Attention please: LSK Staking Explained!

The LSK staking is LIVE! We’ve designed the system to not only incentivize users to lock their tokens for governance participation but also rewards them based on their commitment duration. This mechanism ensures active involvement in the network's decision-making processes and aligns the interests of token holders with the long-term success of the Lisk project. Check it out!

By Lisk

12 Jun 2024

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Through the Lisk Portal, you are now able to specify the amount of LSK you want to stake and your locking duration. Our LSK staking system offers you the flexibility to stake any amount of LSK tokens for a locking duration ranging from 2 weeks to 2 years. This creates a "locking position" where your tokens remain locked for your chosen period. After this duration ends, you can redeem your staked tokens.

Need to unlock your tokens early? No problem! We will soon implement the "fast unlock" option, which involves paying a penalty and waiting for a 3-day emergency unlocking period. The penalty is proportional to the committed staking period and is calculated using the following formula:

Penalty = 0.5 x Staked Amount x (Remaining Days / 730)

For example, if a user has staked 100 LSK for 5 months (150 days) and wants to fast unlock, the penalty would be:

Penalty = 0.5 x 100 x (147 / 730) = 10.068 LSK

Thus, the user would incur a penalty of 10.068 LSK, and the remaining 89.932 LSK can be unstaked after the emergency locking period of 3 days. The penalties collected from users who unstake early are redistributed to the remaining stakers as staking rewards over the next 30 days.

Boost Your Voting Power and Participate in Governance

When you lock your LSK tokens, you gain voting power in the Lisk DAO. Your voting power is proportional to both the amount of tokens locked and the locking duration. Specifically, 1 locked LSK provides 1 vpLSK. Additionally, you can pause the countdown of the locking period to further boost your voting power, potentially increasing it by up to 200%.

Earn Staking Rewards

To incentivize your participation in governance, we have allocated 24 million LSK tokens to be distributed as rewards over the next 3 years, with 8 million LSK allocated per year. Your rewards are calculated daily based on the staked amount and the remaining locking duration. The longer you lock your tokens, the higher your daily rewards.

Our rewards system is time-weighted, meaning you receive higher rewards the longer you commit to staking. Thanks to our next update, you will also be able to modify your locking positions by extending the locking duration, increasing the staked amount, or creating multiple locking positions. Pausing the countdown will keep the remaining duration fixed, resulting in higher rewards since the weight remains constant.

Claiming Rewards

You can claim your staking rewards at any time through the “Claim Rewards” tab. When claiming, you can choose to either receive the rewards or re-stake them, increasing your locked amount and thereby boosting your voting power in governance.

We've made sure that your locking positions are represented as NFTs using the ERC-721 standard, similar to liquidity positions in Uniswap v3. This enhances composability into DeFi and potential future uses.

As our ecosystem evolves, so will the staking mechanisms, further enhancing the decentralization and community-driven nature of the network.

Staking for the HolderDrop

Earn up to 25,000 LSK in airdrop, depending on the number of LSK you hold! You are eligible for 10% of your migrated LSK amount, up to 250,000 LSK. A minimum of 50 LSK is required to participate. Remember, the Hodlerdrop only supports self-custodial wallets!

To unlock your full Hodlerdrop potential, ensure you meet the following criteria. Each of the actions unlocks 25% of your airdrop amount:

  1. Hold 0.01 ETH at the moment of claiming.
  2. Delegate voting power in the Lisk DAO.
  3. Stake 50% of your migrated LSK for at least 2 months at the moment of claiming.
  4. Stake 50% of your migrated LSK for at least 7 months at the moment of claiming.

While not mandatory, completing these steps will unlock your full Hodlerdrop potential!