ADA holders today face the option of either staking their ADA with stake pools or earning interest from DeFi yield farms.
But what if you can do both at the same time? Earn staking rewards from your ADA holdings while also generating yield from DeFi protocols?
Well, we can! And that’s what we are proposing for the next funding round of Catalyst on Cardano, Fund4. With this project, you can double your passive income from your ADA.
This is also the very first Filipino project that is proposed for funding from the Catalyst program of Cardano. If you’d like to see this materialize sooner, you can support the proposal by commenting, starring and giving “kudos” points to the proposal on cardano.ideascale.com (you’ll need to sign up and create an account on the site first):
https://cardano.ideascale.com/a/dtd/Tokenized-ADA-for-Yield-Farming/341574-48088
We hope to make it to the actual voting process and possibly get approved for funding. But even if the proposal won’t be successfully funded this round, that will only be a delay. We are definitely still pushing through with it! 😃
Technical details preview
These tokens are basically tokenized ADA which represent the ADA coins that holders will need to deposit into a dApp or a centralized custodian. In return for the deposited ADA, the user will receive the tokens which are directly convertible back to ADA anytime.
The deposited ADA will then be staked with community stake pools to earn staking rewards. And the corresponding issued tokens can then be used by the holders for yield farming in DeFi applications such as liquidity and lending pools.
The staking rewards earned from the deposited ADA will be paid to the holders of the tokens during the corresponding epoch the staking rewards were earned.
If the tokens are sold or transferred to another wallet/holder, the staking rewards will then also be sent to that new holder of the tokens.
This requires development of a system to track the wallets holding the tokens at any given epoch so that staking rewards can be paid to them accordingly. And a decentralized governance system is also needed to decide on the delegation choices for the deposited ADA in order to avoid possible centralization of a huge amount of stake in the network.
