What Makes Polkastarter Token ($POLS) A Utility Token — Part 1 (Staking)
Polkastarter is a permissionless DEX built for cross-chain token pools and auctions, enabling projects to raise capital in a decentralized and interoperable environment based on Polkadot.
Polkastarter is inspired by Polkadot’s permissionless and cross-chain features, with the vision of enabling projects to raise capital in a secure, immutable, decentralized, and trusted environment.
Polkastarter enables projects to raise funds from a community of professional and retail investors. A strong fundraising and token swap environment only thrives when there is an active and engaged community present that can effectively bootstrap network effects for projects that use Polkastarter to launch.
The future of fund-raising will be decentralized, but it will only scale if it permits interoperable token swaps through a well-governed platform and incentivized community.
The POLS utility token plays a critical role in the Polkastarter ecosystem by being the token for staking and governance. Both of these features are essential to attracting and retaining high quality long-term community members as token holders that share the vision of both Polkastarter and the projects that use our platform to raise funds.
In this series of posts about the use-cases of POLS, we will analyse why the POLS token is necessary and its various utilities in the Polkastarter Ecosystem. Today’s post will focus on Staking POLS.
Generally speaking, staking is a means by which stakers (people who stake) lock up their tokens for a period of time to provide a certain utility to the network, in exchange for staking rewards. POLS staking is no different, and here we will explain the various utilities stakers provide to the Polkastarter Network and what they get in return. This is how Polkastarter token ($POLS) staking works.
Staking for Pool Rewards
Liquidity providers on Polkastarter will become eligible to stake POLS to get a cut of the day’s token pool fees. When token pools on Polkastarter are created, the pool creator has to pay a fixed fee of the total raised amount. A percentage of this fee goes to POLS stakers.
Let’s check an example on our ETH MVP: If a pool creator receives 1000 ETH for his token sale and the fee is fixed at 1%, 10 ETH will be deducted from his purchase. Part of those 10 ETH will be distributed to POLS stakers. the exact percentage that will go to POLS stakers is yet to be determined.
Staking rewards will also be distributed in pre-defined cycles. If a user holds 2% of the total staked POLS during a cycle, that user will get the equivalent of 2% of all the staking rewards for that same period. If during that period Polkastarter generated 1,000 ETH for the staking rewards pool, that user will get 20 ETH.
Important: Polkastarter network users are only eligible for staking after providing liquidity to the Polkastarter pools. Users that create pools get a contributor status that enables them to access staking rewards and other perks. Contributors can lose their staking status if they stop providing liquidity to the network.
Staking for Pool Access
There will always be projects executing token sales with very high demand. This demand often outstrips supply by many times, a situation where purchasers describe as being “X times oversubscribed”. Polkastarter anticipates that there will be many oversubscribed token pools and sales on our platform. So then, what is the fairest way to distribute access to a very scarce asset while benefiting the Polkastarter Ecosystem? Using POLS as the key to access.
For high-demand pools, access can be limited to the top liquidity and network contributors. Password protection and whitelisting are potential features that could provide additional limits. However, to best align the interests of the entire Polkastarter community, the POLS token can be used as a coordinating mechanism. For instance, if community members want access to certain token pools, they must stake POLS tokens. Of course, token pool creators have full autonomy over this process. For projects that use the Polkastarter platform, our goal is to craft diverse token holder communities loyal to the project and invested in its long-term success.
Pool creators can activate POLS staking to limit pool access exclusively to POLS holders. The incentive for this type of behavior from the pool creator is a reduced fee on the total swapped funds.
Staking for Governance
The Polkastarter governance framework aims to build a solid and sustainable protocol for development and usage. POLS holders will be able to vote for ecosystem initiatives, new features development, liquidity rewards distribution specs, and other applications.
POLS holders need to stake POLS in order to be able to vote and to submit proposals. Proposals will be first discussed off-chain on the Polkastarter governance platform. The idea of this pre-voting mechanism is to promote proposal discussion before on-chain submission.
Once the proposal is ready to be submitted, there will be an on-chain vote. Every winning proposal is then reviewed and applied by the Polkastarter development and management team.
Staking is a critical feature of the Polkastarter Ecosystem, and a primary use-case for POLS token. Staking allows:
- Incentives for liquidity provision
- Access to Pool Rewards
- Access to highly oversubscribed token sales
Polkastarter is a permissionless DEX built for cross-chain token pools and auctions, enabling projects to raise capital on a decentralized and interoperable environment based on Polkadot.
With Polkastarter, decentralized projects will be able to raise and exchange capital cheap and fast. Users will be able to participate in a secure and compliant environment and to use assets that go way beyond the current ERC20 standard.