The creation of a liquid derivative on a stake in stUMEE tokens will allow $UMEE holders to access their staked capital for use in DeFi or for trading in the Cosmos ecosystem.

The security and integrity of Umee as a blockchain have been considered since the very beginning of its development. From the high programmability of the protocol to the implementation of the IBC rate cap and minimum gas prices, we take the security of our users’ lending and borrowing activities very seriously. Liquid betting derivatives are the next step in increasing the security and liquidity of our network, and in this post we will explain how we plan to do this with stUMEE.

Understanding Liquid Staking

We explained this in detail in our previous blog, but to understand the concept of liquid staking, it is important to know what staking is. Simply put, it is when a Proof-of-Stake (PoS) blockchain requires its network validators to lock or stake their capital on-chain to participate in all consensus processes. Liquid staking is when these funds remain accessible even in a locked state, and users receive tokenized versions of their staked assets to work with in their stead. In our case, users can use Stride to stake and receive the stUMEE token.

Why are we creating the $stUMEE token?

One of the biggest limitations of traditional staking is bonding periods, which can lock stakers out of their funds for anywhere from a few days to a few weeks. This is true for any cryptocurrency, including $UMEE. Creating a liquid staking derivative in the form of stUMEE tokens will allow UMEE holders to access their staked capital for use in DeFi or for trading in the Cosmos ecosystem.

Benefits of UMEE Liquid Staking

Increased blockchain security

Liquid staking generally contributes to further decentralization of the blockchain. The more is staked in the Umee network, the more reliable and secure the entire network becomes.

Increased earning potential

In addition to the ability to participate in consensus, all validators will receive rewards for staking their UMEE token. They will also be able to use their liquid staking derivatives as collateral in lending pools or provide liquidity as LPs on AMMs. Overall, stUMEE gives stakers the opportunity to increase their returns.

Increased liquidity without the associated risk

stUMEE will be a way for users to take advantage of market liquidity without a lot of the risk associated with staking in general. There will be no periods where you don’t have access to your capital. Your liquid staking tokens will essentially represent your assets in DeFi applications.

Conclusion

The success of liquid staking derivatives has not been in vain. It is with a full understanding of the benefits that UMEE holders will receive that we are preparing to launch stUMEE in collaboration with Stride, the leading liquid staking protocol in the space. Stay tuned for details on the stUMEE release soon so you don’t miss out on the opportunity to claim your tokens!

Sincerely,

Umee Team.

About Umee

Umee is a decentralized financial DeFi hub designed for cross-chain interoperability between networks. As a base-layer blockchain, applications and monetary primitives can be built on Umee, allowing access to cross-chain leverage and liquidity. The Umee blockchain facilitates the interoperability of the Tendermint Proof of Stake protocol with the Cosmos ecosystem, the Ethereum network, sidechain architectures, second-layer extensions, and alternative base-layer protocols.

As a Cosmos SDK blockchain, the Umee network will support interoperability with blockchains such as Crypto.com, Binance Chain, Osmosis, Secret Network and 30+ other chains, as well as Ethereum.