About stFIL

What is Staked FIL(stFIL)?

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.

What can I do with my stFIL?

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.

How do I get stFIL?

stFIL can either be minted directly through the main-site or bought on exchanges.

How do I exchange stFIL for FIL?

The STFIL protocol supports exchanging stFIL for FIL at any time, or exchanging your stFIL for FIL through DEXs.

Where can I see my stFIL rewards?

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.

Where do my earnings come from?

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.

Why can I stake/unstake at any time?

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.

Are my assets safe in the event of redemption pressure?

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.

Why the total supply of stFIL < the total Borrowed during a run?

Because FEVM’s smart contract address accepts ordinary transfers. Some users' operational errors may result in transferring their FIL to the STFIL Staking Pool through ordinary transfers, but not triggering the contract to mint an equivalent amount of stFIL tokens.

Therefore it will appear: total supply of stFIL < total borrowed + STFIL available balance. But it will not happen that the total supply of stFIL < total borrowed + STFIL available balance.

What is the Liquidity Reserve Ratio?

In order to ensure that the protocol has sufficient FIL as liquidity to meet users' unstake needs, when the protocol's utilization rate exceeds 95% (Liquidity Reserve Ratio: 5%). The protocol will suspend borrowing services, and the remaining funds will be given priority to users to unstake.

The Liquidity Reserve Ratio is an adjustable parameter. It will be adjusted by the governance according to market demand.

How to ensure the security of loaned FIL?

Currently, STFIL only opens lending services to Storage Providers, which means that SPs need to mortgage miner nodes to qualify for loans. The smart contract will dynamically set different borrowing leverage based on the assets collateralizing the miner and the storage provider's borrowing purpose. The penalty caused by the miner's poor maintenance will be fully borne by the storage provider; when the miner's debt ratio exceeds the liquidation threshold, the protocol will terminate the miner node's sector to force the debt to be repaid.

When the liquidation threshold is triggered, the remaining FIL after the node's sector is terminated is enough to repay the debt, so users do not need to worry about the safety of the lent FIL.

Is the loan 「under-collateralized」 or 「over-collateralized」?

Usually, the FIL obtained by a storage provider by mortgaging node assets can be 「withdrawn」 or 「 as collateral for new sectors」.

Usually, the FIL obtained by a storage provider by mortgaging node assets can be "withdrawn" or "continued as collateral for new sectors."

  1. When selecting "Withdraw": This is similar to a regular mortgage loan. Storage providers can only withdraw up to 50% of the total assets of the mortgaged miner (leverage: 1.5x).

  2. When chosen as collateral for a new sector: the SP can obtain a FIL loan of up to 200% of the node's assets (leverage: 3.0x). Although this seems to be 'under-collateralized', since the authority of the miner node is still within the protocol, once the SP does something evil, or the miner node is punished for a long time, the protocol has the right to reach the liquidation valve in the proportion of miner debt. After the value is reached, all/part of the miner's sectors will be terminated and the debt will be repaid.

Therefore, the assets pledged by the storage provider must be sufficient to cover losses caused by unexpected events. Any proportion of borrowing leverage currently provided by the protocol is "over-collateralized" for the storage provider.

About wstFIL

What is wstFIL?

wstFIL (wrapped stFIL) is a non-rebasing version of stFIL, where the price of wstFIL is denominated in the changing value of stFIL. The balance of wstFIL can only be altered through transfers, minting, and burning. At any given time, anyone holding wstFIL can exchange any amount of it for stFIL at a fixed rate, and vice versa. Typically, the exchange rate is updated when stFIL undergoes a rebase.

How can I get wstFIL?

wstFIL can either be minted directly through the main-site or bought on exchanges.

How can I use wstFIL?

wstFIL is useful across L2 and other DeFi protocols, which are based on constant balance tokens.

Do I get my staking rewards if I wrap stFIL to wstFIL?

Yes, wrapped stFIL gets staking rewards at the same rate as regular stFIL. When you keep your stFIL in a wrapper you cannot see your daily staking rewards. However, when you unwrap your wstFIL your new stFIL balance will have increased relative to pre-wrapped amount to reflect your received rewards.

Do I need to claim my staking rewards if I wrap stFIL to wstFIL?

No, staking rewards accrue to wstFIL automatically.

How could I unwrap wstFIL back to stFIL?

You can use the main-site to unwrap your wstFIL tokens.

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