The Liquidity Slicing Protocol for Node Staking (LSP), operating on the decentralized verification network Omniverify Chain, innovatively addresses liquidity issues of DPoS/PoS node staking assets through node slicing technology. This mechanism facilitates the slicing, combination, and transfer of assets, while also supporting their flexible use in DeFi products, effectively overcoming the liquidity limitations of traditional PoS assets. By enabling the division and circulation of assets, the LSP protocol transforms previously fixed node assets into freely tradable ones, providing asset holders with unprecedented flexibility and liquidity.
Recently, LSP’s CEO Michael Rey shared his views on the current state of the staking industry, the challenges it faces, and how LSP is driving ecosystem development through its innovative Node Slicing protocol in an exclusive interview.
A Deep Dive into LSP Protocol by Founder, Michael Rey
Michael Rey holds a Master’s degree in Mathematics from ETH Zurich, with a focus on “Optimal Dynamic Trading Strategies with Risk Limits.” After graduation, he has worked in financial risk management for nearly 20 years in financial hubs such as Singapore, London, Tokyo, and Zurich. Michael has worked at UBS Investment Bank for 16 years, where he held responsibilities for market risk management in various markets, such as Asia macro trading, global CVA/proprietary trading in London, and structured credit/asset-backed/principal finance in Tokyo. He also served at the Government of Singapore Investment Corporation (GIC) and Deloitte. As SVP in GIC, he engaged in quantitative risk research and prototyping, improving the risk measurement methods for a unique wealth fund’s risk profile.During his tenure as the Managing Director in Deloitte responsible for APAC, Michael further developed the financial and regulatory risk practices in Singapore and the broader Southeast Asia region, focusing on providing quantitative risk solutions for the industry.
His global career, especially experiencing the earthquake in Japan, sparked his passion for finding better ways to manage and transfer disaster risks effectively. He founded an innovative decentralized risk transfer company, Cerchia, which is built on the Avalanche C-Chain, has also received $1.4 million in seed round funding from a number of institutions, including Germany’s leading venture capital firm High-Tech Gründerfonds. Cerchia also received a grant from Switzerland’s technology innovation agency Innosuisse to to revolutionize risk transfer by leveraging blockchain and distributed ledger technology. Throughout this process, Michael explored the potential and possibilities of decentralized finance (DeFi), and developed a deep expertise in applying the new technologies to solve challenges in traditional finance (TradFi).
When discussing the current state of the staking industry, Michael noted that while staking is the cornerstone of PoS blockchain networks, current liquidity management solutions are far from ideal. “Projects like Lido and RockX have made some progress in providing liquidity,” Michael explained, “but their restaking services are often limited to the ETH ecosystem. Additionally, they either compromise on decentralization or involve complex operational processes, which can be obstacles to wider adoption.”
Core Technology and Market Applications of the LSP Protocol
LSP is directly addressing these issues with its unique Node Slicing protocol, achieving liquidity without sacrificing the functionality of staked assets. “The LSP protocol uses innovative Node Slicing technology to enable dynamic management and secondary market trading capabilities for DPoS/PoS node assets,” Michael explained. He further added, “Professional investors are drawn to the fundamental value and rewards of staking assets and often require large ticket sizes. LSP is a pioneer in validator node brokerage, allowing professional investors to book staking assets into existing investment mandates through block trades.
This technology not only expands the market application of assets but also ensures transaction transparency and efficiency by automatically executing asset combinations and splits through smart contracts while preserving their original yield-generating capacity.
Moreover, the LSP protocol supports layered management and custom configurations of assets, allowing users to choose different asset combinations and strategies based on personal risk preferences and investment goals. This innovation means users can freely trade these slices on the LSP platform, gaining liquidity and flexibility previously unattainable in the staking domain. This flexibility significantly enhances the attractiveness of assets, drawing more investors into blockchain staking and investment.
Technology and Security: The Advantages of the LSP Protocol
Michael also emphasized the influence of risk management principles on the design of LSP. Drawing on his extensive experience in the financial sector, Michael pointed out that security and asset integrity are paramount. “The LSP protocol employs Fully Homomorphic Encryption (FHE) to ensure that all node operations are conducted in a fully encrypted state, verifying the correctness of operations without revealing any private information,” Michael detailed the core advantages of this technology.
Fully Homomorphic Encryption (FHE) allows specific forms of algebraic operations to be performed on ciphertext, resulting in encrypted outcomes that, when decrypted, match the results of performing the same operations on plaintext. The application of this technology allows computations to be executed in an encrypted state, protecting data privacy and significantly enhancing system security and data privacy protection.
Outlook on the Future of the Industry
“With the continuous advancement of blockchain technology and the widespread adoption of Node Slicing technology, LSP is projected to manage tens of billions of dollars in node assets within the next few years,” Michael predicted. He noted that as LSP’s Node Slicing protocol becomes the standard across multiple blockchain ecosystems, market demand will grow significantly. “We believe that as more capital flows into PoS networks, the demand for liquidity solutions like ours will only increase.”
According to platform data, as of the end of July, LSP had 500,000 registered users, with 28,909 stakes, a total deposit amount of $107,215, and a total purchase amount of $2,035,047. These figures fully demonstrate the market’s recognition of the LSP platform and the demand for the asset liquidity it provides. The broad acceptance of this forward-looking technology will drive liquidity and flexibility across the industry, offering higher capital efficiency for existing blockchain networks and providing a pathway for new blockchain projects to quickly launch and attract capital. This development heralds a more diversified and inclusive future for blockchain technology.
In summary, Michael Rey has leveraged his expertise in financial risk management to provide an innovative technical solution to the liquidity challenges of blockchain assets through the LSP protocol. The launch of the LSP protocol signifies a more dynamic and interconnected future for blockchain networks, promising a profound impact on the entire financial ecosystem. “Node slicing is not just an innovation,” Michael concluded, “it is the future of staking.”
