(Part 2)
@staderlabs's Liquid Staking has opened up new possibilities with yield farming on the Terra Ecosystem and why this is a must-know
A thread ๐งต
@staderlabs's Liquid Staking has opened up new possibilities with yield farming on the Terra Ecosystem and why this is a must-know
A thread ๐งต
1. While staking $LUNA by validator delegation or with @staderlabs's plain staking is a low risk farming strategy, the biggest con that comes with that is the 21 day unbonding period.
2. The opportunity costs that comes with the unbonding is massive. Imagine not being able to swap $LUNA for stables when $LUNA takes a huge dip (hopefully never) because of the unbonding...
3. This is where the liquid staking created by @staderlabs comes in. Liquid staking will involve a $LUNA derivative, known as LunaX.
4. In liquid staking, the underlying mechanism is the same as plain staking. But in this case, after staking your $LUNA, you will get a $LunaX token. $LunaX will function like a receipt but it also has additional utility.
5. In liquid staking, your $LUNA is still distributed to multiple validators, your rewards are still auto-compounded and you will still be eligible for airdrops.
6. However, the main difference between between plain staking and liquid staking is that you can exit your position anytime! You can take $LunaX to @terraswap_io and swap all of it for $LUNA!
7. There is still the option to unstake your $LunaX for $LUNA but that will require a 21 day unbonding period.
8. The auto-compounding of rewards is still happening but to $LunaX instead of $LUNA. How this works is that the rewards added into $LunaX, increasing the value of $LunaX that you have, but the quantity of $LunaX still remains the same.
9. That's not all! $LunaX is not just a receipt token, there is actually utility for it. In the near future, you will be able to use your $LunaX as collateral to draw a loan on @anchor_protocol for $UST or to Short Farm on @mirror_protocol!
10. More utilities will be added for $LunaX in the future. But for now, by providing liquidity in the $LUNA - $LunaX pair on @terraswap_io , you can farm $SD, @staderlabs governance token!
11. Will be excited to see what further utility $LunaX can bring about. The possibilities are endless.
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