Stargate Finance
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About Stargate Finance
Stargate Finance represents a liquidity transport protocol that positions itself at the cutting edge of Omnichain Decentralized Finance (DeFi). This protocol functions as a community-centric organization, dedicated to simplifying the process of cross-chain liquidity transfers with an innovative single transaction approach. As the first decentralized application (dApp) to be launched on LayerZero, Stargate Finance’s core objective revolves around enabling seamless cross-chain transactions and enhancing the user experience within the DeFi ecosystem.
How does Stargate Finance (STG) work?
Stargate facilitates the transfer of native assets between various blockchains for both users and decentralized applications (dApps), by employing its unified liquidity pools. These pools are designed to ensure instant and guaranteed finality of transactions. This feature underscores a secure and dependable process for transferring assets from the source chain to the destination chain. The platform also offers users the ability to swap a range of assets, such as exchanging USDC on Ethereum for USDT on BNB. Additionally, it enables applications to integrate Stargate for conducting native cross-chain transactions, which in turn broadens access to liquidity and enhances opportunities for yield generation.
Protection and security of Stargate Finance
Stargate’s security measures have been rigorously vetted by three prominent entities: Quantstamp, Zelliz, and Zokyo. Demonstrating a commitment to robust security, the most substantial bug bounty program to date was initiated in April, with rewards up to $15 million on both Stargate and LayerZero platforms. The governance of the protocol is secured by a multi-signature system, details of which are available via the provided link.
Furthermore, earlier this year, Stargate introduced a two-tiered security framework in its Relayer. The first layer, named ‘The Dome’, is engineered to shield against attacks from malicious external contracts. The second layer, ‘Pre-Crime’, scrutinizes all messages within Stargate, executing them in a local environment. This step is crucial for intercepting any potential disruptions or anomalies in the accounting records before they impact the operational system. Additional information on the ‘Pre-Crime’ mechanism is accessible through the mentioned link.
Features of Stargate Finance
Utilizing the LayerZero communication protocol, Stargate presents an advanced bridge solution for native assets, characterized by instant guaranteed finality and unified liquidity. This approach effectively addresses the “bridging trilemma,” a prevalent challenge among traditional bridges, which typically involves three key elements:
- Instant Guaranteed Finality: Stargate guarantees the immediate availability of funds on the destination chain following a successful transaction on the source chain.
- Unified Liquidity: The protocol amalgamates liquidity pool access across multiple chains, enhancing efficiency.
- Native Assets: Stargate supports the transfer of desired assets, whether native or high-liquidity synthetic, on the destination chain.
In contrast to conventional bridges, which often sacrifice one of these features, usually preferring wrapped tokens to native assets, Stargate adopts a different strategy. Traditional bridges lock the native asset on the source chain, creating a wrapped asset on the destination chain, leading to limitations in liquidity and expansion. These bridges frequently encounter liquidity challenges, necessitating the accumulation of liquidity for each new chain they integrate with.
Stargate, on the other hand, maintains a shared liquidity pool across different chains, ensuring sufficient liquidity. The key to achieving this balance is its innovative Delta algorithm, forming the foundation of their trilemma resolution strategy. This algorithm places Stargate in a leading position relative to its competitors, facilitating smooth integration into diverse networks, thus enhancing scalability and operational efficiency.
Token STG
Stargate Finance employs a multi-token strategy within its network. The primary utility token of the network is STG, which is essential for paying transaction fees and facilitating smart contract executions. STG also serves as a medium for international value transfer in a permissionless fashion and acts as a rewards token.
aSTG: Coinciding with the launch of Stargate Finance was the special distribution of aSTG tokens. These tokens were allocated to participants who acquired STG during the Stargate Launch Auction.
veSTG: Participation in the governance of the Stargate Finance network is facilitated through veSTG tokens. These tokens are awarded to individuals who stake their holdings within the network. The significance of veSTG lies in its voting power; the greater the number of veSTG tokens held, the more influential the vote. It’s noteworthy that these tokens can be converted on exchanges as required, offering flexibility in their use.
What Yields can I Earn on Stargate?
Stargate Finance provides multiple avenues for users to generate yield, encompassing transaction fees, liquidity provision, and rebalancing fees. For every transfer involving non-STG assets, a fee of 0.06% is levied. This fee is allocated among the protocol treasury, veSTG holders, and liquidity providers. Those who provide liquidity can earn an annual percentage yield (APY) ranging from 5 to 10%, paid out in STG emissions. Additionally, by locking STG tokens, users can obtain veSTG, the governance token. This allows them to engage in decentralized autonomous organization (DAO) governance and benefit from transaction fees.
Rebalancing fees play a crucial role in maintaining equilibrium across pools as users deposit and withdraw funds. Fees are charged to users whose actions diverge from the target balance, and these fees serve as incentives for others who aid in rebalancing the pool. In certain scenarios, the flow of treasury fees may also be directed to encourage rebalancing, particularly when a pool’s balance significantly deviates from its intended target.
