Liquid Staking Mechanisms

Liquid Staking and Pondo

What is Liquid Staking?

Liquid staking provides additional new functionality on top of traditional staking like working around the scalability limitations in the number of validators and delegators, unlocking private staking, and enabling validators to receive a commission. The idea behind liquid staking is to pool users tokens and delegate the pool as a whole to one or (split it among) multiple validators.

Pondo's Approach

Pondo is such a protocol, with its own implementation of liquid staking for Aleo. To ensure efficient capital gains, the top five validators in Aleo are allocated the protocol’s Aleo pool.

Furthermore, the validators are ranked based on their yield, the highest APYs have a larger share of the protocol’s Aleo pool delegation than those with a lower APY:

• 1st Validator is delegated: 37% of the pool.

• 2nd: 26%

• 3rd: 16%,

• 4th: 12%

• 5th: 9%

Because this information is not directly accessible by core protocol program, a Yield Oracle program is responsible for reporting this data.

Delayed/Instant Claims

When a user withdraws tokens from the protocol he does not have to wait for the actual unbonding, he can pay a certain fee to have instant liquidity on his staked tokens.