🌊Liquid Staking

Taking the baton from Lido's sunsetted liquid staked DOT, StellaSwap decided to relaunch stDOT to restore its former glory in fostering ecosystem growth.

What is stDOT?

stDOT is a liquid token that represents your share of the total DOT.xc pool deposited with StellaSwap. Any user that stakes DOT.xc will immediately receive newly minted stDOT. Over time, as your DOT delegation accrues rewards, the value of your stDOT increases. When a user delegates their DOT tokens on StellaSwap for stDOT, they do not need to perform or wait for the completion of any delegation or activation steps, as is the norm in traditional staking. The user can instantly exchange stDOT for DOT at any time in the open market.

Traditional Staking vs Liquid Staking

In traditional Proof-of-Stake (POS) staking within Polkadot, a user has to perform several steps manually:

  • Create a Stash Account and bond DOT to it;

  • Nominate validators;

  • Monitor validator's yield to maximize profit.

Staking on Polkadot requires expert knowledge and a great deal of resources, as well as incurring a core risk of slashing that can get very severe if the staking is managed improperly.

Benefits of stDOT

Staking DOT via StellaSwap radically simplifies the staking process and absolves the need for users to maintain their own staking infrastructure. Users can;

⭐ Start earning staking rewards easily in 1-click without locking in your assets ⭐ Instantly liquidate your stDOT w/o waiting for unbonding period ⭐ Supercharge their DeFi by using stDOT across numerous usecases like stacking farm rewards, lending/borrowing etc. ⭐ Use their Metamask or any ERC wallets as we're fully EVM compatible!

APR Maximization

One of the core benefits of StellaSwap's stDOT is that our validation nomination strategy is optimized to keep a higher chance of getting into the active set w/o decreasing APRs. Here are the following metrrics that we constantly track to ensure we select the best validators in the ecosystem;

  • Era points

  • APR

  • Stake amount

  • Nominators list

  • Slashing

  • Payout rate

Rebasing or Yield-Bearing?

Unlike Lido's stDOT, Stella's stDOT is not a rebasing token. Rebasing tokens change in balance as the token supply changes according to staking rewards or slashing penalties. stDOT is a yield-bearing token. Yield-bearing tokens reflect accrued yields through changes in token values rather than balances. This method of reward issuance breaks the 1:1 swap-rate between LSD assets and their underlying assets, allowing the rate to change in real-time as the income increases.

A benefit of being a yield-bearing token is the ease of integration across other DeFi protocols. This streamlines composability of stDOT across DeFi to unlock greater usecases much more easily compared to rebasing tokens.

Stake Your DOT Now!

You can access our stDOT here: https://app.stellaswap.com/stdot

How does stDOT work?

A DOT.xc token holder connects their wallet and deposits their tokens into StellaSwap's stDOT. They immediately receive stDOT tokens that represent a share of the total pool, and StellaSwap delegates DOT to our selected validators on the Polkadot network. When these delegations accrue rewards on the allotted stake, the total DOT under management grows and this increases the value of stDOT tokens.

How the staking exchange rate is calculated?

The amount of stDOT that you will receive is calculated based on the ownership share. The reason you get slightly less stDOT than DOT.xc is due to rounding when dividing:

shares_amount = amount_of_DOT.xc * getTotalShares()
                / getTotalPooledKSM();
stDOT_amount = shares_amount * getTotalPooledKSM()
                / getTotalShares();

Where:

  • amount_of_DOT.xc is a given DOT.xc you want to exchange

  • getTotalShares() is a call to Lido contract

  • getTotalPooledKSM is a call to StellaSwap's contract. This method works with KSM as well as with DOT.

Why should I prefer liquid staking over traditional?

In traditional Polkadot staking a user has to perform several steps manually:

  • Create a Stash Account and bond DOT to it;

  • Nominate validators;

  • Monitor validator's yield to maximize profit.

Staking on Polkadot requires expert knowledge, the main being the fact that slashing can get very severe if the staking is managed improperly.

Staking DOT through StellaSwap will come with a variety of benefits:

  • One-step process — just deposit into the pool with a single click.

  • The pool takes care of validator diversification.

  • Immediate appreciation — you start earning from the pool from the moment of deposit.

How can I redeem stDOT for DOT?

Withdrawals of DOT.xc from StellaSwap can be done through the Unstake tab. However, unstaking directly from StellaSwap will incur the Polkadot unbonding period, which is roughly 28 days. Immediate withdrawal options are available in the open market through liquidity pools on StellaSwap's Pulsar V3 where one will be able to immediately exchange stDOT for DOT.xc. If you wish to instantly receive DOT.xc, we recommend trading stDOT directly on StellaSwap.

DOT.xc can be instantly exchanged for DOT through the Transfer tab.

What are the risks involved?

  • Downtime risk: Polkadot validators can go offline, in which case they do not earn staking rewards. To minimize this risk, StellaSwap stakes across multiple professional and reputable node operators with heterogeneous setups. This will also serve to mitigate potential slashing risks.

  • stDOT Price Risk: As mentioned above, withdrawals from StellaSwap take some time to deactivate. Liquidity pools in the open market will be available for instantly redeeming stDOT for DOT. On such pools, users risk an exchange price of stDOT, which is lower than the inherent value due to withdrawal restrictions on StellaSwap, making arbitrage and risk-free market-making impossible. We driven to mitigate the above risks and eliminate them to the extent possible. Despite this, they may still exist, and hence it is our duty to communicate them.

What fee is applied to stDOT?

StellaSwap applies a 10% fee on a user's DOT staking rewards.

How long is the DOT unbonding period?

In the Polkadot network unbonding period usually takes 28-30 days.

How can I claim my DOT.xc tokens after unbonding?

When unbonding period is over, you can claim your DOT.xc tokens, that your request for redeem, simply by clicking on the "Claim" button on the "Unstake" page.

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