STFIL Procotol hopes to provide users with a liquid staking protocol that allows flexible stakes and unstakes while receiving rewards from the Filecoin network. Although Filecoin itself has restrictions on the pledge period rules (the pledge period of new sectors must be greater than 180 days), STFIL still hopes to solve the liquidity problem for FIL holders to the greatest extent.
Therefore, how to balance the interests between stakes (stFIL Holders) and borrowers (Stroage Providers) is a difficult and long-term problem. In STFIL’s interest rate model, we must take into account that when the staking pool’s capital utilization rate is low, it can stimulate SP borrowing through a lending rate that is better than the market. At the same time, when liquidity is tight, it is necessary to attract new liquidity through higher-than-market returns and encourage some capable SPs to repay their loans in a timely manner.The ultimate goal is to maintain the interest rate and fund utilization of the Staking Pool at a mutually beneficial and healthy level for both parties.
For Depositors (stFIL Holder), they first focus on whether STFIL has sufficient liquidity, and secondly the rate of return.
For borrowers (Stroage Provider), their first concern is whether they will lose money in extreme circumstances, and secondly the average lending rate.
We know that with the growth of the storage power of the Filecoin network, and the obvious decline in network rewards. This ultimately affects the maximum interest that the SPs is willing to pay.
In order to accommodate the interests of both parties at the same time, STFIL needs a more automated interest rate adjustment mechanism, an interest rate setting that is more in line with the needs of both parties, and more reserve liquidity. To this end, STFIL Protocol will make the following updates.
- Automated interest rate adjustment mechanism:
Adjusted from the previous plan of “updating the interest rate every month based on the average network rewards” to “using an automated script to update the interest rate every day”
- Adjustment of parameters in the interest rate model:
Baseline APY: Network avg APR * 10%
Optimal APY: Network avg APR * 42.5%
APY at reserve ratio: Network avg APR * 60%
Max lending APY: Network avg APR * 70%
- Set “Liquidity Buffer”:
The pool retains 5% of its assets as an “exit reserve”. If the pool starts using the reserve, the storage provider will not be able to borrow from the pool (users can unstake) until the reserve is rebuilt again.