Interoperability is about connecting ecosystems, so that users and protocols can interact freely regardless of what blockchain they start on. For a crosschain protocol like Union, it’s important that its native token be truly interoperable as well. Traditional models that confine a token and its derivatives on a single chain cannot live up to this vision.
That’s why Union is collaborating with Escher, the liquid staking hub of the Union ecosystem, to overhaul how liquid staking works in a crosschain environment. When the Union token debuts, it will launch with a sophisticated, chain-abstracted architecture to liquid stake the token in a single click—allowing the Union token and its liquid-staked counterpart to be utilized across the entirety of the connected crypto ecosystem seamlessly and efficiently.
The Challenge of Crosschain Liquid Staking
Liquid Staking Tokens (LSTs) have become a cornerstone of DeFi, but their current implementation presents significant hurdles in a multi-chain world.
LSTs represent a user's staked position in a Proof of Stake network. In exchange for securing the network via the liquid staking protocols, users receive an LST, which is a liquid, tokenized receipt of their staked assets. This LST can then be used in various DeFi applications—lending, borrowing, or liquidity providing—allowing the user to earn additional yield while their original assets remain staked. This mechanism dramatically improves capital efficiency.
For new Layer 1s like Union, which is focused on providing core crosschain infrastructure rather than building a native DeFi ecosystem, this presents a conundrum. Building a vibrant, trustworthy DeFi ecosystem is incredibly expensive and time-consuming, yet without a rich DeFi landscape, an LST has little utility, and users are better off staking their tokens natively. This leaves new L1 tokens with an accessibility problem: their primary assets cannot participate in DeFi without being siloed or losing the security of their native staking.
The problem is magnified in a crosschain context. Today's LSTs are almost always tethered to their source chain. An asset like stETH is minted on Ethereum, which means staking and unstaking must take place on Ethereum. This creates several points of friction:
Poor User Experience: To move to another chain for a DeFi opportunity, the user must bridge the LST. But to unstake, they must bridge it back. That means managing multiple wallet addresses, paying for gas on different networks, and navigating a complex, multi-step process.
Fragmented Security: Staking operations are confined to the home chain, preventing users on other chains from directly participating in the security of the network.
Wasted Potential: An LST is only as valuable as the DeFi ecosystem it can access. If a user on Base wants to stake Union tokens, they shouldn't have to manually bridge assets, switch wallets, and then figure out how to get their LST back to Base to use it.
The Solution: Chain-Abstracted LSTs
Union and Escher solve this fragmentation with a novel approach: the Chain-Abstracted LST. This solution leverages Union's interoperability and Escher's staking hub to allow users to liquid stake Union tokens from any chain connected to Union—all in a single, seamless transaction. A user on Ethereum with a MetaMask wallet can liquid stake Union tokens without ever needing to open a Keplr wallet or manually bridge between chains.
Here’s how it works:
Phase 1: Liquid Staking the Union Token
For users, it will start with a single click within a wallet or supported app. That will trigger:
Initiation: The user’s ERC20 Union tokens on the source chain (e.g., Ethereum) are sent to Union's multiplex contract. This transaction includes a General Message Passing (GMP) payload containing the staking instruction and the recipient address for the Union LST.
Crosschain Communication: The Union tokens are escrowed in the contract, and the message is securely transmitted to the Union chain via Union's IBC-based bridge.
Staking on Union: Once the transaction achieves finality, the message is executed on Union. The Union tokens are minted on Union and deposited into the Escher staking contract.
Union LST Minting: Escher's contract mints the corresponding amount of Union LST based on the current exchange rate.
Return Journey: The newly minted Union LST is sent back through the Union-IBC bridge and escrowed.
Final Delivery: The Union LST is minted on the original source chain and delivered directly to the user's wallet.
The user started on Ethereum and, in one click, received the Union LST on Ethereum.
Phase 2: Unstaking the Union LST
When the user wishes to unstake, the process is practically the same for them. One click will lead to:
Initiation: The user’s ERC20 Union LST is sent to the Union multiplex contract, again with a GMP message specifying the unstaking instruction.
Crosschain Communication: The Union LST is escrowed (and subsequently burned on the source chain), and the message is sent to Union.
Unstaking on Union: On the Union chain, the message is received, and the corresponding amount of Union LST is burned by the Escher contract.
Cooldown Period: The underlying Union tokens plus accumulated staking rewards are registered for unstaking. A 21-day cooldown period begins.
Automated Claim: After 21 days, an authz module batches and sends the unstaked tokens to the user. The user does not need to perform any other actions to claim their tokens. The process is automatic.
Return Journey: The Union tokens plus rewards are sent back through the Union-IBC bridge.
Final Delivery: The Union tokens are minted on the target chain and delivered directly to the user's wallet.
Importantly, this architecture is route-agnostic. For example, a user could stake Union tokens on Base to receive the Union LST. They can then bridge that Union LST to Berachain to pursue a DeFi opportunity. When the strategy is complete, they can unstake their Union LST directly from Berachain and receive their Union tokens back on Berachain, without ever having to return to Base or any other chain.
DeFi Hub: Instant Utility from Day One
This powerful interoperability infrastructure means that Union tokens and the Union LST are not limited to a single chain. They can be utilized across numerous ecosystems simultaneously, creating a ready-made DeFi hub from day one.
Escher will provide a centralized interface to manage all DeFi activities involving Union tokens and the Union LST. Instead of manually tracking positions across different chains and dApps, users can see everything in one place. This hub brings order to the crosschain chaos, allowing users to track and manage their positions with one-click simplicity.
Crosschain Vaults
Escher will leverage Union’s interoperability to introduce a series of tokenized vaults. These vaults will not be confined to a single chain; they will be able to execute strategies across multiple networks simultaneously. Imagine a single vault that:
Provides liquidity to a DEX on Babylon.
Lends assets on a money market on Base.
Stakes tokens in a pool on Ethereum L1.
Users can make a single deposit of Union tokens or the Union LST and gain exposure to all of these positions, plus the underlying staking rewards. Initial vault options will be revealed prior to the Union token’s launch.
Uniting the Multi-chain World
By abstracting away the complexities of crosschain interactions, the system being built between Union and Escher empowers users to interact with a multi-chain world as if it were a single, unified ecosystem.
This model solves the critical cold-start problem for new L1s and provides a superior, frictionless user experience. This is the future of utility, powered by truly trustless interoperability.