Intro
The cryptocurrency space has been a source of passive income for many investors around the world for many years. In 2023, there are a huge number of investment strategies with varying levels of risk and involvement, allowing both beginners and experienced crypto enthusiasts to profit from their crypto assets.
The most popular ways to generate passive income in the DeFi space are staking, farming, and liquidity pool provision.
With the growing popularity of cryptocurrency, more and more investment opportunities and projects are appearing that allow users to invest and earn passive income. One of the newcomers in the crypto world that has huge potential for future development is the Stargate protocol. Since its creation in 2022, it has already established a strong foothold in the market and offers users a large number of investment opportunities. In today's review from Notum, we'll take a closer look at the Stargate protocol, and how it works, as well as pay attention to its investment strategies and distinctive features. As cryptocurrency as an investment option continues to grow and develop, Stargate Finance will likely also offer innovative investment solutions. This will allow users with different levels of knowledge to use the protocol, earn rewards, and contribute to the development of the DeFi world.
Stargate Protocol: The Essentials
- TVL: $353,520,000
- Risk Level: Low-Medium
- Blockchains: Ethereum, BNB Chain, Polygon, Avalanche, Fantom, Optimism, Arbitrum, Metis, Base, Linea, Kava, Scroll
- Foundation Date: 2022
Stargate is an innovative liquidity protocol that underlies Omnichain DeFi. Stargate is built on LayerZero which allows you to make native asset transfers between different blockchain networks. @kate s can we add any examples of that?
Despite its short history of existence since 2022, Stargate already has a total value locked of more than 353$ million.
Because Stargate is a fully composable cross-chain bridge protocol, it solves many existing problems. The disadvantage of most existing bridges is that they are not capable of transferring native assets from one chain to another, so they require wrapped tokens. It is the intermediate tokens that complete the connection process, but this process isn’t the most efficient and also complicates the user experience.
“Stargate is designed specifically to remove the need for wrapped tokens and lets users send native tokens directly to non-native chains.” – Consensys.io
The protocol has achieved recognition and popularity due to its instant guaranteed finality as Stargate Finance operates using unified liquidity pools shared between chains. Thus, the main task when creating the protocol was to make cross-chain bridging a simple, unified, and convenient process.
The Stargate Bridge allows users to seamlessly transfer liquidity between chains in a variety of ways and send native assets without the need to use intermediate tokens.
When developing and designing bridges, most developers are faced with the so-called Bridging Trilemma, the solution of instantly guaranteed finality, unified liquidity, and native token transfers, which is quite difficult to achieve. To solve the trilemma, Stargate Finance has developed a new cross-chain bridge mechanism and balancing algorithm. Its combination provides both direct native token transfers and cross-chain liquidity. The protocol's innovations eliminate the need for wrapped tokens and operate without compromising composability and interoperability.
Source: Stargate Finance
Thus, thanks to the new mechanism, and algorithm, as well as LayerZero's infrastructure, the Stargate protocol bridges native assets, maintains unified liquidity, and provides instant guaranteed finality.
Why Invest in Stargate?
Despite the fact that Stargate has been on the market for a relatively short time, it already has a number of significant advantages that allow it to compete with more experienced and proven protocols. The main ones are:
- Various investment opportunities. Stargate crypto protocol provides users with not only asset transfers with instant guaranteed finality but also several options to receive passive income from their crypto assets. The protocol includes investment strategies such as staking, farming, and liquidity pool provision, each of which allows users to receive relatively high rewards.
- Simplicity and user-friendly interface. The protocol has a fairly simple and convenient website that allows not only experienced users but also beginners the opportunity to invest and receive rewards. At the top of the main page of the site, the user can see all the features offered by the protocol and select the one they need.
- Compatibility with various blockchains. Currently, Stargate Protocol works with a wide range of blockchain networks, which include Ethereum, Polygon, Avalanche, BSC, Fantom, Optimism, Arbitrum, and others.
- Governance. Users who hold the $STG governance token have the right to take part in voting and influence decisions regarding the future of the Stargate protocol.
Source: Snapshot
Investment Strategies on Stargate
Stargate Protocol offers three investment strategies, each of which allows the user to receive rewards for providing their assets. Let's take a closer look at each of them:
1. Liquidity Pool Provision
Stargate Finance is a fairly popular protocol for providing assets to liquidity pools in order to receive rewards. The protocol is built on unified liquidity pools, where users can deposit their assets to receive regular passive income. Stargate allows you to deposit tokens such as USDC, USDT, USDD, ETH, DAI, FRAX, sUSD, LUSD, MAI, METIS, WOO, and BUSD into pools.
By choosing this investment strategy, the user can contribute their assets to one of the many Stargate pools, pay attention to the top pools on the main page, and even create their own liquidity pool.
Source: Snapshot
For example, by investing in USDC on Fantom, users can qualify for an APR of 9% to 13%. Usually, the reward depends on the asset, amount, and network chosen.
For providing liquidity on Stargate, users receive LP tokens reflecting their share of the pool. Even though users cannot trade the provided tokens on crypto exchanges, they can either stake or farm their LP tokens for additional rewards.
2. Farming
Farming is another popular investment strategy on Stargate, allowing users to provide assets to earn rewards. Income is provided as APY in the form of new tokens for placing user funds to participate in liquidity pools, borrowing, and lending. Farming on Stargate is a popular strategy as it allows users to gain passive income and relatively high rewards. You can read more about farming and its features here.
Farming rewards on Stargate vary depending on the length of the lock-in period and the amount of assets provided.
Source: Stargate
Stargate protocol also supports USDC, USDT, USDD, ETH, DAI, FRAX, sUSD, LUSD, MAI, METIS, WOO, and BUSD to participate in farming. On average, the protocol offers rewards from 2.5% APY for farming ETH on Linea to 25.61% for farming USDC on Fantom.
“Stargate liquidity providers can farm their LP tokens in exchange for STG rewards.” - Stargate
3. Staking
Staking is an investment strategy that involves contributing your assets for a certain period in a smart contract to participate in the verification of new blocks. If you want to learn more about staking, we suggest you check this article out.
Staking ensures the security and performance of the blockchain. Thus, users not only receive rewards for staking but also contribute to the security of the blockchain.
Stargate offers users the staking of its native cryptocurrency, STG. In order to take part in staking, you need to connect your crypto wallet to the protocol website. Stargate supports wallets such as Metamask, Coinbase, OKX, Taho, and WalletConnect. After connecting the wallet, the user can see his assets available for staking and voting, based on the number of staked assets. At the moment, the protocol has more than 43,412,026 STG locked.
“Lock your STG tokens to receive veSTG, the unit of Stargate governance voting power.” - Stargate
Source: Stargate
How Risky Is Stargate Finance?
At this point, the protocol has several risks that should be taken into account before providing liquidity to Stargate. The main ones are:
- Continuity Risk. Although Stargate has one of the best TVLs compared to other cross-chain protocols, it is currently still unable to compete with market leaders such as AAVE. Also, since the protocol is relatively new, it has never experienced a period of crisis or a strong market decline.
- Counterparty Risk. If the pools cease to be balanced or the stablecoin loses its peg, there is a risk of losing part of the user’s funds. At the moment, counterparty risk for Stargate is rated as medium.
- Sustainability. Although trading commissions themselves are a relatively stable income, they can be quite small. In addition, income is also generated depending on investor deposits, which also affects the level of reward sustainability.
In addition, the protocol may have other risks, for example, liquidity risk for specific pools, yield risk, and scalability risk, which are currently quite low.
Stargate Finance Token ($STG)
- Circulating supply: 204,338,417 STG
- Total supply: 1,000,000,000 STG
- All-time high STG coin price: $4.28
- All-time low STG coin price: $0.1016
Stargate Finance has its own native cryptocurrency $STG with a total supply of 1 billion tokens. $STG crypto is a governance and utility token that users can stake or provide as liquidity on the platform. In addition, Stargate coins are used to participate in the governance of the protocol and influence future decisions. If users stake STG coins, they receive $veSTG, Stargate's voting escrow token, in return. The longer the STG tokens are locked during staking, the more rewards the user will receive. As of November 23, 2023, STG's price is $0.51.
Notum’s Verdict
Stargate Finance is a protocol that, in its short history of existence, has already managed to gain a strong foothold in the market and surpass more experienced DeFi protocols. This fully composable cross-chain bridge protocol solves the famous bridging trilemma and allows native asset transfers between different blockchain networks.
The protocol offers several investment strategies, such as farming, staking, and liquidity pool provision, each of which has its own advantages and brings fairly high rewards. Stargate also supports a large number of blockchains, which allows different users to provide liquidity and receive passive rewards. In addition, the protocol has its own native STG token, which can be used for staking to receive rewards, as well as participating in voting regarding the protocol’s future.
As the popularity of crypto investment strategies is likely to grow, it is expected that Stargate will continue to conquer the market and offer new investment opportunities and innovative solutions.
Follow Us on Socials
Website | DApp | Twitter | Discord | Telegram | Mirror | DeBank
Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.