Jan 19

5 min read

Karura’s Liquid KSM (LKSM) Integrated as New Bitcoin Vault Collateral for Kintsugi

Use Liquid Staked Kusama (LKSM) from Karura to secure Kintsugi’s Trustless Bitcoin Bridge

Liquid KSM (LKSM) can now be used as collateral for Kintsugi Vaults. Bridge your Kusama to LKSM using the Karura DApp today. New to Kintsugi? Follow this guide to install the vault client and get started.

Liquid Staking 101

In its simplest form, liquid staking is like the coat check at a restaurant. You give the person your coat, they tag it, and you receive a paper receipt representing your coat in exchange. When you’re ready to leave and face the cold, you give them your receipt and get your coat back. Liquid staking is similar, as a user stakes their asset, receives a liquid staking token as a receipt representing their staked asset, then can do as they please with their liquid staking token — the ‘receipt’ from coat check. Whenever they’re ready to get their original staked token back, they simply redeem their liquid staking tokens for their assets. However, in the physical world, a coat check receipt can easily be lost.

Liquid staking provides increased token utility for locked staked tokens. It allows users to leverage additional DeFi activities (such as securing Kintsugi vaults) using yield-bearing derivatives of staked tokens which otherwise have no utility beyond locking for staking rewards. Users can compound their yield by utilizing the derivative token for engaging in DeFi activities, including things like trading, liquidity providing, or lending. Liquid staking provides a practical and flexible alternative to the traditional staking model by allowing users more control over their funds and greater access to additional earning opportunities.

Introduction to KSM Liquid Staking

Karura is Acala’s experimental “canary” network on Kusama. The DeFi appchain runs a suite of applications for the Kusama ecosystem, including: Karura Swap, the AMM-style DEX for trustless trading and liquidity provider rewards, aUSD, an over-collateralized stablecoin, and KSM Liquid Staking (LKSM) — the unlocked, yield-bearing staking token that empowers users to stay liquid while earning their Kusama staking rewards.

Stay Liquid While Staking, and Utilize your LKSM on Kintsugi

Liquid KSM (LKSM) allows users to stake their KSM while maintaining access to its liquidity. When KSM is staked, users receive LKSM (a tokenized receipt for their stake) with the additional benefit of it being a yield-earning token.

Liquid KSM offers low staking minimums, and no unbonding period for the underlying KSM, since users can unbond at any time for a fee.

Get Started with KSM Liquid Staking on Karura

New to LKSM? Follow this guide to start staking your KSM on Karura for LKSM.

Sending your KSM to Kintsugi

Once you have your LKSM on Karura, the process of sending it to Kintsugi is quite simple. Just navigate to Karura’s bridge page, select Karura as the origin chain and Kintsugi as the Destination chain and send to your account on Kintsugi.

Installing a Kintsugi Vault Client

New to Kintsugi? Follow this guide to install the vault client.

Registering a Multi-Collateral Vault on Kintsugi

A single Kintsugi Vault account can support more than one collateral asset.

After installing a vault client, you should follow this guide, which offers you different ways to register a vault. During the registration process, you will select the types of collateral you would like to use. Select LKSM as your desired option and then deposit it as a new collateral asset. Once this is done, the new collateral Vault will appear in the cards in the Vault dashboard.

Multi-Collateral Operation and Management

Each registered collateral asset for your Vault has its own card in the Vault dashboard. All Vault guides are applicable to multi-collateral Vaults.

To view each collateral asset Vault, click on the “View” button on each card. The image below shows a Live LKSM Vault that you can also see by following this link.

About Karura & Acala

Acala is an appchain powering Web3 finance. Acala’s Ethereum-compatible blockchain has built-in DeFi protocols for application developers to leverage, including a trustless staking derivative (liquid DOT — LDOT), a decentralized exchange, the over-collateralized aUSD stablecoin, and the EVM+, a hybrid EVM offering fully Ethereum-compatible development environment plus full compatibility with Substrate. Karura is Acala’s sister parachain to serve the Kusama ecosystem and shares the same codebase as Acala.

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About Interlay & Kintsugi

Interlay is building a one-stop-shop for all things Bitcoin finance. BTC trading, lending, staking, and a way to deploy into other DeFi products. Trustless bridge at the core, AMM and money market on top, wrapped in a simple one-click interface with on/off-ramps and multi-chain support. Kintsugi is Interlay’s canary network, a testnet with real economic value deployed on Kusama (Polkadot’s canary network). Kintsugi and Interlay share the same code base — with the difference that Kintsugi is 2–3 releases ahead of Interlay with more experimental features.