How Does VenomStake Work?
VenomStake is a liquid staking protocol on the Venom blockchain that lets you stake VENOM tokens while receiving a liquid token representing your staked position. With $20M in TVL, it offers standard staking rewards on a relatively new blockchain that launched its mainnet in March 2024. The protocol uses conventional liquid staking mechanics without novel design elements.
TVL
$11M
Sector
Liquid Staking
Risk Grade
C+
Value Grade
D
Core Mechanisms
3.4.2
Liquid staking on Venom blockchain where users delegate VENOM tokens and receive a reward-bearing liquid staking token
Standard reward-bearing LST model adapted for Venom's TVM-based chain. Users delegate to validators through DePools.
3.3.1
Direct delegation to validators through Venom DePools staking infrastructure, users choose which validator to delegate to
Standard delegation model where users select validators. TVL per validator determines reward share.
3.1.1
Pro-rata staking rewards distributed based on delegation amount and duration to Venom validators
Standard proportional reward distribution. Reward rate depends on overall network staking participation.
2.1.2
Percentage-based staking fee taken by VenomStake from staking rewards before distribution to delegators
Standard commission model for liquid staking protocols. Fee structure not prominently documented.
3.2.1
Algorithmic slashing on Venom PoS for validator misbehavior including double-signing and downtime
Standard PoS slashing mechanics. Delegators share slashing risk with their chosen validators.
How the Pieces Interact
Limited DeFi ecosystem on Venom means the liquid staking token has few productive uses, reducing the value proposition of liquid staking versus native staking. Users pay liquid staking fees for composability they cannot effectively use.
On a new chain with limited validator track record, slashing events are harder to predict. Delegators may not have sufficient information to assess validator reliability, increasing unexpected loss risk.
If staking participation on Venom is low, reward rates may be attractively high but unsustainable. As more users stake, yields compress, potentially triggering exits from users who joined for high initial rates.
Protocol fees reduce net yield to delegators. If Venom staking yields are already modest, the additional VenomStake commission could make liquid staking uncompetitive versus direct staking.
What Could Go Wrong
- Venom blockchain launched mainnet in March 2024 with under 2 years of production operation, limiting battle-testing of both the chain and the staking protocol
- Limited documentation for VenomStake itself — staking mechanics and smart contract details are not comprehensively documented publicly
- Small DeFi ecosystem on Venom means limited composability and exit liquidity for liquid staking tokens
- Dependency on Venom chain health — if the L0/L1 chain experiences issues, all staked assets and rewards are at risk
Venom Chain Instability Affecting Staked Assets
ModerateTrigger: Venom blockchain experiences consensus failure, chain halt, or critical bug in its relatively new mainnet
- 1.Venom chain experiences a consensus halt or critical smart contract vulnerability — All transactions including unstaking and liquid staking operations freeze
- 2.VenomStake users cannot redeem their liquid staking tokens or unstake delegated VENOM — Staked assets become illiquid with no exit path until chain resumes operation
- 3.If vulnerability involves state corruption, staking balances or reward calculations may be affected — Users face potential loss of staking rewards or even principal depending on severity
- 4.Confidence in Venom ecosystem declines, validators and developers consider migrating — Network value diminishes, reducing the value of staked VENOM tokens themselves
Risk Profile at a Glance
Overall: C+ (40/100)
Lower score = safer