What is Flashstake Protocol?
The Flashstake Protocol offers a permissionless solution for individuals to earn instant upfront yield through the utilization of various Flashstake Strategies, which leverage the power of underlying protocols like AAVE, Yearn, and Lido.
What is a FlashStake?
The Flashstake Protocol provides a feature called FlashStake which enables users to both stake their principal tokens to mint fTokens and redeem the received fTokens for yield in a single transaction.
A Flashstake provides the simplicity of allowing a user to never interact directly with fTokens. The user can stake a token of their choosing, for any duration they want, and receive upfront yield, while their original staked token now remains locked up for that duration they chose, with no penalty for early withdraw.
The Flashstake Protocol makes it easy for users to earn upfront yield without having to directly deal with fTokens. The user can stake any token for the desired duration and receive immediate rewards, while the original staked principal will be locked for the selected period without any consequences for early withdrawal.
What is the “yield pool” and how does it increase?
The “Yield Pool” is the total available yield earned by a particular Flash Strategy. When users deposit their tokens into the Flashstake Protocol, they are sent to a specific Flash Strategy which redirects them to an underlying protocol, such as AAVE. This results in the earning of yield, or interest, over time, which is accumulated in the strategy’s “yield pool”. It’s important to note that each Flash strategy has its own unique yield pool.
Staked funds always belong to the staker and are never used to pay new users, making the Flashstake Protocol safe from potential bank runs.
Are there benefits to not burning the fToken?
The yield pool of a Flash strategy is represented by fTokens, linked to the performance of the underlying protocol such as AAVE. If the interest rate of the underlying protocol increases, the yield pool will grow at a faster pace, leading to a higher yield rate when fTokens are redeemed.
For example, if the interest rate of the underlying protocol doubles, the yield pool grows at twice the speed and the value of fTokens will increase, while maintaining the same ownership percentage of the yield pool.
This means redeeming fTokens in the future can result in increased yield for the redeemer, when compared to the possible yield redeemable in the past.
The upfront yield rate can fluctuate up or down over time.
How is the APY/APR determined?
The APY/APR is not determined by the Flashstake Protocol, but instead based on the available yield of a given strategy:
When burning fTokens for yield within the “yield pool”
When swapping fTokens via a liquidity pool (open market)
See Protocol Overview.
How does the protocol handle staking time?
The Flashstake Protocol uses block timestamps instead of locking the funds for a specific number of blocks. This means that when you stake for a chosen duration, your funds will become available precisely at the end of that period.
Does using Flash Protocol generate taxable events?
We cannot provide tax or accounting advice. Tax regulations are specific to jurisdiction where you or your company reside. For any legal or tax matters we recommend consulting your own attorney.
What are the risks of using the Flashstake Protocol?
The Flashstake Protocol has been audited by multiple third-party firms as explained within the Security page. however this does not guarantee that there are no bugs. The code has been open-sourced and can be reviewed before use.
It is important to note the Flashstake Protocol has been designed as a marketplace which allows any third-party developers to create their own Flash Strategies. We advise caution when using such strategies since it is possible for a given strategy to have arbitrary logic on how funds are directed.
You can read more about Flash Strategies here.
The Flashstake Protocol will initially be launched with a handful of Flash Strategies. Since these strategies use underlying protocols such as AAVE, Yearn, Curve, etc there is the risk of these underlying protocols having bugs. We have picked underlying protocols we believe are tried, tested and well known within the decentralised finance industry.
There is no risk of the Flashstake Protocol defaulting upon a bank run but it is possible for the underlying protocol (eg AAVE) to be subjected to a bank run. We cannot comment on whether the underlying protocol is susceptible to this scenario.
What are the risks to a user’s staked principal?
This depends on the code of each strategy. The official Flashstake Strategies (as seen on the sidebar) deposit 100% of your tokens into underlying protocols such as AAVE and Lido, and grant you full control of your tokens when it’s time to unstake them. The official strategies do not put your tokens in danger of liquidation or use them for lending, payment to other stakers, or any other risk-prone activities.
Unofficial strategies should be used at your own risk and discretion.