Exchange rate

The exchange rate of LSW:WAX ensures accuracy and fairness in liquid staking. It starts at 1:1, dynamically updating based on accrued staking rewards.

$$Exchange Rate =Total LiquidStakedWAX/ TotalNativeWAX$$

TotalNativeWAX = Staked WAX+ accrued staking reward from DeFi

TotalLiquidStakedWAX = LSW minted

For example:

The pool will initially start at a 1:1 ratio and will be dynamically updated based on the accrued staking rewards. To understand how this works, let’s consider an example:

Avral is LSWs first user and he stakes 100 WAX, he then receives 100 LSW in return.

$$ExchangeRate: 100/100=1$$

Let’s assume that time has passed and 10 rewards in WAX were accrued.

Now, the new exchange rate would be:

$$ExchangeRate: 100/100+10= 0.91$$

If Avral decides to withdraw his WAX, he will receive 110 WAX for 100 LSW based on the new exchange rate.