In the ever-evolving world of blockchain technology, a new Cosmos-based blockchain named “Tenet” has recently emerged, introducing the concept of leveraging liquid staking coins from other networks to secure its transactions. Revealed in a May 3 announcement, Tenet’s developers stated that this method could potentially allow the new network to inherit the security of older ones. This groundbreaking move comes as liquid staking has recently become the most prominent category in the decentralized finance (DeFi) sector.
Liquid staking protocols, such as Lido, Rocket Pool, and Ankr, offer users a way to stake their coins with a network of validators and receive rewards without having to maintain their nodes. These protocols also grant users “liquid staking derivatives” (LSDs), which are redeemable tokens for underlying deposits and rewards.
The new blockchain aims to enable users to “restake” these LSDs for additional rewards on its network, providing them with tokens representing the LSDs. Dubbed as “liquid liquid staking derivatives” (LLSDs), these tokens can be used in lending apps and decentralized exchanges throughout the Tenet network.
Two primary benefits are anticipated from using LSDs instead of a native coin for securing the network. The first is ensuring Tenet’s long-term security by leveraging the joint security of every layer 1 ecosystem the platform services. The second lies in bringing added liquidity and yield opportunities to LSDs.
Upon its successful launch, the protocol plans to allow liquid staking derivatives of cryptocurrencies like Ether (ETH), BNB (BNB), Cosmos (ATOM), Solana (SOL), and Polygon (MATIC) to be restaked on Tenet. This innovative network is being developed by former executives of Ankr and Blockdaemon and advised by team members from Lido, Ankr, and OpenAI.
Having existed since Lido’s inception in 2020, liquid staking protocols gained significant popularity in 2022 and early 2023 as the Ethereum network transitioned to a proof-of-stake system and started to accommodate staking withdrawals. DefiLlama, a crypto analytics platform, announced on May 1 that liquid staking had become the leading category of DeFi applications based on total value locked.
Despite these encouraging developments, it remains to be seen whether Tenet will fulfill its promises and achieve widespread adoption. It is crucial to consider the potential drawbacks, such as increased system complexity and inherent dependence on other networks. Additionally, the future growth of liquid staking could be influenced by the upcoming Ethereum Shanghai upgrade, which could spur further debates over the validity and efficiency of this new approach in securing network transactions.
Source: Cointelegraph
