# Compliant Staking

## **Compliant Staking**

**Compliant Staking** is a mechanism introduced by **Singularity** to:

* Increase **Total Value Locked (TVL)**
* Enhance **obfuscation** and privacy within the platform

### **How It Works**

1. **KYC/KYB Compliance**
   * Users first complete **KYC or KYB** procedures.
2. **Deposit and Lock Assets**
   * Users deposit their native ERC20 assets into the **Singularity smart contract**.
   * They then mint an equivalent amount of **sgTokens** on a **1:1 basis**.
3. **sgTokens**
   * Permissionless ERC20 tokens that can be freely **traded on DEXs** against the native assets.
   * Holders of sgTokens earn **staking emissions** as a reward for:
     * Locking their assets
     * Contributing to the **obfuscation of the pool**
4. **Market Accessibility**
   * Anyone can **purchase or hold sgTokens** from the open market without completing KYC/KYB.

### **Key Features**

#### 1. **Receive Reward Points**

* Holders of sgTokens earn **reward points** for:
  * Contributing to the protocol’s **Total Value Locked (TVL)**
  * Increasing **obfuscation of on-chain actions** within Singularity

#### 2. **Redeem Underlying Assets**

* To redeem the original asset:
  1. **Burn sgToken(s)**
  2. Withdraw the corresponding native asset from Singularity
* **Important:** Withdrawals can **only** be made to a wallet that has completed **KYC/KYB**.

[Head to the the Singularity protocol to get started](https://app.thesingularity.network/staking). 

You should see the following image when you do.

<figure><img src="/files/ywe8w7h7nbn97L8mtcuV" alt=""><figcaption></figcaption></figure>

sgTokens are permissionless ERC20 tokens minted 1:1 against native assets locked in Singularity. They provide users with multiple ways to interact with the protocol while maintaining privacy and compliance.

### **Key Benefits**

* **1:1 Backing & Minimal Market Risk**
  * Each sgToken is backed 1:1 by native assets locked in the smart contract.
  * This backing can be **publicly verified** on-chain via blockchain explorers.
* **Privacy & Compliance**
  * Users can lock assets and participate in staking emissions while maintaining **compliant onboarding**.
  * Enhances **privacy/obfuscation** within the pool.
* **Liquidity Flexibility**
  * sgTokens are **freely tradeable**, allowing users to access capital while native assets remain locked.

### **Using sgTokens**

#### **a. Trading & Liquidity Provision**

* sgTokens can be traded freely on **permissionless decentralized exchanges (DEXs)** such as **Uniswap**.
* Users can also provide liquidity in **sgToken asset pools** (e.g., sgETH) to earn **trading fees**.

#### **b. Collateralization & Borrowing**

* sgTokens can be used as **collateral** in money markets through Singularity partners.
* This allows users to **borrow against sgTokens**, enhancing financial flexibility.

### **Supported Assets**

* Singularity supports **any ERC20 token**, including various **restaking tokens**.
* Initial deployment is on **Ethereum and Arbitrum**, supporting:
  * ETH
  * stETH
  * rETH
  * USDC
  * USDT


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