# V2 vs V3 — What Changed

{% hint style="info" %}
V3 is **live** on XDC mainnet. V2 remains operational so users can migrate at their own pace via [the migration bridge](/products/xdc-liquid-staking/staking-guide/migration.md).
{% endhint %}

psXDC has moved from its original custodial contract (V2) to a fully non-custodial, ERC-4626 vault architecture (V3). This page explains what changed, why, and what it means for users and partners.

***

## Why Migrate

V2 was the first generation of psXDC. It works, but its custodial design creates trust dependencies that limit adoption — particularly as collateral in DeFi lending markets. The core issues:

* **Withdrawals require admin approval** — a user requests to withdraw, then the owner must manually approve each request before XDC is released
* **Custodial validator staking** — the admin withdrew XDC from the contract and staked it into validators; staking happened on-chain but was entirely admin-controlled, so users had to trust the team to manage their funds
* **Owner can mint and withdraw** — the contract has `mint()` and `ownerWithdraw()` functions that give the owner broad control over user funds
* **Rewards are manual** — the owner must call `notifyRewardAmount()` to distribute rewards

These properties make V2 unsuitable for institutional use or as DeFi collateral, because a single admin key can unilaterally move funds.

V3 eliminates all of these trust assumptions.

***

## Architecture Comparison

| Aspect                     | V2 (Custodial)                                                     | V3 (Non-Custodial)                                                                                                                       |
| -------------------------- | ------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------- |
| **Standard**               | Custom staking + APY rewards                                       | ERC-4626 tokenized vault                                                                                                                 |
| **Token model**            | 1:1 fixed ratio (1 psXDC = 1 XDC)                                  | Share-based exchange rate (increases over time)                                                                                          |
| **Reward distribution**    | Manual — owner calls `notifyRewardAmount()`                        | Automatic — exchange rate rises as validator rewards flow in                                                                             |
| **Reward claiming**        | Users must manually claim accrued rewards                          | No claiming — rewards are embedded in share price                                                                                        |
| **XDC utilization**        | Custodial — admin withdrew XDC and staked with validators manually | Non-custodial — vault stakes directly with masternodes via smart contract, fully verifiable                                              |
| **Masternode integration** | Custodial — admin managed validators manually                      | Direct non-custodial integration with XDC validator contract                                                                             |
| **Upgradeability**         | UUPS (owner-controlled upgrades)                                   | **None — `PrimeStakedXDC_V3` is non-upgradeable.** Deployed with a regular constructor, no proxy. The vault logic can never be modified. |

***

## Withdrawal Comparison

| Aspect                 | V2                                                    | V3                                                    |
| ---------------------- | ----------------------------------------------------- | ----------------------------------------------------- |
| **User action**        | Call `requestWithdraw()`                              | Call `redeem()` or `redeemWithQueue()`                |
| **Admin approval**     | Required — owner must call `approveWithdrawRequest()` | Not required — self-service                           |
| **Instant withdrawal** | Not available                                         | Yes — if sufficient liquid XDC exists in the buffer   |
| **Queue**              | Manual admin-managed                                  | Automatic FIFO queue — processes as liquidity returns |
| **Queue cancellation** | Not available                                         | Users can cancel pending requests at any time         |
| **DEX exit**           | Available (same in both versions)                     | Available (same in both versions)                     |

**V2 flow:** Request → Wait for admin approval → Withdraw

**V3 flow:** Redeem → Receive XDC instantly (or enter automatic queue if liquidity is low)

***

## Admin Privilege Comparison

This is the most significant change. V2 gives the owner sweeping powers. V3 eliminates them.

| Capability                         | V2                               | V3                                           |
| ---------------------------------- | -------------------------------- | -------------------------------------------- |
| **Mint new tokens**                | Yes — `mint(address, amount)`    | Disabled — `mint()` reverts                  |
| **Withdraw contract funds**        | Yes — `ownerWithdraw(amount)`    | No such function exists                      |
| **Set reward rate**                | Yes — `setRewardApy()`           | No manual rate — exchange rate is automatic  |
| **Approve individual withdrawals** | Yes — `approveWithdrawRequest()` | Not needed — withdrawals are self-service    |
| **Transfer ownership**             | Instant — `transferOwnership()`  | Time-locked — schedule → wait → execute      |
| **Change roles**                   | N/A (single owner)               | Time-locked — all role changes require delay |
| **Pause/unpause**                  | Owner                            | Admin role                                   |

***

## Reward Model Comparison

| Aspect                 | V2                                                   | V3                                                                                                                 |
| ---------------------- | ---------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------ |
| **How rewards enter**  | Owner calls `notifyRewardAmount(reward)` with XDC    | Validator rewards flow directly into the vault                                                                     |
| **Distribution logic** | Time-based APY: `rewardRate * elapsed / totalStaked` | Asset-based: exchange rate = `totalAssets / totalShares`                                                           |
| **User experience**    | Claim rewards manually from Rewards tab              | No claim — share value increases automatically                                                                     |
| **Transparency**       | Owner-controlled reward injection                    | Validator rewards verifiable on-chain via masternode contract                                                      |
| **Risk**               | Owner sets APY and reward duration manually          | Exchange rate driven by actual validator performance                                                               |
| **NFT boost stream**   | N/A                                                  | `XdcNftBoostHarvester.notifyBoost` feeds a Synthetix-style accumulator inside the NFT vault — claimable separately |

***

## Security Comparison

| Feature                         | V2                                        | V3                                                                 |
| ------------------------------- | ----------------------------------------- | ------------------------------------------------------------------ |
| **Audit**                       | QuillAudits                               | QuillAudits + Nethermind Security                                  |
| **Reentrancy protection**       | Yes                                       | Yes (OpenZeppelin ReentrancyGuard)                                 |
| **Single point of failure**     | Yes — single owner key                    | No — 5 roles + time-locks                                          |
| **Upgradeability**              | UUPS proxy                                | **None — non-upgradeable**                                         |
| **Governance delay**            | None                                      | 1-day minimum (configurable, max 30 days)                          |
| **Loss caps**                   | None                                      | Configurable per-report + per-day caps, set via delayed governance |
| **Principal tracking**          | None                                      | Per-operator and global tracking                                   |
| **Admin can drain funds**       | Technically yes (`ownerWithdraw`, `mint`) | No — no such functions exist                                       |
| **No principal-stake slashing** | Yes (XDC model)                           | Yes (XDC model)                                                    |

***

## Feature-by-Feature Summary

| Feature                      | V2                | V3                                          |
| ---------------------------- | ----------------- | ------------------------------------------- |
| Stake XDC                    | Yes               | Yes                                         |
| Receive psXDC                | Yes (1:1)         | Yes (at exchange rate)                      |
| Self-service withdrawal      | No                | Yes                                         |
| Withdrawal queue             | Manual            | Automatic (FIFO)                            |
| Cancel queued withdrawal     | No                | Yes                                         |
| Masternode staking           | Off-chain         | On-chain                                    |
| Auto-propose masternodes     | No                | Yes                                         |
| Resign masternodes           | N/A               | Yes (with cooldown)                         |
| Share-based pricing          | No                | Yes                                         |
| Liquidity buffer             | No                | Yes (configurable, default 5%)              |
| Time-locked governance       | No                | Yes (all sensitive changes)                 |
| Role-based access control    | No (single owner) | Yes (5 distinct roles)                      |
| Validator loss reporting     | No                | Yes (capped, operator-aware)                |
| ERC-4626 compatible          | No                | Yes                                         |
| DeFi composable (collateral) | Limited           | Full                                        |
| Migration bridge             | N/A               | Dedicated contract with slippage protection |

***

## What This Means for Users

|               | Before (V2)                                                 | After (V3)                                                                                                         |
| ------------- | ----------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------ |
| **Deposit**   | Same — stake XDC, get psXDC                                 | Same — but psXDC is now a yield-bearing vault share                                                                |
| **Rewards**   | Claim manually from Rewards tab                             | Automatic — no action needed, share value grows                                                                    |
| **Withdraw**  | Request and wait for admin approval                         | Self-service — instant if liquidity available, queued otherwise                                                    |
| **Trust**     | Trust the admin not to misuse `mint()` or `ownerWithdraw()` | Trust the code — no admin can move your funds, and the contract itself cannot be upgraded                          |
| **DeFi use**  | Hold, trade, or stake in NFTs                               | Same + usable as collateral in lending protocols                                                                   |
| **Migration** | —                                                           | One-time: approve + migrate via the [V3 migration bridge](/products/xdc-liquid-staking/staking-guide/migration.md) |

***

## What This Means for Partners

* **psXDC becomes viable as DeFi collateral** — the non-custodial design and ERC-4626 compliance make it suitable for lending markets and institutional integration
* **Reduced counterparty risk** — no single admin key can affect user balances
* **Transparent validator economics** — masternode operations are verifiable on-chain
* **Predictable governance** — all changes are time-locked and visible before they take effect
* **Standard interface** — ERC-4626 is the same vault interface used by major DeFi protocols, reducing integration effort

→ [V3 Architecture Details](/products/xdc-liquid-staking/v3-architecture.md) → [Institutional Overview](/for-partners/institutional.md)


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