Overview
Please note this page is under construction! (It's NOT finished yet!)
For the how-to docs, please see this page.
What happens?
You send an LSU and you get back XRD instantly!
Note, you will get back LESS XRD than if you unstaked from your validator and waited the 7 days protocol unstaking period.
How does it work?
Actually it's very simple:
When you send the LSU you ADD liquidity to the LSU Pool and get back a LSU-LP token
Then in the same (atomic) transaction you sell that LSU-LP token in the LSU-LP/XRD shape liquidity pool, which you can see here: LSU-LP/XRD Pool
You receive the XRD
Won't the XRD run out of the LSU-LP/XRD shape liquidity pool?
So it could, but it's unlikely because of supply and demand and here's why... As more and more people use Instant Unstake the price of LSU-LP/XRD goes lower and lower. At some point it starts to become attractive to arbitragers or even plain stakers... The staker (who wants to stake to a validator) can do the following:
Swap their XRD for the now cheap LSU-LP tokens
Use the LSU-LP and remove liquidity from the LSU Pool and get more LSU than they would have via staking directly
The arbitrager (happy to wait it out for a return)
Swap their XRD for the now cheap LSU-LP tokens
Use the LSU-LP and remove liquidity from the LSU Pool and get more LSU than staking
Unstake the LSU with the validator, wait the 7 days and pocket the yield difference
In fact, this is the 7 day XRD deposit we offer on the Portfolio page.
So what happens if the pool runs out of XRD?
Actually nothing exciting happens really. Just like any supply and demand situation, an asset can run out. So if XRD runs out then:
There's no XRD left so Instant Unstake becomes unavailable.
The LSU-LP/XRD LP providers are now 100% holding LSU-LP tokens at the lower price for their range (currently around 0.9850).
These LP providers also have MORE LSU-LP tokens (because of the bonding maths)
They can go to the LSU Pool, remove liquidity and get MORE LSU back than they started with.
Unstake 50% of the LSU (with the validator) and in 7 days end up with more than what they started with...
Where does the price have to be for LSU-LP/XRD for staking to be interesting?
If the price of LSU-LP/XRD is 0.9900 then a user can spend 99 XRD and get 100 LSU-LP tokens which are always worth at least 100 LSU tokens, which means they've made ~1% in 1 week. Hmm that's 67% APY 😁 You get the idea...
The LP's of this concentrated pool benefit by taking very little risk in exchanging the LSU-LP token back and forth for XRD. It's a win-win for everyone
Fees for Instant Unstaking:
Given the actions above, we can breakdown the fees:
Add Liquidity to LSUPool with LSU resource : Fee = 0
Sell LSU-LP token for XRD in the ShapeLiquidity Pool : Fee currently 0.30%
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