Non-custodial staking of L1 tokens
Summary
This is a use-case where token holders can stake their L1 tokens without paying the fees related to moving them in and out of a staking contract.
- Reduce the fees imposed on users for staking and unstaking.
- A simple mechanism for allowing Coinweb tokens bridged down to L1 to stake without any additional complexity.
Introduction
In this use-case we assume there are Coinweb custom tokens that support some form of staking.
A portion of token holders are interested in moving their tokens down to one or more L1s while still partaking in staking and receiving rewards.
The non-custodial staking of L1 tokens is initiated by issuing a signal that is monitored by Coinweb. The simplest approach here is to send a Coinweb transaction that stakes the L1 token.
Such a transaction would contain the ERC20 address or UTXO that should be considered staked.
Unstaking happens automatically when the token is moved.
The core mechanism
The core mechanism in this use-case is to use a PACT with a single Chain Transaction Sentinel
In the PACT, the Penalty Adjudicator will start without collateral.
Incentives
Instead of a thaw-period during unstaking, a non-custodial staking system like this would typically not give out rewards for an initial period of time so the staker is incentivized to not go in and out of staking positions frequently.
Alternatively, initial collateral can be given to the Penalty Adjudicator by moving parts of the L1 tokens through a burn operation.
