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A new Cosmos-based blockchain called “Tenet” will use liquid coins from other networks to secure its transactions, potentially allowing the new network to inherit the security of the old ones, according to a May 3 announcement from the developers.
The network is currently available as a testnet and will launch a mainnet version once testing is complete. This comes after liquid staking recently became the largest category in the decentralized finance (DeFi) protocol.
Liquid staking protocols such as Lido, Rocket Pool and Ankr allow users to stake their coins on a network of validators and earn rewards without having to run their own nodes. These protocols also provide users with tokens called “liquid staking derivatives” or LSD, which can be exchanged for the underlying deposits and rewards.
According to the announcement, Tenet will allow users to “rearrange” these LSDs to earn additional rewards on their network. And it will provide users with tokens that represent the LSDs themselves. The team refers to these third-tier tokens as “Liquid Liquid Derivatives,” or LLSDs. The announcement states that LLSD can be used in lending applications and decentralized exchanges throughout the Tenet network.
The team expects that using LSD instead of a native coin to secure the network will provide two main benefits. First, it “ensures the long-term security of the Tenet chain by leveraging the collaborative security of each ecosystem [уровня 1]which he serves. Secondly, it should “bring additional liquidity and opportunities for LSD”.
Related: Ethereum EigenLayer Restaking Protocol Launches on Testnet
At launch, the protocol is expected to allow Ether (ETH), BNB (BNB), Cosmos (ATOM), Solana (SOL), and Polygon (MATIC) derivatives to be relisted on Tenet.
The new network is being developed by former Ankr and Blockdaemon executives and is being consulted by members of the Lido, Ankr and OpenAI teams.
Liquid staking protocols have been around since 2020 when Lido was first launched. Their popularity rose in 2022 and early 2023 when the Ethereum network moved to proof of stake and began allowing withdrawals from staking. On May 1, cryptocurrency analytics platform DefiLlama announced that liquid staking has become the top category of DeFi applications when measured by total value locked.
Some experts argue that liquid staking may rise in the future as a result of the Ethereum Shanghai upgrade.