Superfluid staking: Earn more rewards on Osmosis

March 17, 2022 written by 01NODE

It is the latest innovation on Osmosis, a proof of stake blockchain and decentralized exchange application that enables users to provide liquidity, swap, and access staking (via the Keplr wallet) for tokens from blockchains from across the Cosmos ecosystem and earn more.

This innovation is an exciting step not just for the interchain ecosystem, but also the evolution of PoS, effectively creating the first-ever ‘Proof of Useful Stake,’” explained Sunny Aggarwal, Co-Founder of Osmosis Labs.

Superfluid staking is a method of staking the OSMO tokens that underlie your LP (liquidity provider) position. It can also be thought of as reverse liquid staking. Instead of creating synthetic representations of staked assets (as with regular liquid staking), superfluid staking allows staking tokens already being used in DeFi to be staked.

What do I need to know?

When you provide liquidity in an OSMO liquidity pool like ATOM/OSMO, you provide 50% ATOM and 50% OSMO. When you bond/lock that LP position, you earn fees and liquidity mining incentives for helping to facilitate trading in the pool. Before superfluid staking, that was the end of it. Your OSMO but could not otherwise be re-used. But now, the locked OSMO can be tracked by Osmosis and used to help secure the chain.

What do I stand to gain?

More rewards🤩! Currently the staking reward is generous. It is definitely recommended to stake a good chunk of your assets.

How to get started?

  • You can pre-split your assets 50/50, or you can provide liquidity with just OSMO or just ATOM. (Note: this a UX enhancement that sells half of your single-staking asset behind the scenes. Either way, you end up with a 50/50 position.)
  • After you provide liquidity, you have to bond your assets. Normally, you can bond with a 1-, 7-, or 14-day unbonding period (longer = more rewards). For superfluid, you MUST bond for 14-days. (This is to match the OSMO unstaking period.)
  • You are helping to secure the network, so you have to select your validator.
  • Rewards will be automatically deposited to your Osmosis address, just like regular LP rewards. (Not like regular staking rewards, which must be claimed.)

How long will it take to unbond?

If you use the front-end, these will automatically begin at the same time, so it will take 14 days. If you go through a different front-end or the CLI, you might manage to accidentally unbond without unstaking, in which case, you would have to wait out two consecutive 14-day periods.

Any risks ( I.e Slashing)

Well, it’s relatively rare. In the case of superfluid staking, any slashed funds will be sent to the Osmosis Community Pool. Slashing is another reason to be thoughtful about your validator selection ( 01node is a high quality Validator with a 99.9% uptime , Our existing validator nodes have secured value on several POS networks since their inception such as Terra, Iris, Solana, Cosmos, Near, E-money, IOV, Solana, Skale, Secret Network, Oasis and others).

More information on Osmosis

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