Quicksilver is a protocol in the Cosmos ecosystem that provides interchain liquid staking through a permissionless and sovereign blockchain. The network leverages the interchain communication provided by the IBC protocol to seamlessly onboard new zones, accounting for naturally enhanced security, decentralization as a core value and limitless scalability by design.
Addressing the illiquidity issue
Securing and protecting the network through staking comes with a trade off—locked up tokens. Whenever users stake their assets to a validator in a protocol, they’re contributing to the network’s security and earning the right to participate in its development; and though the situation reflects a net positive, it doesn’t translate to an optimized management of capital because of the great amount of locked liquidity delegators are left with.
Illiquid tokens prevent users from further interacting in the network and leveraging new opportunities through DeFi protocols, such as using said assets as collateral or providing them as liquidity to a specific token pool. That might lead users to seek better returns and utilize their tokens’ value in another way by unbonding their tokens—which decreases network security and hurts the protocol in the long run.
Quicksilver aims to maximize liquidity while simultaneously contributing to the network’s security and decentralization, implementing liquid staking modules across the Cosmos ecosystem and possibly other chains.
Why use Quicksilver?
Quicksilver provides users better capital management by enabling them to liquid stake their assets through the protocol, and thus contributing to the network’s stability and decentralization while still being able to transfer, trade and overall utilize their staked tokens in any other way that might bring them returns. As such, Quicksilver will also contribute to the DeFi landscape by allowing users to interact with them in previously blocked ways.
Use Case
The main use case on Quicksilver is primarily to give back to delegators the liquidity over their staked assets, without unbonding their tokens or forfeiting their governance rights. The goal is to allow delegators to freely move the liquidity gained from staked assets on any onboarded zone by the Quicksilver protocol—effectively enabling them to maximize their capital.
When a network is onboarded as a zone on Quicksilver—such as Osmosis or Juno, the protocol will be able to issue liquid stakers a qAsset voucher that represents that very same position. A qAsset reflects the user’s claim to their original native assets, allowing them to reclaim liquidity initially locked up by the protocol traditional staking mechanism and to use it however they choose to—collateral, liquidity, trading, etc.
Quicksilver also incentivizes liquid stakers to participate and, more importantly, to make positive choices on the network by rewarding them with a portion of QCK inflation emissions—in addition to staking rewards, should they choose to stake their QCK tokens.
The QCK Token
QCK is Quicksilver’s native token, and it has three primary roles:
- Securing the network through staking
- Paying transaction fees
- On-chain governance
Additionally, the token also has the (sweet) function of accruing Staking Rewards fees.
Token supply at genesis will be 200 million tokens and is being distributed as follows:
Inflation is set to 65% during the first year and will decrease by 25% every year until the token reaches its maximum lifetime supply of 1 billion tokens.
True to one of its core values, Quicksilver will conduct on-chain airdrops for each new onboarded zone to facilitate the decentralization of the protocol as well as the adoption of new users, truly entrusting the protocol to the hands of the community and removing high entry barriers. This represents an incentive allocation of over 50% from the total genesis supply.
Cosmos Hub, Juno and Osmosis will be the three zones onboarded at genesis and eligible stakers on any of these chains will receive the first Quicksilver airdrop. Stay tuned to know more about Quicksilver’s airdrops soon.
We’re currently working on a dedicated post about QCK tokenomics in which we’ll explore the economics more in depth and will soon update this article to redirect you there.
Network Economics
Quicksilver’s liquid staking functions through custom modules that can be gradually added. Upon onboarding a new zone—another proof-of-stake chain, Quicksilver can issue a qAsset token to represent the staked position of the chain’s native token. Meaning, users are able to start liquid staking without unbonding their original assets.
By using the Interchain Accounts application, Quicksilver becomes the recipient of the rewards pertaining to said delegation. After each epoch, which comprises three days, accrued rewards are restaked and the redemption rate for the Asset:qAsset pair is adjusted to include the new rewards. This means the real value of qAssets is accrued over time through staking rewards.
The risk of permanent loss of value does not apply to qAssets because they reflect the value of rewards accrued on the platform, meaning users will always have a claim to their rewards. This only stops once users decide to exchange their qAssets for their delegations or sell their qAssets at market price—though whoever buys qAssets through a DEX will own from then on the staked position it represents.
Also at the end of each epoch, as an incentive for choosing performant and decentralized validators, users of the protocol (i.e. any qAsset holder) will receive a portion of the QCK token from its inflation emissions.
All QCK stakers are eligible to earn staking rewards fees on an epochly basis (three days); the fee amount is governance-configured and has yet to be determined, but at genesis it will be set under 5%. Given Osmosis, Juno and Cosmos are the three initially onboarded zones, staking rewards fees will be collected in $ATOM, $JUNO and $OSMO, but eventually there should be collected fees from every onboarded chain. This means QCK stakers earn the native assets of all onboarded chains by simply staking QCK.
The QCK token is subject to yearly inflation starting at 65% and dropping by 25% every year until it reaches its maximum supply of 1 billion – both are parameters configurable by governance. The high inflation rate during year one incentivizes protocol usage as well as rewards early adopters.
Newly minted QCK tokens are to be allocated as follow:
- 57.5% as staking rewards to validators and delegators for securing the network.
- 15% to the Incentive Pool for ongoing incentives to new users and liquidity providers
- 25% as participation rewards to users and adopters of the protocol
- 2.5% to the community pool controlled by governance, to fund projects that benefit the ecosystem
When staking QCK, the slashing risks are standard Cosmos chains: 5% slash in the event of double signing and 0.01% slash per downtime plus jailing of the validator.
Governance
Governance and decentralization are two of Quicksilver’s most important core values. Since the protocol’s early conception, the community has always been envisioned as the main stewards of the network and the main factor effectively shaping its development along the lines of decentralization.
As such, Quicksilver is the very first liquid staking protocol to design the “Governance by Proxy” feature, which allows users to keep their voting rights in governance even when liquid staking their assets.
Basically, Quicksilver will be able to mirror the proposals of all native chains, guaranteeing their right to participate in governance. This feature won’t be live at mainnet launch, but according to Quicksilver’s roadmap, it should be deployed shortly after.
Quicksilver & Figment
We strongly believe in the protocol use case as well as the dev team’s notable ingeniousness.
Figment participated in both their testnets as validators—first in the non-incentivized one, Rhapsody, and later on on the incentivized one, Killer Queen.
Once mainnet launches, we’ll be offering liquid staking services as a validator with a 5% commission fee.
Future Developments
Besides the eagerly awaited Governance by Proxy feature, we also expect a lot of fun while waiting for new onboarded zones and the respective airdrops that should come with each one.
Lastly, we might be able to see a gradual increase of liquidity and a scenario change not only for DeFi protocols, but for the Cosmos ecosystem as well, summing up a very positive net we’re all looking forward to being a part of.
