TL;DR
Liquid Staking has been all the rage since Ethereum first announced its transition to Proof of Stake. We’ve discussed some of the most significant players in the space like Rocket Pool and Lido DAO as they continue carving out more and more network effects to earn those sweet ETH emissions. Tenet Protocol is one of the newest projects to throw its name in the Liquid Staking hat. Tenet and its Diversified Proof of Stake Network is bringing some brand new solutions to the Fractured Liquidity problem. Tenet deploys a new way to secure a network by using a different approach. Built initially using the Cosmos software stack, Tenet has already upgraded the technology to include Layer Zero. One of the most advanced Omnichain protocols to exist. This collaboration is something that sets Tenet apart from other Liquid Staking Derivatives. With Layer Zero allowing Tenet to connect with any EVM-compatible network, It’ll be interesting to see just how quickly the project is adopted by the community.
Make no mistake about it, Layer Zero is the star of the show when it comes to the functionality of Tenet. Without it, Tenet would be stuck catering to only a few networks.
Liquidity sharding is becoming a real problem as more Ethereum is continually fractured and spread thin across what feels like endless Layer 2 networks. This is just one of the problems Tenet is looking to solve by allowing stakers to remain liquid no matter what network their assets are stored on.
Layer Zero achieves this by launching dedicated endpoints on multiple networks and allowing those beacons to easily interact with each other. Allowing you to access liquidity on any endpoint network without the need for an expensive bridging process. As we get deeper into the development of blockchain technology, cross-chain functionality will be one of the most important features of any protocol.
What is Tenet?
Tenet began its research and development phase in the third quarter of 2022 with the the main focus being capital efficiency. As a Layer 1 network, Tenet looked to do things differently and approach the space, unlike other liquid staking protocols. With so much capital spread across so many chains, the problem only becomes bigger without a clear scaling solution.
Staking rewards in the liquid staking marketplace operate competitively to generate the biggest yields possible for their users. This is more than the original staking emission reward because of the way liquid staking networks leverage their native tokens to offset the additional reward being received by stakers. In the current timeline of crypto, this isn’t seen as a huge issue because there’s not enough demand for these products to raise any major red flags and effectively nuke the underlying project.
To make sure this wouldn’t be the case when developing Tenet, they had the bright idea to create a stablecoin that would allow users to access overcollateralized debt positions while also securing the future of the protocol. Turning Tenet into something of a base layer for all liquid staking tokens.
With the introduction of Tenet’s Liquid Staking Dollar Coin (LSDC) Stablecoin, a multi-token system was created that relies on multiple protocols of Liquidity. Instead of Tenet creating tokens from thin air to prop its incentives up. By doing this Tenet…
Head of Research Jesse is a passionate seeker of truth who enjoys educating others about Bitcoin. As a free thinker and 2nd amendment advocate, Jesse believes each individual has the right to monetary freedom. “The swarm is headed towards us” -Satoshi Nakamoto
