSMO holders to pledge their tokens and provide liquidity (and therefore both returns), improving network security while maximizing capital efficiency.

Now let's take a simple look at what a superfluid pledge is, for example:

A puts $1000 into an Atom/OSMO liquidity pool (weight 50/50%), so the APR through LP market making is currently about 100%, but with superfluid pledging, you can pledge 50% of the OSMO in the pool to A verifier, so, A now gets staking and liquidity mining rewards in the same pool.

For example, staking is staking with an APR of 100% likewise, so A deposits $1,000 and earns $2.70 in the case of A normal LP, or (2.7+1.35)= $4.05 in the case of A superstream pledge.

There are also early alpha opportunities, for example, in Juno/OSMo pools, you can get triple rewards: Swap fees, OSMO rewards, and Juno rewards.

Over time, we are likely to see other AMMs move to their own blockchains, and this design may be the best way to build AN AMM.

3 DeFi Superset

Imagine Uniswap has its own proof of stake (PoS) chain, Uniswap can now connect to hundreds of networks, thousands of asset pools, most of which use UNI as the base asset (not ETH), Uniswap AMM will soon support the entire on-chain DeFi ecosystem: Lending agreements, options markets and stablecoins backed by multiple chain assets... DeFi completely moved from Ethereum to the Uniswap chain.

In this world, UNI is not just a governance token, it is a pledge token for the network, and LP's can use their UNI tokens in both a liquidity pool and a Staking pool, earning transaction fees and prizes.

What would UNI's market cap be in that case? $100 billion? Half a trillion dollars? UNI will not only be the most valuable blue chip for DeFi, it will be the only blue chip to replace ETH as the base currency for DeFi.

Is this a dream? In fact, this is what Osmosis is currently trying to do: use AMM as the entire blockchain, connecting all the other chains, and using native pledge tokens as the underlying asset of a liquidity pool.

This feature is not available on the Ethereum blockchain because Ethereum cannot issue ETH rewards to Uniswap or Sushiswap LP.

Osmosis's superfluid pledge will upset every AMM in the market, and eventually we'll see DEX (especially cross-chain DEX) turning to their own blockchains so they can copy Osmosis's formula.

By the time people realise what needs to be done, Osmosis has achieved network effects.

You can think of Osmosis as a strange asteroid, like the one in Frank Herbert's science fiction novel dune. Arrakis, Arrakis may look simple and barren, but beneath the sand, the universe's most valuable commodity is forming: an extremely rare spice called Melange.

Find OSMO income farmers

If you judge it by Osmosis's current TVL, and you end up with the same explorers who sailed Arrakis, OSMO is likely to become the most valuable and in demand asset in cross-chain DeFi, it will become increasingly scarce.

Refer to the article: https://fionamurakami.medium.com/the-defi-superset-understanding-the-value-of-the-osmo-token-f88fdc999388

https://medium.com/@d.j.evansbognor/what-is-superfluid-staking-going-to-look-like-on-osmosis-basics-explained-here-9ec0d 567373f