Socean has announced its integration into the Solana ecosystem. The integration comes after Solana’s recent announcement that it will allow stake pools on the blockchain. Socean is an algorithmic stake pool that will allow Solana users to increase their stake diversification on the platform.
Solana is all about diversifying blockchain applications on its permissionless ecosystem. This has encouraged developers to come up with interesting protocols as the race for decentralized financial systems picks pace. Socean is trying to solve Solana’s shortcomings in the staking of the SOL token.
Solana’s Delegating Stake Model
Solana users stake SOL tokens to secure the blockchain and in return earn staking rewards. However, unlike most blockchains, Solana uses a shared-risk shared reward staking model. In this case, SOL holders delegate their tokens to validators who write and process new transactions to the Solana ledger.
So how does Socean come in?
Rather than manually delegating your token to one or two validators, stake pools let SOL holders delegate their tokens to a group of validators. The introduction of stake pools, such as Socean, will promote the decentralization of the delegation process to a large number of validators.
According to Socean’s developers, this algorithmic stake pool aims to tap into the underutilized potential of staked SOL. More so, Socean aims to increase SOL liquidity in the financial market. Socean will;
- Provide a suite of tools that help SOL holders to monitor and manage their delegations for maximum APY and network health. Solana users tend to delegate to only a small handful of prominent validators without considering performance metrics. Socean’s algorithm enables SOL holders to delegate their tokens to the best available validators. This unbiased delegation will increase stake diversification.
- Introduce the SOCN token. The delegators will receive a SOCN once they stake their SOL on Socean. Initially, staking your SOL meant you forego your token’s liquidity for the stake earnings. However, with a stake pool token such as SOCN, you earn the usual stake returns – 7% APY – and still enjoy SOCN liquidity. Even better, SOCN will also allow you to borrow and farm yield.
Joining the Socean Stake Pool
To stake with Socena, you can simply deposit your SOL directly to the stake pool. What’s more, you can exchange your SOL for SOCN token by connecting your staking wallet to the Socean stake pool. However, it’s worth noting, Socean will charge various fees. This includes an ongoing management fee, a one-time deposit fee, and a one-time withdrawal fee.
Socean’s developers believe that SOCN will soon replace SOL use in margin trading and yield farming, among other DeFi use cases in the Solana ecosystem.
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