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You send an LSU and you get back XRD instantly.
Note, you should get back LESS XRD than if you unstaked from your validator and waited the 7 days protocol unstaking period.
Actually it's very simple:
- 1.When you send the LSU you ADD liquidity to the LSU Pool and get back a LSU-LP token
- 3.You receive the XRD
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 plan stakers... The staker (who wants to stake to a validator) can do the following:
- 1.Swap their XRD for the now cheap LSU-LP tokens
- 2.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
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...
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
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%