Liquid Staked DOT is Live on Composable
Staking is an important mechanism for many networks, including the Polkadot ecosystem. While traditional staking provides yield to participants and contributes significantly to network security and consensus, it also removes liquidity from the ecosystem as tokens become locked and illiquid.
Recognizing this challenge, and in an effort to help maintain liquidity within the Polkadot ecosystem while generating new valuable use-cases, we are excited to introduce Composable’s Liquid Staked DOT (lsDOT). Notably, lsDOT will also plug into our upcoming Restaking Layer, a mechanism that we will dive into with greater detail in a later blog.
What is Liquid Staking?
Liquid staking is a mechanism that allows holders of staked assets to access liquidity while continuing to participate in staking or securing a blockchain network. Liquid staking protocols and assets address this challenge by issuing fungible or representative tokens (e.g., staked versions of the original tokens) in exchange for the locked assets.
These liquid tokens can then be freely traded, lent, or employed within various DeFi applications, allowing users to navigate market fluctuations, generate additional yields, and actively engage with their assets while maintaining their staking commitments and yield on the original network.
Why have we launched lsDOT?
The introduction of lsDOT is a strategic initiative, aimed at counterbalancing the liquidity constraints imposed by traditional staking. We are exploring several new avenues for users to engage their lsDOT in various applications fostering greater utility and flexibility not just within Polkadot but eventually across various IBC connected ecosystems via Picasso and the Composable Restaking Layer.
Thus, by introducing lsDOT, we aim to not just provide another liquid staked solution to the Polkadot ecosystem but also pioneer a path for liquid staked assets to find additional utility in a cross-ecosystem environment for more dynamic and efficient asset utilization.
What can users do with lsDOT today?
Users are now able to head to app.trustless.zone to stake their DOT tokens in return for liquid staked DOT (lsDOT) and staking rewards. Furthermore, users can now take their lsDOT and LP into the newly launched lsDOT / DOT pool on app.pablo.finance. Pool incentives will follow shortly.
▶️ DOT / lsDOT pool on Pablo ◀️
What does the future hold for liquid staked assets in Composable’s ecosystem?
In the near future, this can be used to secure Composable’s ecosystem in line with the proof-of-stake (PoS) consensus model. This will be accomplished by allowing the restaking of lsDOT. The result is pooled security. This solution can be expanded to be offered to apps on Cosmos and other networks as Picasso’s IBC connections continue to add new networks (such as to Ethereum and Solana).
Initially, the first step will be to facilitate the restaking of lsDOT into Composable’s Restaking Layer. This restaking layer is vital as it not only allows for securing Composable’s network via PoS, but also facilitates partial block building and thus relieves concerns over block proposer censorship and agency issues. Once this model is implemented on Composable’s Restaking Layer, it can be integrated as a middleware and apps on various blockchains. As a result, it will create a use case for lsDOT in Cosmos and other networks, while delivering pooled security to the Composable ecosystem and beyond.
Read more about why we have introduced Liquid Staked DOT on our docs.
