The Quicksilver protocol is a sovereign Cosmos SDK blockchain (or zone). Custom modules add Quicksilver-specific functionality.

How Quicksilver Protocol Works

The Quicksilver Protocol increases capital efficiency by delegating tokens on behalf of users and, in turn, minting a tokenized representation of the user’s delegation, herein referred to as a qAsset. The qAsset takes the form of the onboarded zone’s native asset prefixed with q, for example, qAtom or qOsmo.

qAssets are liquid, fungible, and transferrable via an IBC transaction away from the Quicksilver zone. The underlying value of the qAsset is that of the native bonded asset, plus any staking rewards earned since minting, minus any potential slashing. As such, the pricing of the qAsset is expected to increase in value over time relative to the original bonded asset, as risk remains largely constant and rewards increase over time.

Architecture & Functionality

The primary functionality of Quicksilver is to enable delegators to move delegations on a remote chain X, such that the Quicksilver Protocol controls them and, in return, issues qAsset tokens that represent that position. The qAsset tokens constitute the user’s claim to their original native assets - plus net rewards earned over time - and must be burned at the point of redemption.

The interchainstaking module for each onboarded chain, will generate and control a deposit account and a delegation bucket through the Interchain Accounts IBC module. The purpose of the deposit account is to receive the transfer of liquid native assets.

Upon receipt of a transfer into the deposit account, the corresponding address on the Quicksilver chain will be credited with the appropriate qAsset to the value of the transferred delegation shares.

The delegation shares are then transferred to the delegation bucket and redeemed back into a native delegated position so that the Quicksilver protocol receives the rewards pertaining to said delegation.

At the end of each Epoch (3 days), the delegation bucket will redeem the rewards it has accrued and restake them. At each Epoch boundary, the redemption rate for the Asset:qAsset pair is adjusted to include new rewards.

Additionally, each epoch triggers a rebalance of funds among delegation buckets to ensure that delegators’ wishes are appropriately represented on-chain.

When a request for redemption is made by the user sending a MsgRequestRedemption transaction on-chain, the qAssets are locked, and an unbonding record for the corresponding number of native assets is logged. At the end of the epoch, redemption requests are aggregated and submitted to the remote chain. At the end of the unbonding period, the locked assets are burned and the unbonded native tokens are transferred to delegator accounts on the native chain X.

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