Passive income in ChangeX: Leveraged Staking, Liquid Staking, Lending, and more
We’ve said it before, but we’ll say it again — at ChangeX, passive income is king. Sure, price movement is great, and big price movement is even better, but we believe in long-term, sustainable growth. You can see this reflected in our roadmap. Aside from the many functional and quality-of-life benefits that ChangeX will bring in terms of interoperability, simplicity, and composability to the crypto and DeFi experience in general, we are working on various products that will make your money work for you round the clock, dripping constantly over time. Let’s explore them below.
The Basics: Staking, the ChangeX way
Staking is by now a well-known instrument in the DeFi world, but, just to go over it briefly, it is the process of locking up your crypto and delegating it to a network node, which then uses that stake to secure the network — that’s the most simple explanation, and we won’t be getting into the complicated one (thankfully). Staking is only possible on Proof-of-Stake networks like HydraChain, and every network has its own specifics. Some of Hydra’s, for example, are these:
- Same APR for all stakers, regardless of HYDRA amount
- Minimal computing power needed, with staking accessible to everyone
- Strong decentralization through hundreds of nodes
- About 100x more secure against “51% attacks” compared to POW
- 100% burn of transaction fees
Most PoS blockchains require you to lock up your staked crypto and then, in order to reclaim it and make it usable again, there’s a certain unstaking period — this could be anything between two days to two weeks or more. It varies. However, this is not the case with HYDRA and CHANGE in the ChangeX app. There are no lockup periods, and all you have to do to reclaim your tokens is to click that unstake button.
But what if you don’t have to?
Flexible staking and spending
ChangeX will rely on flexible staking pools, allowing you to stake assets while maintaining immediate access to them for spending without interrupting the flow of rewards. This gives you the ability to stake e.g. HYDRA securely and be able to spend ad-hoc and wherever you need to without interrupting the staking process. This becomes possible thanks to the ChangeX Crypto Debit Card, which will micro-transact the matching amount that is required for settlement and will liquidate it through the best possible liquidity sources, while the numbers continue piling up for you.
Earn CHANGE for staking other tokens
ChangeX, being a non-custodial wallet, is also multi-chain — we can import practically any token on any network, but we will prioritize profitable Proof-of-Stake economies, because you’ll be able to stake them all right there in the ChangeX app with a few clicks.
And because on top of the staking income from all your PoS coins, you will be getting even more: commissions applied to the corresponding staking pools will be used to buy CHANGE and then airdrop it to CHANGE stakers, which means another constant income stream on top of staking.
CHANGE is crucial to this mechanism, because without it you cannot benefit from the airdrop scheme!
The more assets you have staked, the bigger the CHANGE rewards are.
So, imagine that it’s the end of 2022. We now have a decent number of PoS assets in the app and they are all earning you CHANGE via staking rewards and via commissions as another stream. Here comes the cherry on top.
Leveraged Staking with any Proof-of-Stake economy in ChangeX
Yes, every single one, hence why we will prioritize integrating such economies. If you can stake it, you can leverage it. This means you can amplify your yields by 1.2–2x with virtually no limitations. The only risk with a leveraged staking position will be associated with the price of the leveraged asset — if it drops significantly with regards to the entry point (when the position was created), the leveraged position will be closed. However, this can be managed and avoided by adding more collateral to the initial position, thus keeping it open and preventing liquidation.
So, what does this mean: if we integrate CAKE, for example, you can leverage it. If the APR for CAKE is e.g. 75%, you can leverage it up to 150% at maximum setting. Flexible staking however allows you to keep the asset liquid, and with the ChangeX Crypto Debit Card, which we expect to have online by Holidays 2022, you will be able to access it and spend it at all times.
But wait, wouldn’t leveraged staking be centralized?
Actually — no. The leveraged staking economy is powered by another passive income product we are developing, and that’s the stablecoin open lending market (we don’t want to leave any assets just lying about and doing nothing, after all).
When you have stablecoins in ChangeX, you will be able to lend them for an APR of ~9.5%. By doing this you are not only earning on your stablecoin assets — you are also powering the leveraged staking economy.
If you’re on the other side and decide to use leveraged staking, you tap into this stablecoin pool and use the funds there to get more of your PoS asset, effectively using leverage. Your base asset is used as collateral, and the stablecoins are used to buy more of your coin, which is then staked, amplifying your yield (base asset + leveraged asset = up to 2x increased APR).
And because the system works on a peer-to-peer basis, the ~9.5% APR that the stablecoin lender receives comes from your leveraged staking rewards, thus keeping the whole thing decentralized.
But this is not the only form of decentralized leveraged staking that ChangeX will offer. For the second option, we need HYDRA.
Leveraged staking with HYDRA
If you’ve been following HydraChain in the past months, you probably know that the team behind it is actively working on the transformation to Hydra 2.0 — a massive network upgrade, which will make Hydra faster, more efficient, more liquid, and more ambitious than ever.
Here’s the gist of it, as seen on the Hydra blog:
✅ Multiple performance upgrades
✅ 2000TPS elastic capacity / 300TPS standard mode
✅ EVM upgrade to match Ethereum
✅ Second Core-Asset to join HYDRA native ecosystem
✅ Liquid Staking to propel capital for useful purposes without the opportunity cost of unstaking
✅ Delegated Staking
✅ Single-sided liquidity concept revealed in-depth
✅ Stablevault Earn Product revealed with target 8%-12% APR and 100% utilization of capital
✅ Bridge Technology Security Pioneering
✅ Proposal of Refactoring for leveraged burns
Second core asset to join Hydra native ecosystem — not to downplay the others, but this is the really important bit, because it is the key to a second Leveraged Staking offering in ChangeX, albeit via different means. This new asset is called LYDRA, and, once available, LYDRA will be a part of ChangeX. Here’s why.
LYDRA will enable what the HydraChain team refers to as “liquid staking”. Liquid staking will allow you to stake your HYDRA while keeping it usable for other purposes. Yes, it sounds too good to be true, but hey — every once in a while it actually is true.
When you delegate to a super staker, your HYDRA tokens will be dynamically converted into a collateralized asset without interrupting the staking process, with the protocol minting LYDRA in a 1:1 ratio back to you. Once there, you can choose to unlock liquid staking by moving and utilizing the LYDRA outside your wallet via smart contracts.
Example: when you stake 100 HYDRA, you receive 100 LYDRA from your delegator wallet. Your 100 HYDRA are the collateral, and the 100 LYDRA are your “loan”. The HYDRA remains staked throughout the process, earning you standard on-chain rewards. The protocol will only allow you to redeem your 100 HYDRA under the condition that the full 100 LYDRA is back into the wallet that delegated the HYDRA in the first place. If you don’t move the LYDRA, you never initiate liquid staking, but participate in good old regular delegated staking.
However, if you decide to move the LYDRA, you can use it freely throughout the ecosystem, as it is an HRC20 token that is fully compatible with the Hydra DEX and DeFi in general. One use for LYDRA would be to buy more HYDRA, which can be staked again, while yielding new LYDRA, albeit at a lower ratio, effectively resulting in a leveraged position. You can sell it for stablecoins, or exchange it for another asset. The choice is yours.
Leveraged Staking with Hydra in brief:
- Buy 100 HYDRA and delegate them to a super staker for 45% APR
- The protocol mints back to you 100 LYDRA against your 100 HYDRA
- You move the 100 LYDRA out of the delegator wallet and sell it for more HYDRA at a ratio of 0.8:1, netting you 80 HYDRA
- As a result, you now have 180 HYDRA staked for ~81% APR
- Repeat the process, lowering the ratio, but increasing your position
ChangeX will integrate this process and will simplify it greatly. And while setting it all up in the Hydra wallet would require knowledge of encryption, super stakers, and nodes, among others, with ChangeX the entire complicated backend will be translated to a simple and intuitive interface where things will happen in very few clicks, thus unlocking incredible passive income opportunities to all — crypto-savvy and inexperienced users alike. All while keeping things decentralized.
Passive income is king.
- With ChangeX, you will gain access to staking for all integrated PoS assets with the added benefit of receiving CHANGE airdrops because of commissions applied to the staking pools;
- You have the unique ability to use leverage for your staked assets, amplifying yield by a factor of 1.2–2x and supercharging your APR;
- You gain access to a stablecoin lending market, allowing you to put your stablecoin assets to work for an APR of ~9.5% (and you’ll be able to stake stablecoins for a fixed APR — this will be available soon);
- and on top of that you gain access to the HYDRA/LYDRA economy, which is another form of leveraged staking, and which only adds to the variety of investment strategies available at your fingertips.
That’s four different tools that unlock a myriad of strategies, allowing you to put your crypto to work for you. It’s how we envision DeFi’s future — open, accessible, composable.
This will all be connected to the ChangeX Crypto Debit Card, which is why it will no longer live exclusively on the chain. One might say it will be unchained. Personal Finance Unchained. Sounds like a nice slogan.
Thank you for reading,
The ChangeX team