7. Liquid Staking Derivatives Finance (LSDFi)
Introduction to Liquid Staking Derivatives Finance (LSDFi)
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 liquidity pools and in exchange 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.
Benefits to DeFi Projects:
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.
Why MetaHub Embraces LSDFi:
MetaHub recognizes the pivotal role of liquidity in fostering a robust DeFi ecosystem. By integrating LSDFi, MetaHub aims to:
Empower Users: Allow users to maximize the utility of their assets, providing them not just with a stake in liquidity pools but with tokens that carry the potential for further financial innovation.
Drive Platform Growth: The feature is designed to attract more users to MetaHub by offering competitive staking rewards and fostering a more active trading environment through enhanced liquidity.
Innovate Financial Products: LSDFi positions MetaHub at the forefront of DeFi innovation, enabling the creation of new financial instruments and services that leverage these liquid staking derivatives.
Community Engagement: By rewarding long-term commitments, MetaHub fosters a committed community, aligning the interests of the platform with those of its users, thereby promoting a sustainable growth model.
In essence, LSDFi within MetaHub is not merely a feature but a strategic enhancement aimed at catalyzing the potential of DeFi through sophisticated liquidity solutions. This initiative underscores our commitment to pioneering a more integrated, efficient, and rewarding decentralized financial landscape.
Core Mechanics
Becoming a Liquidity Provider
Process: Users will stake both MEN and USDT to obtain LP-Tokens. the LSDFi smart contract locks these LP-Tokens to activate an LSDFi package. The minimum package requires 500 USDT worth of MEN and 500 USDT).
Withdrawal: After the lock period, users can withdraw their tokens based on the current pool ratio, potentially benefiting from shifts in token value.
Staking a total of 1000 USDT when MEN is priced at 0.25 USDT, and withdrawing when it's 0.50 USDT, results in a return of 1,415 USDT, illustrating the potential for value increase due to price movements.
FORMULA: Final Multiplier = Basic multiplier + Bonus
Total Shares in LSDFi
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.
Tax Allocation for LSDFi Participants
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.
Last updated