A new Cosmos-based blockchain called "Tenet" will use liquid staking coins from other networks to secure its transactions, which could allow the new network to inherit the security of older ones, according to a developer announcement on May 3. May.
The network is currently available as a testnet and will release a mainnet version as soon as testing is complete. This comes after liquid staking has recently become the largest decentralized finance (DeFi) protocol category.
Liquid staking protocols like Lido, Rocket Pool, and Ankr allow users to stake their coins with a network of validators and receive rewards without having to run their own nodes. These protocols also provide users with tokens called "liquid staking derivatives" or LSD, redeemable for deposits and underlying rewards.
According to the announcement, Tenet will allow users to "retake" this LSD for additional rewards on its network. And it will provide users with tokens that represent the LSD itself. The team calls these third-order tokens โliquid stake liquid derivatives,โ or LLSDs. DLLs will be usable in decentralized exchanges and lending applications across the entire Tenet network, according to the announcement.
The team expects there to be two main benefits to using LSD instead of a native currency to secure the network. First, it โensures the long-term security of the Tenet chain by leveraging the joint security of each [layer 1] ecosystem it serves. Second, it should "bring additional liquidity and yield opportunities to LSD."
Related: Ethereum EigenLayer 're-staking' protocol launches on testnet
At launch, the protocol is expected to allow for the liquid participation of Ether derivatives (ETH), BNB (bnb), space (ATOM), Solana (SUN) and polygon (MATIC) to go back to betting on Tenet.
The new network is being developed by former Ankr and Blockdaemon executives and is being advised by members of the Lido, Ankr and OpenAI teams.
Liquid stake protocols have been around since 2020 when Lido was first launched. They grew in popularity in 2022 and early 2023 when the Ethereum network was implemented a proof-of-stake move and began allowing betting withdrawals. On May 1, crypto-analytics platform DefiLlama announced that liquid staking had become the top category of DeFi applications when measured by the total value locked.
Some experts have argued that liquid staking may grow in the future as a result of the Ethereum Shanghai upgrade.
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