Staking

On RWAOne, all liquidity for RWAOne products is created by staking. Staking is an integral part of the system and provides deep liquidity by locking collateral and maintaining a target collateralization ratio (c-ratio), which powers all of the products within the RWAOne protocol.

When users stake $RWAX and mint rUSD, they take on debt reflecting the amount of rUSD that must be burned to unstake their $RWAX. This debt, denominated in rUSD, increases and decreases in accordance with the supply of Synths and their exchange rates.

For example, if 100% of the Synths in the system were synthetic Bitcoin (rBTC), which halved in price, the debt in the system would halve, and each staker’s debt would also halve. This means in another scenario, where only half the Synths across the system were rBTC, and BTC rises 50%, the system’s total debt—and each staker’s debt—would increase by 25%.

Stakers adjust their c-ratio by minting Synths if their ratio is above the target c-ratio or burning Synths if their ratio is below the target c-ratio. Maintaining the target c-ratio ensures the RWAOne protocol is backed by sufficient collateral to absorb large price shocks.