Lido Liquid Staking on Polkadot via Moonbeam

Natively staked DOTs are 'frozen', since you have no way to transfer or sell them. Lido on Polkadot lets you mint a stDOT for each DOT you stake. stDOT token can then be transferred, sold and used as a LP or collateral position in Polkadot DeFi ecosystem.Future DeFi opportunities:

• Stable swap will let you sell your stDOTs without waiting for the unbonding period.
  
• AMM protocols can generate additional rewards and provide LP fees. Vaults and yield optimizers can be used to increase and compound yields.
  
• Lending protocols will let you get additional APR for providing stDOT and can be used to create leverage.
  

We have a dynamic stake reallocation algorithm. It lets us ensure that only validator nodes that perform well, were never slashed and always participated, are nominated and have no penalties, which leads to higher APR. You may find currently selected validators in this list.

In order to pick the most effective validators with good performance we constantly get public and provable data from the network about oversubscribing, fees, performance and slashing risk for each node.

That automation allows unattended staking and leaves no need in validator performance review and manual intervention to reallocate your stake.

Strategy includes nominating the optimal number of validators in order to keep a higher chance of getting into the active set without decreasing average APR. According to our short-term and long-term simulations and also according to the rules of the Phragmén algorithm we nominate three validators from each ledger.

Slashing is hedged now by splitting stake and nominating by at least two ledgers. We also see in Polkadot's network data that a stake of over 1,000 DOT ensures we get in the top 256 nominators of a validator. Therefore: 500,000 DOT / 3 Ledgers / 3 Validators ~ 55,555 DOT may be nominated per validator. Meaning for the first stage, maximum stake per ledger may be, and is limited at 100,000 DOT.

Average expected DOT delegation reward APR is 13.94% according to stakingrewards.com as of May 17th, 2022. Our own research shows an average of 12.55% APR before fees for all the nominator's stakes over 1,000 DOTs. Around one third of all the staked DOTs are now having less APR than average.

According to our simulations Lido's on Polkadot APR is expected at 16.5% APR. The actual result may vary and will be optimized throughout the life of the protocol.

Staking rewards accrue automatically because stDOT is a rebase token so your wallet balance reflects exactly the amount of DOTs staked in the relay chain. Smart contracts will be updating reward balances every 24 hours, after each Polkadot era ends.

Lido protocol fee is 10% of net staker rewards. That means having 16.5% APR for Lido on Polkadot, your net profit is 16.5% APR − 10% fee = 14.85%.

Lido is the market leader for Ethereum liquid staking, representing over 80% of market share in that space.
stDOT smart contracts have been audited by MixBytes separate auditing team and Dedaub.
If using only Lido on Polkadot staking with no additional DeFi products added on top, then only these points are to be considered.

1. Smart Contract risk which is mitigated by audits and expertise of the development team.
   
2. Validator's downtime risk still exists, but will be promptly detected and unreliable validator will be replaced.
   
3. Unpeg risk is not applicable as DOTs are minted 1:1 to stDOT.

Lido on Kusama was launched on February 18th, 2022 on Moonriver Network. It has over 23,000 KSM staked with average APR ~24%, while Kusama staking average return is ~17% APR. It already has multisigs enabled, decentralized oracles launched and a Stable AMM pool launched on Solarbeam as announced.