6. Liquid Staking Derivatives Finance (LSDFi)
Last updated
Last updated
Within the constantly accumulating realm of decentralized finance (DeFi), liquidity is the foundation on which the practicality and openness of financial services are constructed. The advent of Liquid Staking Derivatives for Decentralized Finance, herein referred to as LSDFi, marks a significant leap forward in enhancing the fluidity and functionality of DeFi platforms.
Here, LSDFi brings about a new model through which participants can lock up their assets into Uniswap and get derivative tokens representing their shares. These tokens, known as liquidity provider (LP) tokens, are not only tokens that prove an investor’s stake in a pool but are also usable in various other DeFi projects. This system enhances the liquidity in trading and other activities by many folds and enriches the DeFi protocols by boosting the capacity of liquidity and flexibility of capital.
Enhanced Liquidity: Through rewarding as a liquidity provider, LSDFi makes sure that different DeFi platforms can facilitate trades with larger volumes at lower price impact, which will benefit all market participants due to increased market depth.
Yield Generation: Stakers earn rewards from transaction fees, which are dynamically adjusted based on the duration of their commitment, thus providing an attractive yield mechanism that encourages long-term staking.
Interoperability: The LP tokens generated can be utilized across various DeFi applications, including yield farming and as collateral in the lending platforms, thus increasing the interrelation and usability for the DeFi networks.
Security and Trust: Given that commitments are locked for certain durations, LSDFi plays a crucial role in determining the stability of the token, and much less in the volatility that results from the withdrawal of liquidity.
Process: Users will stake both MEN and USDT on Uniswap to obtain LP-Tokens. the LSDFi smart contract locks these LP-Tokens to activate an LSDFi package.
Withdrawal: After the lock period, users can withdraw MEN and USDT based on the current pool ratio of the two tokens on Uniswap.
The amount of withdrawable USDT and MEN will be subject to the value of the tokens at the time. Users can calculate the rate via the online Impermanent Loss Calculator here: https://dailydefi.org/tools/impermanent-loss-calculator/
FORMULA: Final Multiplier = Basic multiplier + Bonus
Total Shares represent your stake in LSDFi. The higher your shares, the more dividends you receive.
FORMULA: Total Personal Shares = Package Value * Multiplier
Example Calculation:
NOTE: If you're the only one to check in at the end of the tax distribution cycle, you receive 100% of the LSDFi reward.
Strategies: You can increase your Total Shares by either increasing the LSDFi Deposit Value or extending the Lock Period.
Example: Staking a total of 13,000 USDT in value for 50 days yields the same number of Shares as staking 1,000 USDT in value for 300 days.
Allocation: 30% of the tax collected from transactions is distributed:
25.5% proportionally to all stakers based on their shares.
4.5% as Affiliate Rewards.
Affiliate Rewards Requirement
Participants must stake in LSDFi for at least 100 days to qualify for affiliate rewards.
