StoneDefi ($STN) considers itself the only yield management protocol which is focused on creating “Rock Solid Yield” for users of the decentralised finance (DeFi) ecosystem.
StoneDefi was founded in September 2020 by Alex Lam. Previously, Lam had worked with government-affiliated Institutions before taking up a keen interest in cryptocurrency. He has so far become actively involved in the crypto world, building platforms to support investment pools, notably RockX.
Rockx provides some degree of support to StoneDeFi thanks to Lam’s influence. However, StoneDefi is currently run by a team of about 7 people scattered across South-east Asia.
In the later months of 2020, StoneDefi’s project caught the attention of Singapore-based Venture Capital, Signum Capital. The project then received early-stage funding from the VC of undisclosed value. Signum Capital exclusively deals with blockchain startups and innovations.
Together with his team of finance and cryptocurrency experts, Lam guides StoneDefi as the project leads to becoming the only rock-solid yield management protocol for crypto assets.
What is StoneDefi?
StoneDefi, commonly referred to as Stone, is a yield management protocol that functions to ensure maximum returns for liquidity providers. It also secures capitals in asset pools and yield farms to safeguard investor’s interests in the DeFi sector.
StoneDeFi was designed to create a “rock-solid” yield for DeFi investors. Stone differs from other yield aggregator platforms in the priority it gives to the credibility of investments. The protocol focuses on the viability and integrity of all digital assets over just the potential yield.
After all, the name “stone” comes from the idea of a rock-solid yield aggregator.
Most yield aggregators are notorious for their risky strategies endangering investor funds in high-risk pools. StoneDeFi’s developers see a far bigger future for DeFi and understand the role of investors in it. Therefore, their enduring emphasis on “rock-solid” yield to transform funding in the DeFi space from just speculations and get-rich-quick schemes into a credible institution.
They are able to achieve this by carrying out thorough assessments of the sustainability and integrity of different investment pools. The protocol also carries out regular audits of active pools and yield farms to keep up with changes and safeguard investor funds.
By hedging single assets through indexes, the protocol is able to venture into more volatile pools while mitigating investors’ risk. Consequently, investors can enjoy a reliable and consistent passive income from liquidity pools through Stone’s protocol.
Liquid Staked Assets
To ensure stable and maximum yield to users, StoneDefi has explored a number of alternative farming strategies. One of Stone’s more progressive strategies is staking in liquid assets.
Stone, in collaboration with platforms that generate staking derivatives (notably StaFi), has developed a way to use LP funds to create a flexible redemption for rigid PoS stakes. Stakers can redeem locked tokens for rTokens which can be subsequently traded on platforms like Uniswap while still accruing yield on their locked stakes.
For the liquidity of staked assets to be viable, there must be a system by which the credibility of user funds is ascertained. Stone’s extensive assessment protocol plays a vital role in this phase. This flexibility would see tokens in sufficient circulation without inflation while accelerating its price discovery on DEX.
Users can also use staked tokens for other purposes, especially trading where they have access to their profits without the restrictions of the unbounding that can sometimes take up to 28 days.
STN Token and The Stone DAO
Just like other yield aggregators, StoneDefi has its own native token which is tied to most activities carried out on its platform. The Stone token or “STN” has a variety of functions that ensure smooth participation and exchange on StoneDefi.
STN’s most important function is to ensure effective protocol governance through its Decentralized Autonomous Organization (DAO). Individuals who stake STN tokens are granted voting rights and the ability to propose adjustments in the way the protocol is run.
This DAO approach seeks to ensure open and transparent governance of investor funds to counteract closed and centralized regulation, which is a common problem for yield aggregators.
Stone’s token is also used to reward participation in investment pools. When Liquidity providers participate in different recommended pools, they are given different quantities of STN as acknowledgement and reward.
However, not all pools attract the same number of STN tokens. Token rewards are distributed to encourage participation in less populated pools. This system of incentivizing smaller pools would ensure portfolio rebalancing.
Distribution of STN
STN is also used for paying transfer fees in cross-chain executions, as well as standing as the security deposit in liquid staked assets. To prevent the devaluation of STN, a system where some percentage of STN tokens in the market are bought back to be burned is put in place. A percentage of the Stone platform’s fee income is used to fund the purchase of the STN tokens to be burnt.
While several yield management platforms have been successful in generating a consistent return for investors, one thing that they often get wrong is risking their user’s funds at the expense of high yields. This is symbolic of short-term thinking that could have dire consequences on the DeFi sector and possibly the entire crypto industry if asset pools are not given adequate risk assessments.
But with an innovative approach to yield management, StoneDefi is able to ensure maximum yield for users without having to risk user fund without cause. Their open and transparent method of governance through a DAO is also promising, giving investors the authority to contribute to the administration of their funds.