Liquid Staking on Tangle Network

Liquid Staking Workflow

Creating a Pool

The inital step is to create a pool, this is permissionless and can be done by anyone. The pool is created with an initial deposit, this can be any amount of tokens, but must be greater than the minimum bond amount. If you are simply looking to liquid stake your assets, you dont have to create a pool, you can use the pool id of an existing pool when bonding.

Who can create a pool?

Pool creation is a permissionless process, anyone can create a pool. The only requirement is that the initial deposit must be greater than the minimum bond amount.

Why do I create a pool?

You can create a pool to nominate validators on behalf of your users. By creating a pool, you are responsible for the rewards of the assets in the pool. You will need to nominate validators and ensure that the pool users are getting the best possible returns. In return for this service, you can set a commission rate for the pool. If you are providing the best reward rates of all pools, you will be able to attract more users to your pool, and earn a higher commission.

Joining a Pool

A user initiates liquid staking by joining an open pool using the join function. This transfers the specified bond amount to the pool and allows the user to start earning rewards. When you join a pool, you receive LST tokens in return. The amount of LST tokens you receive is based on the pool's reward rate and the amount of tokens you bond.

Are all LST tokens the same?

No, all LST tokens are not the same. Each pool is a separate entity, and the LST token of a pool is only valid for the pool it was created in. This means that the LST token of one pool is not accepted by another pool. This also means rewards are captured by the pool, and are not shared with other pools.

Bonding Extra

Users can add additional tokens to their stake using the bond_extra function. This can be done from free balance or from pending rewards.

Unbonding and Withdrawing

When a user wants to exit the pool or reduce their stake, they can use the unbond function to unbond a portion of their stake. At the time of unbonding, the LST tokens are burned. There is a 28 day unbonding period for all unbonds. At the end of the unbonding period, you can withdraw your unbonded tokens. This is done using the withdraw_unbonded function.

Learn more about how to execute these functions in Join a Liquid Staking Pool.

For detailed instructions on creating a pool, visit the Creating a Liquid Staking Pool.