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Cover image for  The First Staking Derivative Of Polkadot

The First Staking Derivative Of Polkadot

raphael91269290 profile image Raphael ・3 min read

Polkadot community has been excited over months on the news about the polkadot Staking derivates to solve the illiquidity problem faced by $DOT stakers. rDOT is a decentralized DeFi product provided by StaFi that solves the liquidity problem of staked DOT on Polkadot mainnet.

rDOT Token is a staking asset redemption certificate issued by StaFi to users when they stake DOT through StaFi rDOT product. rDOT tokens are anchored to the DOT assets staked by users and the corresponding staking income. rDOT tokens can be transferred and traded at any times as per the users’ convenience.

Therefore, rDOT product can help DOT stakers solve two prevalent problems:
1) There will be no need to wait for a long 28-day redemption period to transfer or trade staked DOT assets. rDOT product users can transfer and trade rDOT assets at any time to enjoy liquidity and hedge price risks.

2) There is no need to learn the complicated NPoS consensus mechanism and staking reward calculation rules if you want to maximize staking revenue. With rDOT product, users only need a few steps to deposit DOT into the rDOT contract, which will automatically select the best validator for delegation by the profit maximization strategy.

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StaFi will calculate the amount of rDOT which has to be issued to the user based on the current exchange rate between the amount of DOT deposited and rDOT when a user deposits DOT into the rDOT contracts. StaFi calculates the amount of redeemable DOT when a user holds rDOT based on the real-time staking income of DOT.

The rDOT exchange rate Ci grows with the increase in Staking income. It is determined by the total number of DOT locked in the staking contract Qstk, the total number of redeemed DOT Qred, the number of staking rewards Qrew, the number of slash Qslh, the commission rate Rcom, the total number of rDOT issued M, and the total number of burnt rDOT N. The calculation formula is as follows:

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                rDOT VALUE
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Through rDOT, StaFi solves the following problems for DOT staking users:

1) There is no need to worry about the liquidity of staked DOT. Users can trade rDOT on Uniswap at any time in the future.

2) The rDOT contract integrates a strategy for maximizing staking returns, which automatically selects a group of Original Validators with the highest returns on the chain for staking.

3) The current NPOS staking mechanism of the StaFi mainnet is rather complicated for ordinary stakers to learn, such as understanding the consensus mechanism, the maximum number of nominees that validators can have simultaneously, the determinants of reward, how to claim rewards, how to choose the best validators, and so forth. The rDOT product can maximize the staking return for users who want to stake on the DOT chain.

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About polkadot
Polkadot is built to connect private and consortium chains, public and permissionless networks, oracles, and future technologies that are yet to be created. Polkadot facilitates an internet where independent blockchains can exchange information and transactions in a trustless way via the Polkadot relay chain.

About StaFi Protocol
StaFi is the first DeFi protocol unlocking liquidity of staked assets. Users can stake PoS tokens through StaFi and receive rTokens in return, which are available for trading, while still earning staking rewards. FIS is the native token on StaFi Chain. FIS is required to provide security to the network by staking, pay for transaction fees on the StaFi chain, and mint & redeem rTokens.
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