StaFi is a DeFi protocol that unleashes the liquidity of staked assets. Users can stake Proof-of-Stake (PoS) tokens, such as DOT, FIS, and others, through StaFi’s staking contract and receive rTokens (e.g., rDOT, rFIS, etc.) in return. These tokens can be traded to hedge market volatility while still earning staking rewards.

FIS is the native functional token of the StaFi protocol, used for:

• Staking: Validators in the StaFi consensus need to stake FIS to join the consensus network, and nominators must stake FIS to participate.
• Transaction Fees: To prevent system abuse, initiators of transactions must pay FIS to access computational resources. This eliminates invalid transactions, similar to other Polkadot chain functionalities.
• On-Chain Governance: FIS holders can participate in changing StaFi protocol parameters, vote on protocol upgrades, and determine the development process. Anyone can propose changes to the protocol, but only FIS holders can vote for or against proposals, with one FIS account representing one vote.
• Value Capture: A significant portion of StaFi’s platform fees (transaction fees and liquidity fees) will fund the buyback and burn of FIS tokens. The distribution of StaFi revenue may change based on governance decisions.

StaFi releases the liquidity of staked assets through staking contracts. The protocol consists of the following main components:

• rToken: rTokens are derivative assets issued by StaFi based on staked tokens. Holding rTokens means you can request redemption of the native staked tokens at any time. This also implies that rToken holders have rights to the staking rewards of the underlying tokens.
• Staking Contract: A set of code containing StaFi’s core functionalities, such as staking, redeeming, and trading. It also records the mapping relationship between rTokens and the underlying staked tokens. In StaFi, the role of the staking contract is similar to the CDP contract in MakerDAO.
• Multisig Accounts: Temporary accounts used by StaFi to manage staked tokens and participate in staking.
• StaFi Special Validator (SSV): SSVs differ from regular validators in that they are responsible for managing multisig accounts and validating the original chain transaction states. They use multisig transactions to handle staked tokens within the accounts.