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New Cosmos network to utilize liquid staking tokens from various platforms for security purposes.
A new blockchain based on Cosmos, named “Tenet,” will utilize liquid staking coins from various networks to secure its transactions, potentially enabling the new network to benefit from the security of established ones, as stated in a May 3 announcement from the developers.
The network is presently accessible as a testnet and will introduce a mainnet version once testing concludes. This development follows the recent emergence of liquid staking as the largest category within decentralized finance (DeFi) protocols.
Liquid staking protocols like Lido, Rocket Pool, and Ankr enable users to stake their coins with a network of validators and earn rewards without the necessity of operating their own nodes. These protocols also issue tokens known as “liquid staking derivatives,” or LSDs, which can be redeemed for the underlying deposits and rewards.
As per the announcement, Tenet will permit users to “restake” these LSDs to gain additional rewards on its network. Furthermore, it will provide tokens that represent the LSDs themselves. The team refers to these third-order tokens as “liquid liquid staking derivatives,” or LLSDs. LLSDs will be applicable in lending applications and decentralized exchanges across the Tenet network, according to the announcement.
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The team anticipates two primary advantages of utilizing LSDs instead of a native coin for securing the network. Firstly, it “ensures the long-term security of the Tenet chain by leveraging the joint security of each [layer 1] ecosystem it services.” Secondly, it aims to “bring additional liquidity and yield opportunities to LSDs.”
Related: Ethereum ‘re-staking’ protocol EigenLayer launches on testnet
Upon launch, the protocol is projected to enable the restaking of liquid staking derivatives for Ether (ETH), BNB (BNB), Cosmos (ATOM), Solana (SOL), and Polygon (MATIC) on Tenet.
The new network is being developed by former executives from Ankr and Blockdaemon, with guidance from members of the Lido, Ankr, and OpenAI teams.
Liquid staking protocols have been in existence since 2020, when Lido was initially launched. Their popularity surged in 2022 and early 2023 as the Ethereum network transitioned to proof-of-stake and began permitting staking withdrawals. On May 1, crypto analytics platform DefiLlama reported that liquid staking had become the leading category of DeFi applications based on total value locked.
Some analysts have suggested that liquid staking may expand in the future due to the Ethereum Shanghai upgrade.
