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What is Liquid Staking Protocol (LSP)?

LSP allows users to earn staking rewards without locking $flow tokens or running node softwares. Users can deposit $flow tokens and receive transferrable $stFlow tokens in return. Liquid staking combines the benefits of staking (earning rewards) and brings liquidity, as well as additional possibilities to increase your assets or hedge your positions by participating in Flow’s DeFi ecosystem.
Furthermore, LSP stakes these tokens to a set of different node providers for the sake of decentralization, preventing any single point of failure, diversifying staking risks and stabilizing liquid staking apr.

What is $stFlow token and how can I get it?

stFlow is a fungible token on Flow blockchain that represents a share of the total $flow tokens staked through LSP, along with any generated staking rewards.
There is no waiting time for receiving stFlow tokens - you’ll receive the newly minted stFlow as soon as you delegate to LSP. You can also purchase $stFlow from the open market (e.g. DEX) directly.
Since the delegated $flow tokens accrue staking rewards, $stFlow is interest-bearing - meaning that its price grows on each flowchain's epoch advancement.

How do I claim my staking rewards?

The simple answer is: you don’t have to.
As explained above, stFlow represents both your staking amount and the rewards you earn on each epoch, so its price grows over time. The same amount of $stFlow entitles you to withdraw more Flow after each epoch.

Can I unstake at any time?

Yes. You have 2 options:
  • Directly swap $stFlow back to $flow on the DEX, and you’ll get $flow tokens back immediately. Depending on the liquidity condition of stFlow <> Flow pair on DEX, sometimes it has better rates than normal unstaking.
  • Perform an unstaking request by burning your $stFlow tokens for a redemption ticket, and you’ll find both your pending and matured unstaking requests in the 'Unstaking' tab. Just like traditional unstaking, it takes 1~2 epochs, and after it’s matured you can come back to withdraw.

How long after (normal) unstaking can I withdraw my Flow?

Depending on the time of your unstaking request, the waiting period is 1 ~ 2 epochs (1 epoch ~= 7 days). After that, you will be able to withdraw your claimable amount.

What is Migrate? How to benefit from LSP if I’ve currently delegated to a node?

‘Migrate’ is a feature specifically built for existing delegators. So if you’ve delegated to a node already, you do not need to unstake from the node, but instead you can “migrate” the staked position to LSP and receive $stFlow immediately in 1 transaction.
If you don’t have any staked position, the card will be empty; otherwise the Migrate tab will be red dotted to give you a notice. Some notes here:
  • Any unclaimed rewards or unstaked tokens will be migrated along with staked and newly commited tokens, in 1 click.
  • Any new unstake request will be canceled and then the position will be migrated, all in 1 click.
There’re also certain restrictions on migratable staked positions though:
  • If the staked position has any ongoing unstaking request, it is temporarily non-migratable: you’ll have to wait for 1 epoch until the unstaking request becomes ‘unstaked’ and then come back to the 'Migrate' tab.
  • If the staked position has used locked account to handle staking (for example: Blocto), you have to unstake from locked account first. Check Unstake & Migrate's case in the user guidance for more info.
  • If you're staking through Flow Port, you should be good to go and migratable most of the case. (Unless you've staked any unvested tokens, see explanation in the end of user guidance)
  • Encountered question with other staking providers and non-migratable? -> Let us know on twitter or discord.

Why should I use LSP other than traditional staking?

There are many reasons, just to name a few:
  • Instant liquidity: You get instant liquidity (transferrable $stFlow token) while still earning staking rewards. Use $stFlow to participate in Flow’s DeFi ecosystem to earn more.
  • Auto-compound: There’s no need to manually claim staking rewards anymore. With LSP, the staking rewards are automatically claimed and restaked in the beginning of each new epoch (and thus auto-compounding!).
  • Option of instant unstaking: As long as there’s enough liquidity on DEX, you can always choose to redeem $stFlow back to $flow immediately by swapping. Sometimes DEX has better rates than normal unstaking.
  • Composability for more yield opportunity: With $stFlow, it unlocks broader yield opportunities. You can supply $stFlow on the lending market to earn double (or even triple) rewards. You can borrow more $flow to mint $stFlow with $stFlow as collaterals. You can earn trading fees (plus LP rewards) by providing liquidity to the stFlow-Flow pair, which has almost zero impermanent loss. And more opportunities waiting to be discovered.
  • Ease of use and risk diversification:
    • In traditional staking, users have to search by themselves and manually specify which node they’d like to delegate to. They also have to manually claim rewards, periodically check delegated node status and to perform unstake then stake if necessary.
    • As a comparison, with LSP one can start staking with a single click. Strategy bots will handle delegate distribution, auto-compound, slashed nodes detection, redelegation, according to different strategies (e.g. nodeCut, uptime, etc).
    • LSP benefits the decentralization of the whole network as well as some small node operators. LSP splits delegates among all eligible nodes other than delegating to a single, self-operated node.

Has LSP been audited, and what are the risks involved?

Yes, and you can find the audit report in audits.
We put security as top priority in developing in the DeFi space, and besides security audits, we’ve also set up a bug bounty program for security researchers and white hats to help audit and protect LSP. The bounty program is also publicly accessible here.

Which nodes are receiving delegates from LSP?

We do not spin up our own nodes, so the delegated tokens are not staked to us.
We adopt the practice to stay transparent and reach progressive decentralization over time. The end goal is to let token holders (in future we’ll release the token) vote and distribute delegates in a weighted manner. However, right now there’s an allowlist of nodes, only nodes within the allowlist are eligible to receive delegates from LSP.
  • Nodes in the list are chosen based on reputation, former experiences in maintaining node infrastructure, partnership, and so on. The 1st wave of nodes in the list includes nodes run by HashQuark (HashKey’s infra arm), Versus, Blockchain at Berkeley, and we’re in talk with other node operators.
  • A list of well-known nodes can be found here. If you’re a node operator and would like to join the node program, please fill in this form and tell us on discord / twitter / email.

What is the current Delegation Strategy?

There are 4 types of nodes that are eligible to receive staking rewards: Execution, Consensus, Collection, and Verification. Right now all of them are applied with the same rewards weight, but it may change in the future according to Flow’s plan. Also currently nodes cannot customize the nodeCut parameter, as it’s fixed to 8%, however, this is also updatable in future.
So for now, the delegation strategy is simple enough: it will try to evenly distribute delegates to eligible nodes. But in the future once the node weight and node cut feature have been upgraded, the delegation strategy would also be upgraded accordingly, including but not limited to metrics like self-bonded amount, uptime, slashing history, etc.

What fees does LSP charge?

Right now there’s a 1% fee applied on users’ staking rewards (it’s only applied on generated rewards, not on staked funds). This fee cut is essentially 0 as compared with Lido, which charges 10%, so as to give back more rewards to users and nodes, and to build a network effect of $stFlow.
This fee is charged to continuously fund operations, marketing expenses, stFlow <> Flow LP rewards, insurance funds, auditing expenses, and future development, etc.
The fee cut is configurable, and it may be changed in future to incentivize LSP participants and boost the adoption of $stFlow ecosystem. Further notice will be given before updating the feeCut parameter.

More questions?

Find us on Twitter or Discord and let us know.