Can you imagine staking your funds and receiving the return instantly?
Well, it is possible, thanks to a concept called flash-staking.
Let’s delve into it.
What it is and how it works
It is a form of staking whereby the benefits of blocking funds in a protocol are received right after depositing them instead of at the end of the blocking period.
The main protocol that offers this is Flashstake.
Users deposit their funds into the protocol and receive future tokens (fWETH, fUSDC…) which they can instantly redeem for tokens such as USDC or WETH.
The amount of ftokens the user receives (their yield) is calculated based on the strategy in which the protocol invests the principal and the block time.
Basically, Flashstake calculates the return that the funds the user has deposited will generate and gives that return to the user in advance.
The minimum lock-in time is one minute. In case the user wants to withdraw the principal before the lockout period ends, then he has to return the corresponding part of the yield he received when depositing the tokens.
For example, if the blockade lasted for 6 months and the user wants to withdraw his principal after 3 months, then he has to return 50% of the yield he received in advance when blocking his funds.
As we can see, it is nothing more than staking but receiving the reward when depositing the funds instead of withdrawing them or during the process.
The usefulness of flash-staking lies in the return you can generate with the yield received in advance during the locking period.
Where does the yield come from?
The upfront performance comes from the performance previously generated by other users.
Flashstake is committed to giving a return that is below the potential return that the strategies can deliver, so that in most cases the return generated is higher than the return received by users, resulting in the cushion or a pool of tokens that allow immediate return to be redeemed.
The immediate yield, therefore, is made possible by the difference between the yield generated by the protocol and the yield that is conservatively offered to the users.
The protocol makes sure that the yield given to users upfront does not exceed what the locked funds can generate over time.
In addition, it always keeps some reserves in the form of its token as a lifeline.
Flashstake, for its part, seeks to incentivize investors not to redeem their ftokens so that they do not have to use funds they use to generate yield by giving the ftokens utility.
Users can use ftokens in other protocols by depositing them to generate a return or using them as collateral to borrow money.
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