DeFi network and Polkadot (DOT/USD) liquidity hub Acala announced a partnership with top-grade provider of blockchain infrastructure Blockdaemon to support its newly-launched staking derivatives for Kusama (KSM/USD) and Polkadot, Invezz learned from a press release. Acala’s DOT and KSM Liquid Staking is the first liquid staking product of its kind in both crypto ecosystems. As such, it is part of a new class of financial products that target creation of new use cases for DeFI and compounding staking liquidity. Today, the product launches on Acala’s KSM-based blockchain Karura.
Resolving issues with locked liquidity
The value of liquidity staked on Polkadot and Kusama at the moment is more than $21 billion and around $2 billion respectively. However, these are dormant assets, which don’t yield returns. What’s more, users have to wait a week to redeem their assets on Kusama and 28 days for Polkadot.
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Blockchain infrastructure provider Blockdaemon boasts multiple layers of risk mitigation to make sure Acala and Karura grow safely and securely, making it possible for user funds to remain liquid while earning rewards for Kusama staking. Konstantin Richter, founder and CEO of Blockdaemon, said:
“As the leading blockchain infrastructure provider, pushing for innovation in the staking and security space is a top priority for Blockdaemon. Acala’s Liquid Staking product is poised to unlock billions in liquidity across Polkadot and Kusama, and we are excited to be the first node operator to join this program to help users compound their DOT and KSM staking yield.”
Staking KSM while maintaining access to liquidity
Acala developed and launched liquid staking on Karura, where users get LKSM, a yield-generating, liquid token that represents rising staking rewards as well as staked KSM value, which they can unbond at any time. Right now, users who stake KSM for LKSM can earn rewards of up to 16% APR. moreover, they take advantage of the fact that LKSM is an unlocked token providing access to its underlying KSM liquidity.
Multiple ways of using LKSM
Traders can use LKSM for their trades in an LKSM/kUSD pair within Karura, as collateral for a kUSD stablecoin loan, or to become liquidity providers in the LKSM/KSM pool. LKSM offers a staking minimum of just 0.1 KSM. As you can redeem your tokens at any time, there’s no unbonding period to reckon with.
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