How to Earn with xDOT: Step by Step Guide

November 25, 2021
How to Earn with xDOT: Step by Step Guide

Parachain projects are required to lock up a portion of DOT to lease a Parachain slot in the Relay Chain. Users are incentivized to lock up DOT for a fixed period of time in exchange for the project token. However, during the lock-up period, users’ DOT becomes illiquid. This prevents the user from managing their DOT to its full capacity (ie. staking).

However, Equilibrium solves this issue by allowing users who contribute DOT to the parachain project to receive xDOT in exchange. We call this mechanism Fluid xDOT staking. xDOTs are liquid and tradeable wrapped DOTs on Genshiro, our canary network money market system on Kusama. This empowers users to enjoy the benefit of both contributing to the parachain slot auction while having full control over the same amount of DOTs you have contributed through xDOT. xDOTs will also be supported in Equilibrium once it onboards as a parachain on Polkadot.

The following will be a detailed guide on how to gain access to xDOT.

We will first go over what it means to contribute DOT into the Parachain Slot Auction. If you would like to go straight to the guide, please skip the following section.

Contribution Process

Users who want to bid for their favorite project transfer funds to a special multisignature custody wallet (3 of 5 msig with Equilibrium, Genesis Block Ventures, PNYX ventures, Signum Capital, and DFG as participants).

Users specify the project they want to bid for and the amount of DOTs they would like to contribute. There is a minimum contribution of 5 DOTs.

Users then need to agree on the terms by signing the transaction, confirming that they indeed want to vote for a particular project in the crowdloan.

All approved funds are then used in the crowdloan campaign for the respective project. Multisig contributes to crowdloans via a special-purpose (non-transfer) proxy account which acts on behalf of the multisig. Its sole function is to avoid multiple actions from the msig account itself. Contributions happen every 4 hours or 100 DOTs collected per project. All transaction fees are deducted from the contribution amount.

With Equilibrium, you can unlock the liquidity of your DOTs during the parachain lease period. Fluid xDOT staking is our new mechanic that enables users to contribute DOT to a parachain project and get xDOT, which are DOT wrappers on our canary network on Kusama, called Genshiro. Basically, it means you get a multipurpose asset that will be also available on Equilibrium once it becomes a parachain on Polkadot.

Willing to get xDOT ASAP? You can either go the long way and learn as much as possible about the whole process or skip the following 3 passages and jump into the guide.

First, let’s make it clear about the contribution process

The contribution process is simple. Users start off by sending the DOT they would like to contribute to a special custody wallet. This wallet is safely managed through a multi-sig system that is manged by trusted parnters such as Gensis Block Ventures, NYX ventures, Signum Capital, and DFG.

There is a minimum contribution of 5 DOTs.

Users then need to agree on the terms by signing the transaction, confirming that they indeed want to vote for a particular project in the crowdloan.

All approved funds are then used in the crowdloan campaign for the respective project. Multisig contributes to crowdloans via a special-purpose (non-transfer) proxy account which acts on behalf of the multisig. Its sole function is to avoid multiple actions from the msig account itself. Contributions happen every 4 hours or 100 DOTs collected per project. All transaction fees are deducted from the contribution amount.

Now, let us walk you through 5 quick steps to your fluid xDOT:

  1. Go to https://xdot.equilibrium.io/en
  2. Choose Equilibrium in the Support your favorite parachain form and tap the Join button

3. In the New contribution enter the number of DOT you want to contribute. The minimal contribution is 5 DOT. Provide your email so we may contact you later for special bonuses and offers.


4. Tap Connect wallet

5. Enter your password (Make sure your setting is set as “Allow use on any chain”)

6. View your Total DOT contribution in My stake

And there you go! You can contribute your DOT to your favorite project and receive xDOT in exchange. We are also rewarding users with 0.5 EQ per 1 DOT that users contribute. Users who vote for EQ via xDOT before December 25 will receive a 25% early participation reward.

Through xDOT, you can now both contribute and fully manage your contribution equivalent through xDOT in Genshiro and Equilibrium in the future. However, we have more news on what you can do with xDOT. If you would like to know more, come join the #Equilibrium AMA session on November 18 1 PM UTC!

Now, we will answer all questions you might come up with, so that you feel savvy about the contribution process and your xDOTs.

How does contribution work?

Users can simply start contributing by first transferring their funds to a trusted multi-sig custody. It is safely managed through multi-sig by five trusted partners including Equilibrium.

Users specify the project they want to bid for and the amount of DOTs they would like to contribute. There is a minimum contribution of 5 DOTs.

Users then need to agree on the terms by signing the transaction, confirming that they want to vote for a particular project through the crowdloan.

All approved funds are used in the crowdloan campaign for the respective project. Multisig contributes to crowdloans via a special-purpose (non-transfer) proxy account which acts on behalf of the multisig. It’s core purpose is to avoid multiple actions from the msig account itself. Contributions happen every 4 hours or 100 DOTs collected per project. All transaction fees will be deducted from the contribution amount.

What will happen if the project doesn’t win a slot?

In case the project is not able to receive enough contribution to win a slot, all the contributed DOTs will be returned automatically to the Equilibrium multisignature wallet at the end of the corresponding crowdloan campaign. The msig will have an automated system to return all the DOTs back to individual contributors. In conclusion, all users will be able to receive their original shares minus the transaction fees.

Where can I see the total number of DOTs staked for each project?

Such information will not be available in the xDOT page at the moment. However, we are currently working on to add these figures on the table of the  fluid xDOT page.

What about Equilibrium?

Equilibrium is in the wait-and-see mode, observing current crowdloan dynamics to make the best out of its upcoming parachain strategy. However, users can pre-contribute to Equilibrium via our fluid xDOT staking and receive an extra 20% early bird bonus in EQ. The bonus is available till December 23.

Are there any special bonuses for users who contribute via our fluid xDOT staking? You bet! From now on, you can vote on any project that is running a crowdloan campaign right now via xDOT staking and get a 0.5 : 1 EQ bonus for each DOT you stake! At this moment, that list includes Astar, Acala, Litentry, Manta, Clover, and Parallel. As for the users that have already contributed, the bonuses will be proportionally calculated and transferred to your accounts.

Equilibrium is the only project supporting Ledger wallet for users who vote for Equilibrium via xDOT. This is a unique chance for all DOT ledger holders to support the best DeFi project with primary technology in the Polkadot Ecosystem.

How will xDOT get to Genshiro in Kusama?

When a project wins a slot and becomes a parchain, Equilibrium will take the snapshot of all contributions made via xDOT and allocate a corresponding amount of xDOT tokens to user addresses in Genshiro.

Once Equilibrium becomes a parachain in Polkadot, xDOTs will be supported as well. All users will be able to enjoy the ability to bridge these tokens back and forth between Polkadot and Kusama ecosystems.

How will I receive my project tokens as a contributor?

Most projects reward their users according to a modified vesting schedule. We will make periodic snapshots of xDOT balances on user accounts and will reward users in the corresponding parachain based on these snapshots on a pro-rata basis. If you sell or transfer your xDOT before these snapshots, you won’t be eligible for future rewards.

However, there still remains the issue of users trying to extract rewards without contributing to the network: users may  purchase xDOT one day in advance to be eligible for rewards and sell the xDOT after the distribution. To avoid this, Equilibrium will introduce a bond-like market and the notion of Accrued Interest, where buyers of the xDOT will have to pay the seller a negotiated premium for accrued project token rewards.

Attention!

We currently offer a lot of bonuses at the xDOT auction. Users vote for their favorite parachains via xDOT and get up to 1 EQ per 1 DOT. Also, you can get an increased 25% early bird bonus on your contribution to EQ crowdloan via xDOT staking till December 23!

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