How to liquid stake DOT using Composable Finance
Introduction
Liquid staking is a mechanism that allows holders of staked assets to access liquidity while continuing to participate in staking and giving them the freedom to trade, lend or lock into LP thereby additionally increasing the revenue.
Recently Composable Finance has enabled liquid staking DOT which will add new functions to DeFi where you can use your liquid staked token. In this guide, we will walk you through how to liquid stake with ease.
Prerequisite
You will need a Talisman or Polkadotjs wallet to execute the transaction. You will also need to bridge DOT to Composable Parachain.
You will also need to send a token as a fee. Since LAYR is not yet launched you will need to use other token to pay for the transactions. You can use KSM, DOT, PICA and many more you can look up here https://docs.composable.finance/networks/composable/composie-asset-list for more info about which tokens can be used to pay fees. In this guide we used PICA but feel free to use any token you found from the list.
To liquid stake DOT you will need to stake a minimum of 1 DOT.
Apps you might need
- Trustless bridge – https://app.trustless.zone/
- Pablo DEX – https://www.pablo.finance/
Bridge DOT to Composable Parachain
Connect to the Trustless bridge using this link: https://app.trustless.zone/.
Straight forward and easy route is to simply send DOT to Composable Parachain using the Trustless bridge.
Another route you could also take is if you buy DOT on Pablo on Picasso Parachain you could send it via IBC to Composable Parachain using the Trustless bridge.
So depending on the route you on the Trustless bridge select send from Polkadot or Picasso if you plan to send DOT from Picasso to Composable (Polkadot) select DOT token and enter the amount. Be sure to also send some tokens for the fees.
Set fee token on the Composable (Polkadot)
After you sent DOT to Composable Parachain and token for fees you will need to set the fee token. On the Trustless bridge select sent from Composable (Polkadot). The moment you select Composable Parachain a little cogwheel will appear in the right corner.
Press on it and another window will pop up. We decided to use PICA as a fee token. The important thing is to select the token you want and that these tokens are on Composable Parachain. A pop-up window from your wallet will show. Confirm the transaction even if the fees are marked with LAYR it will go through.
Liquid stake DOT
On the Trustless bridge in the menu select option Staking. Then press stake now for DOT.
Here you will have an option to liquid stake DOT. Simply enter the amount you want to stake and when you are ready press stake. A pop-up window will show where you will need to confirm the transaction. It might happen that the wallet you are using shows LAYR as a fee again. Just ignore it since we already set up token that will be used as a fee.
And that is it. Congratulations you have liquid staked DOT.
What can I do with lsDOT, how can I unstake it, and what are the benefits of lsDOT?
If you want to unstake lsDOT you can go to the same page you liquid staked DOT and select Unstake. Enter the amount you want to unstake and confirm the transaction but you will have to wait for 28 days.
In the events you want to unstake instantly send lsDOT to Picasso Parachain and trade lsDOT on Pablo Dex.
Currently, you can put lsDOT into the LP pool on Pablo DEX. Liquid staking has just started on Composable Finance and hopefully soon we will see more use cases. For now, you can hold lsDOT and let it auto-compound.
Benefit of liquid staking is the fact that you can sell assets at any time, it keeps auto-compounding and therefore increases the value of DOT you would receive from the liquid staked token and hopefully soon we will see more usecases for lsDOT like lending, have more pools with lsDOT etc.