An overview of staking via the safety module
User safety is one of the key focus areas for Biconomy and keeping in mind the various risks involved in cross-chain transfers, Biconomy is providing coverage through its safety module to protect our users from any future Shortfall event. The safety module gives BICO holders the opportunity to earn a yield on their BICO while contributing to the security of the protocol and providing liquidity.
This safety layer is driven by user deposits into the staking contract. Users who lock BICO/BBPT tokens into a Smart Contract-based staking pool will be incentivized with BICO. It will accept BICO along with the Balancer LP token(BBPT) for the 80% BICO / 20% ETH pool.
To withdraw the BICO/BBPT token, a 21 days cooldown period is required. Rewards will still accrue during the cooldown period and the users will get 3 days to claim their staked tokens after the cooldown period is over. In the event that a user is not able to claim the token in the stipulated time, they will have to initiate the cooldown again. The locked BICO/BBPT will be used as a mitigation tool in case of a Shortfall Event within the Biconomy Ecosystem.
Cooldown and Unlock Window
The main role of the Safety Module is to protect the protocol against unexpected loss of funds from any shortfall events. Apart from the Shortfall Events listed below, further interpretation of a Shortfall Event is subject to Biconomy Governance vote:
- Chain Re-org Risk: Chain reorgs could pose a risk for the users in case of any cross-chain transfers pertaining to re-org blocks
- Smart Contract Risk: Any risk arising due to the smart contract layer
- Validator Network Risk: Any risk arising due to the protocol validator network layer
NOTE: This is not the exhaustive list of shortfall events. As mentioned above, further interpretation of a Shortfall Event is subject to Biconomy Governance vote
In the case of a Shortfall Event, token holder balances can be slashed and used to cover the losses. Slashed tokens may be auctioned in the open market to mitigate the incurred loss.
There are two ways to stake BICO and earn rewards through the staking module:
- Directly Stake BICO in the Staking UI
Stake BICO to earn rewards
- Add liquidity to the Balancer Pool ( 80% BICO/20% ETH liquidity pool) and then stake the BBPT token in the Staking UI
Stake BBPT to earn rewards
BICO/BBPT holders who deposit their tokens into the staking module will get a tokenized position - stkBICO for BICO and stkBBPT for BBPT - that can be withdrawn or transferred as an ERC20 token. The stkBICO & stkBBPT token has the same proposing and voting rights as BICO on Biconomy governance.
The staking aspect of the safety module is inspired by Aave’s Safety Module. We have improvised on the respective smart contracts to make them work for our use case while also ensuring that we can leverage the safety and security provided by them. Our contracts are also audited by Halborn. Access the security report here.