Liquid Staking
This page describes the basic concepts of liquid staking with Lido on the Polkadot network
Using Lido, users can stake their xcDOT tokens and get stDOT tokens back, which is a tokenized version of their staked positions. stDOT is 1:1 pegged to xcDOT and can be exchanged back to xcDOT in an open market. Since stDOT represents users’ staked positions, users receive staking rewards continuously to their stDOT balance.
Rewards automatically increase the holder's stDOT balance. The holder doesn't need to manually claim it.
When users stake their xcDOT to Lido, they automatically receive stDOT tokens at the exchange rate of 1:1. After staking, users start to receive rewards right away once they are accumulated on Lido.
After the deposit is received, Lido will distribute all the funds received in the current era to the enabled ledgers on the relay chain. Tokens distribution between the ledgers will be done according to the Lido staking algorithm, which ensures equal token balance across all enabled ledgers.
When a user decides to redeem their xcDOT tokens with rewards from Lido, Lido will start the unbonding process on the ledgers on the relay chain for a specific amount of tokens that were redeemed by the user. The unbonding period takes 7-8 days on the Kusama chain and 28-30 days on the Polkadot chain. According to the rules of the Polkadot relay chain, ledgers can receive slashes on their unbonding stake, so in the end, the user can receive a little bit fewer xcDOT tokens after claiming. This is only possible when ledgers receive slashes while the user is waiting for the end of the unbonding period.
Slashes can be applied to your redeemed xcDOT tokens, so you can receive a little bit fewer xcDOT tokens after claiming them only if ledgers were slashed during the unbonding period.