🧱Protocol Architecture

Overview

The Quicksilver protocol is a sovereign blockchain (zone) built with the Cosmos SDK. It introduces custom modules that enable liquid staking functionality within the Cosmos ecosystem, addressing the inherent capital inefficiency of Proof-of-Stake (PoS) networks. By offering a tokenized representation of a delegator’s stake, Quicksilver allows users to maintain staking rewards while retaining liquidity in the form of qAssets.

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How the Quicksilver Protocol Works

Increasing Capital Efficiency

• Delegate on Behalf of Users: Quicksilver delegates tokens to validators on remote chains (e.g., Cosmos Hub, Osmosis) for users who choose to stake via Quicksilver.

• Mint qAssets: In return, the protocol mints a tokenized representation of the user’s delegated stake, called a qAsset. For instance, if the staked asset is ATOM, the corresponding qAsset would be qATOM.

Because qAssets are liquid and fungible, they can be transferred or traded via Inter-Blockchain Communication (IBC) to other chains and applications. This liquidity is what enables delegators to earn both staking rewards and DeFi yields without sacrificing one for the other.

Value Proposition of qAssets

The value of each qAsset reflects:

1. The underlying bonded asset (e.g., ATOM, OSMO),

2. Accumulated staking rewards since minting, minus any slashing penalties, and

3. A redemption rate that increases over time, aligning with additional rewards.

As network risk remains relatively constant, qAssets are expected to appreciate in price against their underlying asset over time, since they incorporate the accumulating staking rewards.

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Architecture & Functionality

The Quicksilver architecture utilizes Cosmos SDK modules and Interchain Accounts (ICA) to manage staking on remote chains securely and transparently.

Interchain Staking Module

1. Deposit Account

   • Each onboarded chain (e.g., Cosmos Hub) has a deposit account on Quicksilver.

   • When a user transfers their native tokens from the remote chain X to Quicksilver, those tokens land in this deposit account.

2. Delegation Account

   • The delegation account holds delegation shares corresponding to the user’s stake on chain X.

   • These delegation shares represent the staked position and capture the proportional ownership of the original assets plus any rewards accrued.

Steps in the Staking Flow

1. Transfer & Mint

   • The user sends native tokens (e.g., ATOM) from chain X to the Quicksilver deposit account via IBC.

   • Quicksilver mints qAssets (e.g., qATOM) and credits them to the user’s address on the Quicksilver chain, reflecting a staked position.

2. Redeem for Delegation

   • The delegation shares move from the deposit account into the delegation account, effectively converting them into a natively delegated position on chain X.

   • From this point, Quicksilver collects and compounds any staking rewards associated with these shares.

3. Reward Accrual & Restaking

   • At the end of each Epoch (set to 3 days), Quicksilver calculates the rewards accrued in the delegation account.

   • These rewards are restaked to increase the total amount of tokens securing the network, thereby boosting future rewards.

   • The redemption rate (Asset : qAsset) is updated to account for the newly staked rewards, raising the value of each qAsset.

4. Rebalancing

   • At each epoch boundary, the Quicksilver protocol rebalances delegation shares to align with delegators’ preferences— for example, adhering to certain validator weightings or allocation strategies.

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Redemption Process

When users wish to redeem their qAssets for the underlying tokens, the protocol enforces a sequence to ensure proper unbonding and staking rules:

1. Redemption Request

   • The user sends a MsgRequestRedemption transaction on the Quicksilver chain, specifying how many qAssets they want to redeem.

   • Those qAssets become locked, and an unbonding record is created to track the corresponding native assets on chain X.

2. Unbonding

   • At the end of the current Epoch, Quicksilver aggregates redemption requests and submits them to the remote chain (chain X).

   • The protocol initiates the unbonding period on chain X (e.g., 14–28 days for some networks).

3. Final Settlement

   • Once unbonding completes on chain X, the previously staked tokens become liquid again.

   • Quicksilver burns the locked qAssets and transfers the unbonded native tokens back to the user’s account on chain X.

This approach respects the underlying chain’s unbonding rules while giving qAsset holders a clear path to reclaiming their staked tokens.

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Key Benefits & Highlights

1. Capital Efficiency

   • Delegators earn staking rewards while maintaining liquidity for DeFi activities, maximizing the utility of their capital.

2. Security Maintenance

   • By encouraging more users to stake (through liquid staking), PoS blockchains can maintain or increase their bonded ratio, bolstering security.

3. IBC Compatibility

   • qAssets can be freely transferred across different Cosmos IBC-enabled chains, unlocking broader use cases in lending, DEXes/AMMs, yield aggregators, and more.

4. Automated Rewards & Rebalancing

   • Quicksilver automatically redeems and restakes rewards each epoch, compounding returns for delegators over time.

   • The protocol rebalances delegations to ensure they conform to user preferences or governance mandates.

5. Transparent & Modular

   • Built on the Cosmos SDK, Quicksilver leverages established, modular components like Interchain Accounts for secure multi-chain staking operations.

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Conclusion

The Quicksilver protocol leverages the Cosmos SDK’s modularity and the power of IBC to deliver a robust liquid staking experience. By issuing qAssets for delegated positions, it frees users from the traditional lock-up of staked tokens, increasing overall capital efficiency while preserving (and even boosting) network security.

Key Takeaway: Quicksilver’s architecture not only enables continuous compounding of staking rewards but also opens up new realms of DeFi possibilities for liquid staking tokens. As the Cosmos ecosystem grows and interconnectivity strengthens, Quicksilver stands at the forefront of advancing capital efficiency, stakeholder flexibility, and chain security in the Interchain.

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Further Resources

• Cosmos SDK – Learn more about the framework for building sovereign blockchains.

• Interchain Accounts Module – Technical details on how accounts are controlled across multiple chains using IBC.

• Staking & Unbonding – Understand the fundamental mechanics of delegation, rewards, and slashing.