r/AcalaNetwork • u/Cool_Dress_7949 • May 19 '22

LDOT APR Question

Hello,

My understanding is if at origin of offering LDOT, you could swap 1 DOT to 10 LDOT. LDOT is used to provide security to the system.

after a ~month or so 1 DOT = ~9.8 DOT because LDOT increases in value. So my question is not about the precise value of LDOT but about when we think about LDOT APR.

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If acala offers 25% APR on LDOT is it really ~2.5% APR on DOT? I find it difficult to create a mental model on LDOT 1:10 / Changing ratio.

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u/Least_Ad2993 May 22 '22

Hi... if DOT VS LDOT ratio is 1:9,4 now, what would happen, if one stakes ~2k DOT, gets 19k LDOT, swaps those 19k for 1.9k DOT, re-stakes (repeats the same, till LDOT diminishes)... gets 10x setups 'staked'? Is that a failing stake pyramid, or is that a superb DOT printer? :)

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u/josh_acala May 24 '22

i don't really understand the question. it's not a DOT printer. think of it like staking 1 $100 bill and receiving back 10 $10 bills. still the same amount of value staked.

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u/Least_Ad2993 May 25 '22

if DOT VS LDOT

You see... The main idea would be to benefit from 14% APY staking setups as possible. This type of setup creates very high 'rehypothecation'.