IOTA Reveals First Liquid Staking Protocol, Swirl

Liquid staking solution Swirl has launched on the Layer-1 blockchain IOTA mainnet as an independent ecosystem project on the IOTA network, which enables users to stake IOTA and receive stIOTA.

According to the press release, stIOTA tokens provide instant liquidity. While their IOTA is staked, users can trade them, use them as collateral in decentralized finance ( DeFi ), or earn additional rewards. Therefore, the tokens’ value can be used across the IOTA DeFi ecosystem.

Furthermore, Swirl is built on IOTA’s decentralized contract infrastructure. It utilizes Move-based smart contracts to manage staking operations in “a transparent and auditable manner.” It will evolve into a more distributed system as the IOTA staking ecosystem matures, the announcement says.

Additionally, the system’s decentralization will expand over time as well. In the meantime, the team claims, certain components are controlled via MultiSignature Wallets. These include validator management and backend operations.

Moreover, Asphere, the enterprise services division of Web3 developer hub Ankr , has co-engineered Swirl. It will continue assisting in validator node operations.

Asphere has supported blockchain initiatives for major enterprises, including Microsoft, Binance, and Polygon. “Its globally distributed validator network will contribute to a seamless and resilient staking experience for Swirl’s users,” the announcement states.

DeFi Integration and Yield Opportunities

The announcement explains that the Swirl protocol does away with users’ tokens being practically unusable while locked. While staking, users receive stIOTA tokens for their IOTA tokens. They can redeem stIOTA for the staked IOTA or a reward, trade it on secondary markets, or use it as collateral in other DeFi protocols.

This way, the team argues, users “benefit from staking without sacrificing liquidity.” They highlighted some of the benefits of this liquidity, such as immediate access to liquid assets. Furthermore, users can leverage yield farming, arbitrage trading, and lending to maximize ROI.

Staking provides automatic daily rewards with an annual percentage yield (APY) of up to 10%–15%.

Furthermore, users can utilize stIOTA in the IOTA DeFi ecosystem, including on decentralized exchanges ( DEXs ). Strategies such as trading, liquidity mining, and automated yield farming can help users maximize earnings, the team claims.

Also, users can unstake stIOTA at any time via the instant unstake feature. As soon as they burn their stIOTA, they receive IOTA back.

Meanwhile, the integration of the new liquid staking protocol follows IOTA’s upgrade to a Move-based object ledger. Iota announced this upgrade to the much-anticipated Rebased Protocol on 5 May, officially migrating from the Stardust network to the new IOTA network. According to the team, IOTA Rebased was the chain’s “largest, most complex, and most important upgrade to date.”