Flashstake allows users to receive upfront yield on deposited assets instantly with a fixed rate over a set duration.
The protocol is currently live on Ethereum, Arbitrum and Optimism and offers a variety of strategies on assets such as rETH.
Flashstake claims that users can receive upfront yield on rETH without many drawbacks seen in other protocols. For example:
- User funds cannot get liquidated.
- User funds are always 100% collateralized.
- Users can lock for any amount of time down to the minute.Users know precisely when their principal will unlock.
- Users can unlock their principal at any time by repaying a portion of their upfront yield.
- Outside of an unforeseen exploit, it is technically impossible for users to lose their principal.
This means that Flashstake is extremely useful if you want to lock in a fixed rate interest for a specific amount of time and getting paid upfront. In addition, you can also use the upfront yield to hedge or leverage without losing your principal.
There are 3 simple steps to claim upfront yield for rETH:
- Choose the amount of rETH/ETH/wETH tokens you want to stake
- Choose the duration of time to stake
- Claim upfront yield instantly
Behind the scenes, Flashstake stores the capital into a time vault strategy (TVS) and mints a time-based derivative (TBD).
Time vault strategies are custom smart contracts that help people buy, sell, and earn TBDs, and also handles the complex logic to derive the yield. For example, a Lido TVS strategy could be used to generate upfront yield on stETH while a Aave v2 Time Vault strategy could be used to generate upfront yield on USDC.
Currently, Flashstake supports a variety of Time Vaults from Aave, Lido, GMX and Rocket Pool. To incentivize creation and protocol activity, Time Vault creators can take a fee anytime someone uses their Time Vault Strategy.
On the other hand, time-based derivatives represent the time value of money for any digital asset. When you stake into a time vault strategy, time-based derivative ERC-20 tokens are minted.
They represent the yield pool – a person holding 50% of the TBD supply for the specific yield pool can redeem 50% of the yield in the corresponding time vault strategy.
The two concepts above work hand-in-hand to help users generate upfront yield, while the protocol takes a small cut of between 0% to 20% (known as a time fee, which is currently set at 5%) for providing the service.
The time fee goes into the Flash Capacitor, which is the protocol’s value capture mechanism.
The only way to remove Time Fees from the Flash Capacitor is by depositing FLASH tokens, which is then sent to the treasury to further reduce the circulating supply.
Risks of Flashstake
Flashstake is audited by Peckshield and Openkertify / Secure3 with bug bounties underway.
There are no admin functionality to control users’ principal or funds at any time except a function to adjust the percentage fee taken each time TBDs have been minted and the address they are sent to.
However, these do not completely erase the risks and users should always exercise caution when dealing with experimental technology.