We are proud to introduce a new mechanic that significantly enhances the user experience for those contributing crowdloan campaigns on Polkadot: fluid xDOT staking!
Current options for crowdloan participants
Imagine that you are contributing DOT to a parachain project to help them win a slot (like ours for example — check out the details here). You could stake your DOT to the campaign and receive rewards in their native token, but this would leave you stuck without any liquidity for your DOT for up to two years.
You might also stake DOT via a third-party project that offers the issuance of liquid DOTs. You’d get a wrapper against the DOT that you stake to the campaign, but these projects generally don’t offer any actual use cases for these wrappers yet. Bummer!
We are pleased to be changing the game. Thanks to our new fluid xDOT staking, users will be able to stake their DOT for their favorite Polkadot parachain and get xDOT, which are DOT wrappers on our canary network on Kusama, called Genshiro. Genshiro is already up and running and offers a lot of functionality, like a working lending platform with over $2.4 million of real liquidity already locked.
xDOT makes DOT tokens into a multipurpose asset. On one hand, users can lock them for a selected project (including Equilibrium, Acala, Astar and others). On the other hand they get exposure to this new DOT derivative for use inside our systems, not to mention that they also get EQ token rewards.
xDOT will be also available on Equilibrium once it becomes a parachain on Polkadot. This means users will be able to choose where they want to mint their xDOT from between two networks.
xDOT introduces noteworthy use cases
You can use these xDOT wrappers as liquidity on liquidity pools to start earning yield right away. The platform’s current APY is over 25%. And it’s now completely possible to use xDOT as collateral to take out a loan from the system — it’s never been done this way before!
You can also lock xDOT as collateral and take out loans in any asset available on the platform, including stablecoins. The APR can be as low as 1%, and you can affect it by setting the collateralization level of your choice. The more collateral you provide, the lower interest you pay on your loan.
Genshiro is in a closed beta stage now. If you are eager to sign up and start earning, feel free to ask active users for an invitation in our chat. Each active participant can invite up to two friends to join in!
Ledger wallet users, take note: we will also support parachain auction bidding from your hardware wallet. This kind of functionality is only possible due to our fluid xDOT staking — since user contributions are now a simple transfer of DOT to a custody multisig account, Equilibrium can offer out-of-the-box support for Ledger devices. We will provide an interface where Ledger users can contribute their DOT with the help of the Pokadot.js extension. Please note that this functionality works only when you contribute to Equilibrium! Right now we’re the only project with full Ledger support.
How does our fluid xDOT staking work?
Since we need to control the return of the DOT back to users after a lease period ends, we will gather all the user contributions via a single custodian address before participating in the bidding process from that address.
The custodian address will be managed with multisignature permissions by influential and trusted counterparties (Signum Capital, Genesis Block Ventures, DFG, and PNYX Ventures). Once Equilibrium gets a parachain slot on Polkadot and the bridge between Equilibrium and Genshiro is enabled, fluid staking will become more decentralized then.
This does not exclude users from participating on their own, where they lock their tokens directly in the relay chain. If the project they staked for wins a slot, they can claim their tokens back after its parachain lease period ends (which is two years on average).
How xDOT brings value to users
To sum things up, let’s take a look at the setup from the user’s perspective:
Crowdloan participants can:
- Receive xDOT tokens on Equilibrium or Genshiro once their favorite project wins the slot
- Claim project tokens on the respective parachain, proven an xDOT balance
- Sell xDOT tokens or provide liquidity by putting them into the corresponding Balancer pool
- Use the Balancer LP token in Equilibrium’s parachain or on the Genshiro DeFi platform
- Use xDOT/DOT tokens inside Equilibrium’s parachain or on the Genshiro DeFi platform
All DOT token holders can:
- Bridge DOT from the Polkadot relay chain to the Genshiro substrate or transfer their DOT to Equilibrium parachain
- Buy xDOT tokens or provide liquidity by putting DOT tokens into the corresponding Balancer pool
- Use the Balancer LP token (an ERC-20 token that represents a user’s share of a specific pool) in the Equilibrium or Genshiro DeFi hub
- Use xDOT/DOT tokens inside the Equilibrium or Genshiro DeFi hub
As you can see, there are plenty of use cases where this liquidity can serve you. Vote for your favorite parachain and keep your DOT liquid!