Avely Finance has officially launched its liquid staking protocol and stZIL token on the Zilliqa mainnet.
Following an extensive testing period, multiple audits, and a public bug bounty programme which revealed no issues with its liquid staking smart contract, the company has now launched its liquid staking protocol in a beta phase and opened up the platform to all users on the Zilliqa network.
The Avely Finance dApp allows users to stake their ZIL through the platform and earn staking rewards as they normally would when staking directly to an SSN from their wallet. However, Avely’s liquid staking protocol also allows for greater flexibility by providing stakers with stZIL - a ZRC-2 token that represents their staked ZIL balance.
These stZIL tokens can be transferred like any other tokens on the network and can be used to provide liquidity on decentralised exchanges or for payments.
Liquid staking offers the benefits of standard staking and liquidity by giving ZIL holders a way to earn rewards from staking while still being able to use their funds elsewhere via the stZIL token.
We spoke to Ihar Paliashchuk, co-founder of Avely Finance, to find out more about the launch of Avely’s liquid staking protocol and the opportunities this unlocks for ZIL holders.
How stZIL and liquid staking works on Avely
Avely’s liquid staking protocol is a powerful solution that allows users to continue earning staking rewards while still having access to their funds indirectly through the stZIL token.
“There are many advantages to liquid staking - the main benefit being flexibility. If you stake ZIL normally, your funds are locked and you do not have access to them. When you use our liquid staking protocol, you will get stZIL which you can use for almost anything, including payments,” Ihar says.
“stZIL is completely backed by staked ZIL and its value will therefore remain stable and similar to the value of ZIL.”
To get started with liquid staking on Zilliqa, users can open the Avely Finance dApp in their browser and connect a compatible wallet such as Zeeves or ZilPay. They can then simply enter the ZIL amount they wish to stake through the platform and click on “Stake”.
Once they confirm the transaction in their wallet and it has been processed by the network, stakers will receive an amount of stZIL based on their stake, which they can then immediately use as a standard ZRC-2 token.
Avely also allows users who are already staking ZIL through another SSN to easily shift over to liquid staking through the “Convert” feature within the dApp. This allows users to instantly receive their representative amount of stZIL upon converting their stake to the Avely liquid staking protocol.
Any staking rewards earned are automatically re-staked by the Avely Finance smart contract, and users are able to withdraw their funds at any time according to regular ZIL staking withdrawal rules.
Funds staked through Avely are controlled entirely by a smart contract that calculates an “honest price” for withdrawals, which includes all ZIL rewards with auto re-staking.
Staked ZIL is divided among multiple SSNs for better decentralisation, with each node belonging to a different operator and monitored for continued reliability. These nodes currently charge a standard staking commission rate of 4%.
Avely’s liquid staking protocol charges a 10% fee on all ZIL rewards but not on the initial amount staked through the protocol. However, this fee can be covered by auto-compounding interest of automatically re-staked rewards.
Alongside the launch of the liquid staking protocol, Avely Finance has also launched Avely Swap within the dApp interface. This service allows users to directly swap stZIL for ZIL as well as provide liquidity.
“Avely Swap is available at launch and allows users to earn fees for providing liquidity to the platform using stZIL and ZIL,” Ihar says.
Bringing new DeFi utility to Zilliqa
Avely Finance is the first liquid staking protocol launched on the Zilliqa network, and Ihar believes that as more DeFi applications come to Zilliqa, it could generate much greater liquidity and transaction volume for the network.
“There are many ways that stZIL can be used in the Zilliqa ecosystem. For example, you can stake 50% of your ZIL through Avely and receive stZIL. Then you could use that stZIL and ZIL to provide liquidity through Avely Swap and start earning liquidity provider fees,” he says.
Providing liquidity for the stZIL-ZIL trading pair on Avely Swap is a great way to start using stZIL as this pair is closely linked in value, with stZIL’s value growing linearly relative to ZIL due to the auto-restaking of rewards. This means there is a lower risk for impermanent loss compared with other, more volatile token trading pairs.
“I believe stZIL is an important token for the Zilliqa ecosystem because it can be used everywhere ZIL is used thanks to their value being closely linked. We hope that stZIL and Avely Finance can boost the transaction volume on the network, delivering more transaction fees and better rewards for the entire network.”
Zilliqa’s upcoming Ionise money market protocol, built using the network’s recently implemented EVM compatibility, is another great opportunity for unlocking the utility of stZIL and growing the DeFi ecosystem of the Zilliqa network.
“Zilliqa is working on an EVM-based money market protocol and we look forward to stZIL being supported on that platform to unlock even more opportunities for DeFi utility,” Ihar says.
“For example, you would be able to use stZIL as collateral to borrow more ZIL on Ionise [Zilliqa’s upcoming money market protocol], which you could then stake through Avely to receive even more stZIL.”
“We are very excited about all possible utilities which can make the price of stZIL flexible, and we are very happy to be working on integrating stZIL into the upcoming Ionise money market protocol.”
It’s set to be an exciting year for DeFi on Zilliqa, with EVM compatibility potentially bringing more decentralised lending applications and marketplaces to the network that have proven successful on other chains that support Solidity-based smart contracts.
Ihar believes that with the launch of the Avely dApp as Zilliqa’s first liquid staking protocol and the implementation of EVM compatibility, there is a massive opportunity for growing DeFi applications and adoption on the network.
“Zilliqa’s support for EVM compatibility is great news for users, as many decentralised exchanges and DeFi applications can be forked over to Zilliqa, unlocking more utility for stZIL and the wider Zilliqa ecosystem.”