Why We’re Calling it Staking on Firelight (Not Restaking)

With Firelight’s launch around the corner, this article abstracts away the complexities of the terminology used to describe activity on Firelight, giving you a clearer understanding of how it works.

Nomenclature in the Staking Landscape

Let’s begin by defining terms related to staking and clarifying the key distinctions. We’ll define these in the simplest possible way:

• Staking: The act of deploying your assets to secure a layer of activity.

• Restaking: The act of redeploying your assets to secure an additional layer above the first layer of activity.

• Liquid Staking Token (LST): The token you receive when you stake your assets. It proportionally represents your underlying staked assets in a liquid form. You can trade it, use it in DeFi, or transfer it, while your original assets remain staked.

Understanding these distinctions is critical to understanding where Firelight sits in the larger landscape.

How Staking Works on Firelight

Let’s now dive into how these terms apply to Firelight Protocol and how the actual mechanics work. Stakers deploy assets, starting with FXRP, into a vault. The vault then mints an LST (initially stXRP), which represents your proportional share of staked FXRP in the vault. This token acts as your liquid receipt for the staking position you’ve created.

The issued LST is transferable, enabling holders to use it across Flare Network’s DeFi ecosystem and participate in activities such as swapping, lending, or providing liquidity, or all three, to compound returns.

There will be multiple vaults for ESSes to choose from, each dedicated to securing different high-impact DeFi use cases. Once you choose to unstake and withdraw, a cooldown period will apply to manage liquidity. During this period, your stXRP tokens will be burned, and you will receive your underlying FXRP along with Firelight Points.

On Firelight, staking refers to the act of deploying tokens to secure a layer of activity. This process cannot be classified as restaking, since only a single action is taken: depositing your tokens into a vault. With the terminology clarified and the mechanics explained, you should now have a clearer understanding of how, and why, we’re using the term staking to describe the activity on Firelight.

Stay tuned to our official announcement channels for the latest updates on Firelight’s launch.