Flashstake: Unlocking Yield for LSD | TKX Weekly

4 min readMay 4, 2023

The LSD protocols are primarily aimed at boosting capital efficiency by increasing APY, and this will be the key focus in the first half of 2023 with the Shanghai Upgrade. In addition, we will be exploring Flashstake, a protocol that goes beyond improving capital efficiency and provides a novel way of unlocking liquidity.

Intro

Flashstake allows users to buy, sell, and earn the future value of their money today, providing instant upfront yield at competitive rates. With Flashstake, users can “time travel” with their money by staking a chosen amount of tokens for a selected duration of time, and instantly receive the future value of their money upfront.

How it Works

Flashstake has created a marketplace that connects individuals who need money now with those who are willing to wait for it. This enables the trading of the time value of money.

Flashstake offers two different staking methods:

Traditional Staking: Users deposit their principal into Flashstake, which then invests their funds into a staking pool and helps them earn more returns through protocol strategies.
Flashstake: Users immediately receive a fixed-term return on their investment upon depositing their principal into Flashstake.

Structure

The three primary components of Flashstake are:

Flashstake Protocol (FSP): This facilitates the creation and activity of Time Vault Strategies. FSP is the frontend of machine, which stores the balance, deploy and register Time Vault Strategies (TVS) and mint Time-Based Derivatives (TBDs).
Time Vault Strategies (TVS): These are custom smart contracts where people buy, sell, and earn TBDs, which is the core part of Flashstake.
Time-Based Derivatives (TBDs): These represent the time value of money for any digital asset, which is used to get upfront yield.

Time Vault Strategies (TVS)

The upfront yield in Flashstake comes from multiple methods of “Pools” used by Time Vaults to make upfront yield possible. There are three main pools/strategies:

Yield Pool

When a Time Vault strategy generates yield from its yield source, the yield is redirected to the Yield Pool. To withdraw yield, users have to burn Time-Based Derivatives (TBDs), and the amount of yield they can withdraw is proportional to their ownership of TBDs. The Yield Pool creates a perpetual available yield source, but it takes time to accumulate.

Liquidity Pool

The Liquidity Pool allows individuals to add liquidity to Time-Based Derivatives (TBDs), such as ETH/TBD. When users mint TBDs, the tokens are sold into the Liquidity Pool, and liquidity providers (LPs) provide upfront yield and earn trading and potentially liquidity mining fees. The Liquidity Pool creates liquidity for TBDs, but it must attract LPs.

Boost Pool

The Boost Pool in Flashstake allows anyone to deposit money directly into it, and when a user mints Time-Based Derivatives (TBDs), the tokens are burned to redeem funds from the Boost Pool. This model allows anyone to subsidize the cost to jumpstart a Time Vault, making it easy to start, but the donation is an expense. The available yield is donated by a person or entity, and the yield is claimed by burning TBDs.

Time-Based Derivatives (TBDs)

Time-Based Derivatives represent the time value of money for any digital asset. When people stake into a Time Vault Strategy, Time-Based Tokens are minted, with each individual Time Vault Strategy having a uniquely assigned TBD. TBDs are used to represent the future value of staked assets and can be traded on various decentralized exchanges. TBD is an ERC-20 token, this means 100% of the total TBD supply can be redeemed for 100% of the total yield in the yield pool in a given strategy.

Metrics

Flashstake’s total value locked (TVL) has been around $500k since its launch in November 2022. Its TVL has grown tenfold since 2023, increasing from $270k to almost $3m.

More than 85% of TVL is composed of GLP and stETH. These two graphs indicate a strong demand for DeFi lego protocols with composable products.

Final thoughts

Flashstake is a DeFi project that is entering the market from different angles:

Flashstake could be a great composable layer for any protocols with dynamic yield. If protocols like Lido or GMX integrate Flashstake natively, Flashstake can become infrastructure like Chainlink. Users wouldn’t even know it exists, but it would offer protocol users fixed and upfront yields. For degens, it definitely sounds juicy enough to structure more robust farming strategies. Of course, it would be a huge market, as Flashstake can be combined with the yield-farming market.
Flashstake is also entering the interest rate market. By getting the yield upfront, users can lock in a fixed-rate APR, which is actually a shorting of the yield.
By getting the yield upfront, degens can use the upfront yield as leverage without risking any of their principal.

Reference

https://docs.flashstake.io/
https://dune.com/murathan/flashstake-dashboard
https://defillama.com/protocol/flashstake

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