I. Introduction
We are pleased to submit our request for the 2025 round of Community Grants to support the development of the Valid V2 LSD protocol. We are seeking 1 million XDC to fund the final testing, audits, deployment, and integrations for our Liquid Staked Derivative (LSD) token, which will be offered through the second version of the Valid Protocol.
Reference Link:
https://www.xdc.dev/duts/community-support-bounty-rules-and-application-form-3c7c
II. Applicant Details
About Us
X Digital Capital Solutions (XDCS) is a small product development team known for the self-funded development and launch of the XDC staking application, the Valid Protocol. Our team has successfully developed the protocol from concept to product, with a focus on retail users while remaining exclusive to the XDC Network.
Our team consists of five high-performing members, each bringing diverse strengths and expertise. Our backgrounds span business and technology consulting, project management, finance, sales, blockchain research, writing & communications, and public service as first responders.
Contact
X Digital Capital Solutions, LLC https://www.xdcs.io/
Contact Email contact@xdcs.io
III. Grant Application Details
Grant Category
Protocol Development: 30%
Code Audits: 40%
Integrations: 30%
Project Description
Valid Protocol V2 enhances XDC staking opportunities by eliminating the technical barriers to MasterNode operations, enabling participation from stakers of all sizes. Users can choose from multiple staking options, each with different lock durations, stake amounts, and expected annual percentage yields (APY).
The protocol offers three staking options; Users will be classified based on their selected staking option, i.e., Anchor Staking = Anchor Staker, Native Staking = Native Staker, Liquid Staking = Liquid Staker.
Anchor Staking
Anchor Staking is designed for larger stakers with a long-term horizon who are willing to lock their tokens for a steady yield. Anchor Stakers will receive the highest APY, which is greater than 8%, as a reward for their commitment to the protocol and network. This offering is ideal for self-managed XDC MasterNode owners, as it allows them to earn a higher APY than they would through self-management.
Liquid Staking: stXDC
Liquid Staking is tailored for users who want to maximize capital efficiency without sacrificing staking rewards. When users stake their tokens, they receive a Liquid Staking Derivative (LSD)—stXDC—which represents their staked XDC and continues to earn rewards. Liquid Stakers can swap freely between native XDC and stXDC, with the flexibility rewarded by a lower APY. This APY will be governed by the Valid Protocol’s Inventory Manager, a series of smart contracts that rebalance liquidity and incentives.
Native Staking
This option is designed for users who have similar needs to Anchor Stakers but may not meet the minimum liquidity requirements or have a shorter investment horizon. Tokens will be locked by the protocol for predetermined intervals, with the community providing input on these durations. The expected APY for Native Stakers will fall between those of Liquid Stakers and Anchor Stakers.
Project Links
Valid Protocol v1 | https://app.validprotocol.io/
Project Goals & Aspirations
Our primary goal is to establish stXDC as the leading Liquid Staked Derivative on the XDC Network. We aim to transition self-managed Standby XDC MasterNode operators by demonstrating how the Valid Protocol allows them to rehypothecate their staked assets, significantly improving capital efficiency without sacrificing yield potential.
If 25 to 50 percent of self-managed Standby MasterNode owners participate, it would unlock substantial liquidity for the network, driving product innovation and attracting new participants. We continuously engage with the XDC Network community to prioritize features and utility upgrades, with upcoming product rollouts that include Fiat On/Off Ramps, institutional staking participation, and governance features.
Milestones
Most Recent
The latest milestone stems from the Valid v1 protocol. We have been monitoring the application through the entire investment lifecycle, including components such as escrow, distribution, deposit, lock, mint, redeem, countdown, MasterNode creation/shutdown protocols, and emergency features.
Despite high demand, we chose to slow scaling efforts to ensure the system functioned as planned. Now that we have confirmed the success of v1, we are ready to integrate it into v2.
Current
We have developed the v2 components that were not included in the v1 architecture, including Anchor and Liquid Staking. Quality Assurance Testing (QAT) is in progress, with only minor UI modifications required.
Future
A. User Acceptance Testing (UAT) on XDC Apothem Testnet
B. Protocol Audit
C. XDC Mainnet Launch
D. stXDC & Partnership integrations
IV. Budget
Request: 1,000,000 XDC
We request funding to support the final testing, audits, and integration of our Liquid Staked Derivative (LSD) token within Version 2 of the Valid Protocol. The breakdown is as follows:
Security & Compliance
Smart Contract Audit (Independent Firm) – 10,000 USD
External Security Audit (Independent Firm) – 10,000 USD
Institutional Compliance & Legal Review- 20,000
Development & Deployment
Final Protocol Testing & Deployment - 10,000 USD
API Development & Integration - 10,000 USD
Server & Infrastructure Scaling – 10,000 USD
Operational Monitoring & Maintenance
Protocol Monitoring, Ongoing Maintenance & Support – 20,000 USD
External Security Audit (Independent Firm) – 10,000 USD
Partnerships & Integrations
Product & Strategic Partnership Integrations – 10,000 USD
Project Management & Coordination – 5,000 USD
Security & Compliance: $40,000
Development & Deployment: $30,000
Monitoring & Maintenance: $30,000
Partnerships & Integrations: $15,000
Total: $115,000
Total Requested Grant Amount: 1,000,000 XDC
Receiving this grant will greatly enhance our ability to successfully launch the Valid Protocol V2, ensuring it is rigorously tested, secure, and well-integrated into the XDC ecosystem, thereby increasing adoption and utility for LSD token holders.
V. Sustainability Plan
Near-Term Sustainability
The Valid Protocol V2 is designed to achieve long-term sustainability through a combination of different protocol fees. The protocol will generate revenue through transaction fees and staking commissions, while keeping operating costs manageable through automation, partnerships and efficient infrastructure scaling.
Protocol Revenue
Fees: A portion of the staking rewards earned by users will be allocated to the protocol. Additionally, a small fee for unstaking and converting LSD tokens to XDC will support long-term operational sustainability.
Staking as a Service: White-labeling services will provide customizable staking solutions for enterprises, financial institutions, and XRC-20 projects in exchange for service fees.
Valid Utility Token: The team will explore the possibility of launching its own token; however, this decision will be contingent on various external factors, including regulatory developments and community demand.
DeFi & Ecosystem Integrations: Yield Aggregation Partnerships – As stXDC integrates with more DeFi protocols, demand for stXDC will grow, bringing in additional liquidity and increasing total value locked (TVL).
Long-Term Sustainability
Valid Protocol’s financial strategy includes treasury and reserve management, increasing TVL, and strategic partnerships. By utilizing DeFi options and staking revenue from the treasury, we aim to generate additional income to support future operations and development. As TVL increases and more MasterNodes are operated, fee revenue will also grow, strengthening the protocol's financial position. Collaborations with other protocols and DeFi platforms will further expand adoption and opportunities within the Valid Protocol ecosystem.
Treasury Management
As the protocol adoption grows and revenue stabilizes, Valid’s Treasury assets will have more flexibility in how they’re deployed. For instance, utilizing treasury assets to support other DeFi protocols will generate further revenue while contributing to the growth of the broader ecosystem.
Total Value Lock (TVL)
A byproduct of TVL growth on Valid Protocol is the expansion of the LSD token, which can be freely utilized in other applications. This growth follows a 1:2 ratio of network total value expansion—for every one XDC staked, an LSD token is minted, enabling further utility and integration across the broader XDC ecosystem.
Strategic Influence
Beyond direct financial strategies, actively advocating for and influencing other teams to develop verticals that strengthen the sustainability of the protocol, including the rehypothecation of LSD assets or tooling to further polish the User Experience.
VI. Legal Information
Entity Name: X Digital Capital Solutions, LLC
Registered in: United States (Delaware & California)
Grant Recipient: X Digital Capital Solutions, LLC
Discussion (13)
I fully support this proposal. The plan to enhance XDC staking through innovative options shows great potential for growth within the ecosystem. I look forward to seeing the positive impact this project will have.
Yes, Supported!
Defimoon is the trusted auditor of Valid V2 and the XDC ecosystem. We fully support this initiative and recognize its importance in enhancing staking opportunities within the XDC network.
We look forward to supporting the development of Valid V2 and its contribution to a more accessible and efficient staking ecosystem within the XDC Network.
We know the Valid V2 team and the YodaPlus team and have had the pleasure of working together - it is always a pleasure to collaborate with such dedicated and skilled teams
I say YES on the Valid V2's 2025 Grant Proposal because I strongly believe that Liquid Staking is essential to expanding the usability of XDC and attracting more participants to the ecosystem.
Valid V2’s Liquid Staking Derivative (LSD) introduces a much-needed mechanism that allows stakers to participate in securing the network without sacrificing liquidity. By enabling users to stake their XDC while still having a tradeable asset (stXDC), the protocol makes staking more efficient, flexible, and inclusive. This will enhance XDC’s adoption and utility across DeFi applications, increasing engagement within the ecosystem.
The Mitchell Group is in strong support of having additional staking options and as a Validating Master Node, I would Vote YES for this proposal.
As the Network grows, we will see additional DeFi Projects being built to utilize the staked XDC derivative tokens.
Bringing options to increase liquidity is fantastic, but we also need additional defi projects to utilize the derivative output.
Offer the Liquid XDC option and the projects will come. It may take some time but there are many projects out there on EVM platforms.
The X Digital Capital Team has been working tirelessly to provide a Top Tier Protocol. Lets give them the support they need to make XDC Network a more Liquid Network.
The XDC Network continues to evolve, and I believe the Valid Protocol V2 development is a key step toward making staking more accessible and efficient. By introducing Liquid Staking Derivatives (LSDs), it unlocks new opportunities across DeFi and this upgrade will enhance network participation and ultimately strengthen the ecosystem as a whole.
I fully support approving this grant, as it represents a major step forward for XDC. We’re all looking forward to seeing these enhancements continue to grow and drive innovation across the network! 🚀
I vote YES! I support Vaild Protocol
I vote YES!
Valid has been hard at work for years. They continue to push and expand the XDC community!
I vote YES! I support Vaild Protocol
YES, supported! Technical and participation barriers are fairly ubiquitous obstacles across the industry. I think community and stakeholder efforts to lower these barriers help adoption on all fronts.
I support Valid protocol, I am voting YES!
Vote YES! Valid Protocol is working hard to enhance staking opportunities within the XDC network. They are consummate professionals and staunch supporters of XDC.
I Support the Valid Protocol V2 Grant Proposal – Vote YES
I fully support the Valid Protocol V2 grant proposal and vote YES for its approval. This project is a game-changer for the XDC Network, providing small investors with an opportunity to participate in staking without the technical and financial barriers of running a MasterNode.
By introducing Liquid Staking Derivatives (LSD) through stXDC, Valid V2 enhances capital efficiency, increases network liquidity, and strengthens the overall staking ecosystem. The team's structured approach—prioritizing security, audits, integrations, and long-term sustainability—demonstrates a clear commitment to responsible and scalable development.