Source: Cycle Capital
Overview:
pSTAKE Finance is a multi-chain liquidity staking project that launched its token in early 2022. Originally, the project provided liquidity staking services on the BSC chain and the Cosmos ecosystem, with a TVL of around $7 million. Recently, it has partnered with the BTC staking project Babylon to launch BTC staking services. Over 90% of the project’s tokens are already in circulation, with a market capitalization of $57 million.
Team and Financing: Strategic investment by Binance Labs in 2022
The founder of pSTAKE Finance has a background in Singapore and graduated from Nanyang Technological University. In November 2021, the project raised $10 million in angel funding from investment institutions such as Galaxy Digital and Coinbase Ventures. The funding round priced the tokens at $0.1, with the institutions receiving 100 million tokens, accounting for 20% of the total supply. In December 2021, the project conducted a public sale on CoinList, raising a total of $10 million at a token price of $0.4, selling 2,500 tokens, which accounted for 5% of the total supply. In May 2022, the project received a strategic investment from Binance Labs in a funding round whose specific investment amount and valuation were not disclosed. From the financing prices, the current secondary market price is close to the seed round financing price and lower than the public sale round price.
Challenges posed by the low market capitalization and high FDV token issuance model have led to Binance launching the Binance Listing Project recruitment plan in May 2024. The plan aims to promote the development of the blockchain ecosystem by strengthening support for small and medium-sized cryptocurrencies with good fundamentals, organic community bases, sustainable business models, and industry responsibility. pSTAKE, as a low market capitalization and high circulation token that has participated in Binance’s bear market investment but has not yet been listed on Binance, has the opportunity to be selected for this program.
Tokenomics: 93.6% of tokens in circulation
The total supply of pSTAKE tokens is 500 million, and as of February 2022, over 93.6% of the tokens have already entered circulation. A portion of the tokens that have not been released yet belong to the team. According to the plan, the team’s tokens will be locked for 18 months and then released linearly over the next 18 months, completing the release by February 2025.
Recent Partnerships: A new narrative for BTC staking
Recently, pSTAKE has expanded its business focus on BTC staking and reached a cooperation agreement with the BTC staking protocol Babylon. This partnership taps into the current new narrative and may bring substantial and long-lasting TVL growth to the project.
Babylon is a Bitcoin staking protocol founded by Professor David Tse from Stanford University. It has received a total of $96 million in investments from top-tier crypto investment institutions, including Paradigm, Hashkey, Binance Labs, Polychain, and IDG. Babylon is similar to the Eigenlayer in Ethereum and is currently in the testnet phase. Once the mainnet is launched, its TVL is expected to grow rapidly.
There will be a series of cooperation agreements around Babylon, and the business scale of these agreements will grow. At the same time, there will be competition between the protocols. Currently, multiple protocols have announced cooperation with Babylon in BTC staking, including BTC layer-2 B2Network, Merlin, ZK-based BTC execution layer Chakra, and AI staking protocol Mind Network.
pSTAKE’s liquidity staking program will provide returns for Bitcoin. Users can deposit BTC into pSTAKE and receive corresponding liquidity staking tokens to participate in other DeFi projects on the chain and earn profits. After Babylon’s mainnet launch, the BTC deposited in pSTAKE will also be staked in the Babylon protocol to earn corresponding returns.
Binance has also provided feedback on pSTAKE’s latest business development direction. Binance Research mentioned this change in their weekly market highlights summary on May 19.
Valuation Comparison:
Below is the valuation situation of Ethereum staking tokens listed on Binance. The dimensions that affect valuation include narrative popularity, business data, liquidity premium (whether listed on Binance), financing valuation, and competition advantages in the industry. pSTAKE’s valuation is not significantly different from the previous institutional financing valuation and is generally undervalued. A brief comparison of valuation related to Ethereum staking tokens is provided as a reference. It should be noted that pSTAKE’s actual TVL is currently very small, and there is a significant difference compared to Ethereum staking projects.
Under different market capitalization assumptions, the price and FDV changes of pSTAKE:
Conclusion:
1. pSTAKE currently has a low market capitalization, and the tokens are almost fully in circulation. After launching in February 2022, it experienced the bear market downturn and thorough washout. The current market price is close to the seed round private sale price and much lower than the public sale round price. It received investment from Binance in 2022.
2. The business has expanded with a new narrative. pSTAKE’s early business focused on liquidity staking on the BSC and Cosmos ecosystems, which were not hot topics. In May 2024, it added BTC staking business and partnered with the BTC staking protocol Babylon. This partnership may bring rapid and sustained business growth.
3. pSTAKE received strategic investment from Binance in 2022. With its low market capitalization, high circulation, new narrative of BTC staking, and Binance’s strategic investment, it has the opportunity to be selected for Binance’s Listing Project recruitment plan.
4. The main risk lies in pSTAKE’s small TVL at the moment, which will mainly depend on Babylon’s development. Babylon is still in the testnet phase, requiring some waiting time. At the same time, there are multiple protocols cooperating with Babylon in BTC staking, and pSTAKE may not have a competitive advantage in the BTC staking race, leading to lower-than-expected business growth.