Acala, the decentralized finance network and liquidity hub of Polkadot, today announced its partnership with Blockdaemon, a top-performing blockchain infrastructure provider, to support its newly-launched staking derivatives for Polkadot (DOT) and Kusama (KSM).

The first liquid staking products in the Polkadot and Kusama ecosystem, Acala’s DOT and KSM Liquid Staking represent a new class of financial products primed to compound staking liquidity and create new use cases for DeFi users and developers. The products launched today on Karura, Acala’s Kusama-based blockchain, then will launch on Acala, the soon-to-launch Polkadot-based blockchain platform.

Unlocking Liquidity

Nominated proof-of-stake networks like Polkadot and Kusama incentivize users and validators to stake DOT and KSM for alignment in security and consensus, but one problem has emerged – these staked assets offer no utility beyond earning rewards.

Over $21 billion of liquidity currently is held on Polkadot, and approximately $2 billion on Kusama. However, these assets are still locked and inactive. They cannot take advantage of DeFi to generate additional returns. The unbonding period for users is quite long, with them having to wait for 28 days (DOT) for Polkadot and 7 days (KSM for Kusama) before their assets can be redeemed. Acala’s Liquid Staking was created to solve these problems and allow for billions in liquidity within the Polkadot, Kusama and Kusama communities.

The first Liquid Staking product on Polkadot

Acala’s first Liquid Staking product is KSM Liquid Staking (LKSM), a product launched today on the Karura parachain that lets users stake their KSM while maintaining access to its liquidity.

KSM staked on Karura gives users LKSM. This liquid token is a yield-earning token and represents the staked KSM value. It can be redeemed at any time. Users also receive their increasing staking rewards. Anyone who stakes KSM to LKSM currently earns an indicative 16% APR as staking rewards. However, LKSM can also be unlocked and grants them access to their underlying KSM liquidity which they may use for other DeFi purposes.

LKSM may be used to secure a kUSD stablecoin loans, trade within Karura Swaps in an LKSM/kUSD couple, or become a liquidity provider in the LKSM/KSM pools. KSM Liquid Staking provides additional utility that allows users to increase staking return and access liquidity.

What’s more, LKSM offers low staking minimums (0.1 KSM), and no unbonding period for the underlying KSM, since users can unbond at any time for a small fee. Users can unbond immediately and avoid waiting the 7-day unbonding period. This eliminates the potential cost and time of unbonding staked KSM.

Powered by Blockdaemon

As PoS networks scale, so too does the importance of the underlying infrastructure that coordinates and maintains access to developer tools and nodes. These nodes play a key role in validating transactions and storing on-chain records, and it’s imperative that validator programs for layer-1 platforms like Acala include strong partners equipped to provide institutional-grade security, scalability, and reliability.

Acala partners with Blockdaemon for its Liquid Staking Validator Program.

Blockdaemon, which will be running validators in the KSM Liquid Staking Pool, is now secure for Kusama. Blockdaemon offers low commissions to the KSM Liquid Staking Pool participants (2%) as well as a guarantee of no-slash that users will be covered in case of a node failure.

Blockdaemon puts customer security first, with risk mitigation as their number one priority. To avoid downtime and protect users from loss, Blockdaemon’s engineers manually oversee failover procedures using rigorous processes and monitors every protocol 24/7. Blockdaemon provides data center diversity that spans over 10+ cloud service providers and bare-metal service providers, with node redundancy.

With multiple layers of risk mitigation, Blockdaemon will be supporting the secure growth of Acala and Karura and allow users’ funds to stay liquid while earning their Kusama staking rewards.

“As the leading blockchain infrastructure provider, 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 in liquidity across Polkadot and Kusama, and we are excited to be the first node operator to join this program to help users compound their DOT and KSM staking yield.”
– Konstantin Richter, founder and CEO of Blockdaemon

Join the Liquid Staking Validator Program

Interested in helping validate on Polkadot and Kusama while serving the liquid staking pool participants of Acala and Karura? Apply for Acala’s Liquid Staking Validator Program here.

Start staking KSM for LKSM to earn liquidity mining rewards

Today, the Acala team is kicking off a new liquidity mining program to reward the community with a pool of 350,000 KAR in wards. The liquidity mining program has two ways to earn:

For more information on how to get started, please review the Liquid Staking guide.

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