PulseX is the native and most liquid decentralized exchange of the Pulsechain network, both created by Richard Heart, the founder of HEX. It facilitates the exchange of PRC-20 tokens and operates similarly to Uiswap v2 on Ethereum, while the staking model and farming are borrowed from PanCake Swap. The DEX currently has a daily volume of $28 million, and the total value locked is $274 million, which places PulseChain in 10th place amongst all chains for the TVL value. Just one month after launch, Richard Heart decided to make an upgrade and bring PLSX single-sided staking to PulseX to reward users and provide more value to the many tokens traded on the chain.
What is single-sided staking
Single-sided staking is a mechanism that allows users to stake a single type of token in a staking pool and earn rewards.
Uniswap v2 liquidity pools expose the user to impermanent loss, and it may be risky, especially when the pair of tokens aren’t locked in a close trading ratio, which is what happens with newly launched tokens.
This is where single-sided staking is a good option for those who want to earn passive income with zero risk.
Depending on the protocol, single-sided staking is usually a very flexible process, allowing for a large leeway of freedom when it comes to locking periods.
Some protocols even allow locking and withdrawing tokens without any time constraints or penalties, which means that payouts are given out daily.
Other protocols have time constraints that are measured in days, weeks, months, or even years. Some apply penalties for unstaking; others don’t. There may be a progressive rewards system where staking for longer with a larger number of tokens will earn more rewards. And here comes to mind HEX.
The staking pool distributes rewards to participants based on the amount of tokens staked. The rewards are typically distributed proportionally to each participant’s stake in the pool.
Advantages of single sided staking
Compared to traditional staking, where users need to stake a pair of tokens to earn rewards, single sided staking lowers the barrier to entry by simplifying the process with just a single token required for staking instead of dealing with two.
Users do not need to manage two different assets and their ratios in a staking pool.
They can earn rewards even if the tokens are not doing anything, so instead of keeping them in the wallet, the users can put them to work with no risk while maintaining full liquidity in the case of a staking protocol allowing for unstaking.
The staking mechanism is a very good tool for reducing the available total supply of a token, which means that the demand for the token increases, leading to higher prices. The rewards may be traded to gain more PLSX and earn even more rewards. This is usually a process that helps the project by driving the trading volume up increasing its adoption and in consequence also its price performance.
Farming vs PLSX staking
Farming is the process of providing liquidity to DeFi protocols by depositing token pairs into liquidity pools. Users need to provide their tokens to a liquidity pool, and in return, they receive liquidity provider (LP) tokens representing their share of the pool.
These LP tokens can be staked to earn rewards.
On PulseX, users provide token pairs to liquidity pools, and they receive the liquidity provider token. Then they put this token in a farming pool where they earn INC tokens as an additional incentive for liquidity providers. Rewards are distributed to LP token holders as a proportion of the trading fees generated by the liquidity pool and the share ratio of the farming pool.
The key difference between farming on PulseX and single-sided staking is that in farming, the user needs to provide both tokens, while in single-sided staking, only PLSX is required.
Staking PLSX aims to reward token holders, while farming focuses on liquidity provision and earning fees, which incur the risk of impermanent loss. While farming tokens involves risk, INC rewards are a strong factor in driving liquidity into the pools.
PLSX single-sided staking
There aren’t any details on how PulseX single-sided staking will work; however, the interface suggests that users will need to stake the PLSX token, and they will earn rewards in other tokens like, for example, LOAN, PP, BBC, or others.
It will be up to Richard Heart to decide which projects are eligible, and they will probably need to meet some strict eligibility criteria.
Being featured on the PulseX platform will be one of the most potent marketing boosts a project can get.
Being on a platform with over $400 million in volume in the initial phases of the Pulsechain launch, where the entire network converges to trade on the open market, will be an objective per se for many founders.
If this wasn’t clear yet, with this next upgrade, PulseX is going to be the heart of PulseChain and the kickstarter for many projects.