DeFi Network and Polkadot Liquidity Hub (DOT / USD) Acala have announced a partnership with top-tier blockchain infrastructure provider Blockdaemon to support its newly launched staking derivatives for Kusama (KSM / USD) and Polkadot , learned Invezz 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 aim at creating new use cases for DeFI and compound liquidity staking. Today, the product is launched on Acala’s KSM-based Karura blockchain.
Solving problems with blocked liquidity
The value of liquid staking on Polkadot and Kusama is currently over $ 21 billion and around $ 2 billion, respectively. However, these are dormant assets, which do not produce returns. Additionally, users have to wait one 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 securely, allowing user funds to remain liquid while earning Kusama staking rewards. Konstantin Richter, founder and CEO of Blockdaemon, said:
“As a leading provider of blockchain infrastructure, 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 of cash between Polkadot and Kusama and we are thrilled to be the first node operator to join this program to help users increase DOT and KSM staking yield.
Staking KSM while maintaining access to liquidity
Acala has developed and launched liquid staking on Karura, where users get LKSM, a return-generating liquid token representing rising staking rewards and KSM staking value, which they can release at any time. At this time, users staking KSM for LKSM can earn rewards of up to 16% APR. Furthermore, they take advantage of the fact that LKSM is an unlocked token that provides access to its underlying KSM liquidity.
Multiple ways to use LKSM
Traders can use LKSM for their trades in an LKSM / kUSD pair within Karura, as collateral for a stablecoin kUSD loan, or to become a liquidity provider in the LKSM / KSM pool. LKSM offers a minimum staking of just 0.1 KSM. Since you can redeem your tokens at any time, there is no no-obligation period to contend with.
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