Staked FIL(stFIL) is a cryptocurrency token designed to represent "staked" or depositing tokens as collateral to support the Filecoin storage network. The token is designed on the decentralized finance protocol STFIL.
It is designed as a liquidity token, where you can deposit FIL into the smart contract of STFIL on the blockchain and receive an equivalent amount of stFIL, which can be traded, exchanged, borrowed against, or used for any other liquidity purposes.
The way STFIL is architected makes stFIL a fantastic piece of DeFi "Lego", letting you use it as you normally would use your FIL. As more storage providers join the protocol, your stFIL balance will increase daily.
As the Filecoin ecosystem continues to improve, you can use stFIL to provide liquidity in the FIL/stFIL pool created by AMMs (automated market makers, e.g. Curve). You can also take out loans on lending protocols (e.g. Aave) using stFIL as collateral. In the future, more integrations will come with more use cases for stFIL.
The STFIL protocol supports exchanging stFIL for FIL at any time, or exchanging your stFIL for FIL through DEXs.
You can check your stFIL balance on Filscan. Interest is calculated by the second and distributed directly by continuously increasing your wallet balance. No transactions took place as a way of preventing daily gas bills.
For Example: If you staked 10,000 FIL, you will immediately receive 10,000 stFIL, and over time, the amount of stFIL in your wallet will continue to increase. When you unstake and have 11,000 stFIL, you will be able to receive 11,000 FIL.
The earnings come from the Filecoin network as a result of borrowing FIL from storage providers as collateral. Part of the Filecoin block rewards from the network is allocated as your income.
Your earnings APY (Annual Percentage Yield) is calculated based on the following formula: storage provider lending rate * capital utilization rate * (1 - 10%), where 10% represents the treasury income used for community governance.
For example: Assuming the current annualized yield and the value of FIL, storage providers consider a borrowing rate of 20% to be satisfactory. Therefore, your estimated earnings APY ≈ 20% * Optimal Utilization Rate(80%) * (1 - 10%) = 14.4%
The above example is just a simple analysis and is not intended as investment advice.
This is because the protocol is designed with an interest rate model that is determined by market supply and demand. The Optimal Utilization Rate controls the availability of FIL in the Staking Pool, making it difficult for all of it to be borrowed, thus ensuring liquidity. As long as there is available liquidity in the Staking Pool, you can successfully unstake without any time restrictions.
However, it should be acknowledged that there may still be instances where the inability to unstake occurs due to redemption pressure. In such cases, one would need to wait for new liquidity to enter. The higher Interest Rate will attract new funds for participation in staking and encourage capable storage providers to repay early. As long as users maintain confidence in Filecoin, redemption pressure will only be temporary.
The essence of generating earnings lies in mining, and the protocol cannot alter the mining and pledging rules of Filecoin. Liquidity can only be obtained through the interest rate model.
Because the protocol always ensures a 1:1 ratio between FIL and stFIL, you don't need to worry about losing your assets. In this situation, it is equivalent to receiving all the earnings of the storage provider (generated from borrowing FIL), resulting in a very high rate of return.
In such a scenario, you can convert stFIL back to FIL through the following methods:
- 1.Wait for new funds to participate in staking or wait for storage providers to repay and then unstake your FIL.
- 2.Exchange your stFIL for FIL through a decentralized exchange (DEX), but typically, there may be a discount when exchanging in the secondary market.