rDOT Solution
rDOT is a decentralized DeFi product provided by StaFi that solves the liquidity problem of staked DOT on Polkadot mainnet.
rDOT Token is a staking asset redemption certificate issued by StaFi to users when they stake DOT through StaFi rDOT product. rDOT tokens are anchored to the DOT assets staked by users and the corresponding staking income. rDOT tokens can be transferred and traded at any times as per the users’ convenience.
Therefore, rDOT product can help DOT stakers solve two prevalent problems:
1) There will be no need to wait for a long 28-day redemption period to transfer or trade staked DOT assets. rDOT product users can transfer and trade rDOT assets at any time to enjoy liquidity and hedge price risks.
2) There is no need to learn the complicated NPoS consensus mechanism and staking reward calculation rules if you want to maximize staking revenue. With rDOT product, users only need a few steps to deposit DOT into the rDOT contract, which will automatically select the best validator for delegation by the profit maximization strategy.
When a user deposits DOT into the rDOT contract, StaFi will calculate the amount of rDOT which has to be issued to the user based on the current exchange rate between the amount of DOT deposited and rDOT. When a user holds rDOT, StaFi will calculate the amount of redeemable DOT based on the real-time staking income of DOT.
The rDOT exchange rate Ci grows with the increase in Staking income. It is determined by the total number of DOT locked in the staking contract Qstk, the total number of redeemed DOT Qred, the number of staking rewards Qrew, the number of slash Qslh, the commission rate Rcom, the total number of rDOT issued M, and the total number of burnt rDOT N. The calculation formula is as follows:
Through rDOT, StaFi solves the following problems for DOT staking users:
1) There is no need to worry about the liquidity of staked DOT. Users can trade rDOT on Uniswap at any time in the future.
2) The rDOT contract integrates a strategy for maximizing staking returns, which automatically selects a group of Original Validators with the highest returns on the chain for staking.
3) The current NPOS staking mechanism of the StaFi mainnet is rather complicated for ordinary stakers to learn, such as understanding the consensus mechanism, the maximum number of nominees that validators can have simultaneously, the determinants of reward, how to claim rewards, how to choose the best validators, and so forth. The rDOT product can maximize the staking return for users who want to stake on the DOT chain.
Participants | Roles |
DOT Staker | Stake DOT through StaFi rDOT App. |
Original Validator (OV) | Validators on the Polkadot chain who apply to be validators of rDOT product are called Original Validators (OV). For details, please refer to StaFi rToken Paper. |
StaFi Special Validator (SSV) | The validators who control the asset relationship in the staking Contract is called SSV. SSV mechanism adopts a distributed key management solution with the panel rotated on the chain. For details, please refer to StaFi WhitePaper SSV. |
For the rDOT business, we will launch the Original Validators (OV) project. The OVs in the plan refer to validators who are part of the DOT staking contract plan. For the DOT token deposited by users, the StaFi staking contract will nominate each OV who joins the OV plan according to the nomination rules.
The OVs in the plan are required to run the nodes of the Polkadot mainnet and submit node information to StaFi. StaFi will establish an intelligent scoring system to quantitatively evaluate the performance of each OV. High scorers will first become official OVs.
The main criteria of the scoring are:
1) The background of the node operator
2) Offline duration
3) Historical slash situation
4) Quantity of self-bonded DOT tokens
5) Commission ratio
Since Polkadot adopts NPoS consensus mechanism, the staking income obtained by each elected node is the same in absolute amount. That is to say, the amount of delegated DOT that nodes get may vary, but they all receive the same amount of DOT rewards.
If two nodes are elected where one has more staked DOT, then stakers will get more rewards if they stake to the other node (with less staked DOT).
Therefore, the nomination rules for OVs in rDOT product contract are designed as follows:
1) Divide several(M) Staking Contract Pools according to the total number of DOT assets staked by users.
2) For each Staking Contract Pool, staking will follow this logic: Rank all OVs by the number of staked DOT they have obtained from low to high every 1Era (24H), and the top N OVs will be selected for nomination.
Note: The above-mentioned parameters M and N are all flexible.
Through rDOT, StaFi can help users avoid Slash in the following ways:
1) rDOT Staking Contract Pool favors those validators who do not have slash history to become official OVs.
2) Validators with a higher proportion of self-bonded DOTs will be preferred for OVs so that OVs are motivated to avoid Slash.
3) rDOT Staking Contract Pool will select several OVs for each nomination so that any one OV will not have a huge impact on user funds even if that particular OV gets slashed. Therefore, even if an OV is slashed (albeit the probability being very low), staking rewards will not be affected.
If a user directly stakes in the Polkadot network, the staking rewards cannot be obtained if the validator or nominator doesn’t claim them. If the reward hasn’t been claimed for 84 Era (84 days), all staking rewards will be destroyed.
However, if one stakes through StaFi’s rDOT product, s/he needs not to claim rewards by themselves, because StaFi will do that through smart contract all automatically.
Minting rToken is free in order to encourage users to use rDOT staking.
StaFi and OVs charge a total of 20% of the net income of the staking contract as Commission. The portion that goes to validators will be adjusted by the number of validators in the StaFi Staking Contract.
Currently, the commission rate of OV is set at 10% because the business has just taken off.
When a user redeems staking assets, s/he only needs to apply for redemption on StaFi Staking Dashboard. The redemption process is mainly divided into two steps:
Step 1: Enter the amount of rDOT for redemption, which can’t exceed your rDOT balance.
Step 2: Confirm and apply. The system will destroy the rDOT you used to redeem, and calculate the amount of redeemable DOT by the exchange rate. The balance, after deducting the service charge, will be sent to the user’s wallet address.
The service charge (Feered) is determined by users applied quantity M for redemption, the current rDOT/DOT exchange rate Rc, and the redemption rate Rr :
Among them, Rr is currently set at 0.2%.
StaFi will create rich, multi-level circulation scenarios that stretch across different chains for holders of rDOT :
1) When the rDOT product is live, StaFi will establish rDOT/ETH and rDOT/DOT pairs on DEX such as Uniswap and Balancer, and organize liquidity mining incentive campaigns.
2) StaFi will not only support the circulation of rDOT in the ETH ecosystem but also empower rDOT’s engagement in the DeFi protocol of Polkadot and Cosmos through cross-chain bridge services.
StaFi will establish a common standard for Substrate rTokens based on the development experiences of rFIS and rDOT solutions. The standard can be applied quickly to the development of other rTokens that belong to the Substrate family. Therefore, StaFi will soon launch rKSM and other Substrate rTokens after rDOT is accessible. The StaFi rToken product family will grow bigger and bigger with each passing day.
In the future, StaFi will open the general protocol to the community, and launch a grant development incentive plan to encourage community members to be engaged in the development of Substrate rTokens. Also, any Substrate project can use this general protocol to develop staking products that liberate token liquidity.
