Deep Diving into LSD and the Trip it will take us on…
This is a continuation of our previous article and goes much deeper behind the nuts and bolts of our LSD design parameters, LSD Staking Swaps, and the mathematics that makes it all work.
LSD Design Parameters
LSD Commissions: WYND LSD aims to be competitive in the marketplace. Our strategy is to charge 10% less in commission than the market median. Based on the commission charged in the market for other similar products, this number works out to be 9%.
Max Validator Commissions: Only validators with 10% commissions or less are eligible to receive LSD gauge weight and delegations.
Gauge Weight Thresholds: Following the first gauge snapshot, validators must receive a minimum of 0.1% gauge weight to receive incentives. Additionally, validators’ gauge weight is capped at 10% to promote decentralization.
Optimized LSD Liquidity and LSD Staking Swaps
With the introduction of LSD assets, there will be multiple ways to acquire and disperse LSD assets. To acquire LSD assets, a user has the option of depositing the native asset in exchange for the wyAsset or using an LSD Staking Swap pool to trade the native asset for the wyAsset at the market price.
Conversely, to convert the wyAsset back to the native asset, the user also has several options which include LSD withdraw which takes roughly the unbonding period to convert the LSD asset back into the native asset, or to immediately exchange the wyAsset for the native asset using an LSD Staking Swap pool.
Given the many options to enter and exit wyAsset positions, we are proud to introduce Smart LSD Swaps. Smart LSD Swaps optimizes the route in which LSD entry takes so that users will always get the maximized value on their LSD deposits. For example, if a user has $JUNO and wishes to acquire $wyJUNO, Smart LSD Swaps will compare the market price of the $JUNO/$wyJUNO pool against the LSD deposit exchange rate and automatically route the $JUNO into the path that nets the most $wyJUNO for the user.
This innovation will greatly improve the LSD user experience, increase value for our users, reduce price volatility between native and wyAssets, and drive volume into our Staking Swap Pools.
Staking Swap Mathematics
Staking Swap pools use a modified version of stable swap pools. Modifications were made to the more common stable swap pools, which are typically used for 1:1 target-valued stablecoin assets, so that the invariants are more optimized for LSD assets — which by design will slowly deviate in value in a predictable manner versus the native over time.
At a high level, the customized invariant used for WYND LSD Staking Swap pools will minimize impermanent loss and improve capital efficiency by 20x versus traditional xy=k pools within 8% of the redeemable rate.
To dive deeper into the mathematics, please see below:
This is just the beginning rollout of WYND’s multiprotocol, multichain DeFi vision. LSD will play an essential role in this vision and synergize with WYND DEX and future protocols. Participate in LSD, vote on LSD gauges, and stake $WYND now to shape the future!
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