AQTIS is revolutionizing DeFi with its unique approach to creating LSDs. In this blog post, we go into detail on what those are, and how we categorize them for ease of understanding.
Understanding AQTIS LSDs
We’re a software company building tools that allow investors to achieve consistent yield with our unique LSDs, and gain access to best-in-class trading tools and assistants. We’re bringing technology typically only available to institutional investors and making it available to everyone.
To better understand what AQTIS LSDs are, let’s first provide more clarity on what an LSD is. An LSD (Liquid Staking Derivative) serves as a digital representation with value derived from an asset staked within a blockchain ecosystem.
This derivative token is referred to as ‘liquid’ because it can be traded, transferred, or used in decentralized finance (DeFi) applications, enabling the holder to participate in other activities without having to un-stake the original assets. Unlike standard LSDs which derive yield from network validation rewards, the yield of our LSDs is derived from our proprietary Quant Tech and the AQTIS ecosystem.
Let’s explore each of the LSD categories in turn.
Standard LSDs
We have coined a category called ‘Standard’ LSDs, referring to an LSD with characteristics you might already be familiar with.
qETH is a yield-bearing Liquid Staking Derivative or LSD for short. It has ETH in the name because it is pegged, 1:1 to native Ethereum, and the ‘q’ part is that this LSD, or the liquidity generated in the minting of the LSD is used in our Quant Tech.
Like many other ETH-based LSDs, holders of the LSD will receive their yield in Ethereum, as you find with other LSDs built on Ethereum.
Speaking of yield, the qETH LSD has a 10% APY, which comes from two assets: 7.5% APY in native Ethereum, and 2.5% APY in AQTIS tokens. AQTIS offers not only competitive yield but access to the AQTIS token, the gateway to the AQTIS ecosystem.
Hybrid LSDs
Hybrid LSDs are staking derivatives that combine different components to create something familiar to LSD holders, but also, have new elements investors may not have seen before. QSD is our version of a hybrid LSD.
QSD, or Quant State Dollar, delivers its yield in stablecoins, giving the flavor of a yield-bearing stablecoin. But QSD itself is not a stablecoin, it’s an LSD with a dynamic price range.
QSD represents a unique fusion of a traditional LSD/token and a currency. The yield is standardised in USD but the market price is not. At the same time, several unique features help QSD maintain a semi-stable state. We will explain this further below.
For now, the key thing to understand is that it has a standardized APY the moment it is minted of 15%. So as an example, for every 100 QSD minted, $15 USD in yield is created. Once all the 100 million QSD are minted, however, that’s where things become interesting.
To mint a QSD costs $1. Once all are minted, the market decides the price. We have designed QSD to have a floor price of $0.7, which AQTIS will maintain to ensure it doesn’t drop below that. But there is no limit to the upper floor price — the market can set it as high as it deems its worth. These pricing dynamics mean the APY changes according to the underlying value of 1 QSD. Let’s explain how that works.
So QSD is hard coded to generate $15 per 100 QSD, but if the value of QSD is less or greater than $1, the APY for the newbuyer automatically changes to reflect that. The chart below summarises this:
As you can see, to maintain the $15 yield per 100 QSD, the APY adapts to the market price. This creates a stabilizing effect: the more valuable the market price for QSD, the lower the APY, the lower it is, the higher the APY.
So to summarize, as the amount of APY in $ is fixed per QSD, the amount of APY a buyer receives, depends on the market price of QSD at the time of buying. Price fluctuations after buying do not affect the APY of QSD holders, 100 QSD still yields $15 annually.
A new buyer just receives more QSD when the price drops, increasing the total % APY or decreasing it when the price goes up.
Exotic LSDs
Exotic LSDs are liquid staking derivatives that create yield in new or novel ways. While all our LSDs at AQTIS create yield using our Quant Tech, QRT takes that yield and adds a new dynamic that rewards holders in ways not typically seen before, which is why we class QRT as an exotic LSD.
QRT is designed to alter the share of yield to reward users who hold for the long term. While the yield for QRT is hard-coded, the value of that yield can fluctuate, because of its unique yield: user mechanism. We’ll explain that more below.
What’s special about QRT is that its rewards will dynamically adjust to how popular the LSD is. The QRT token is designed to deliver a fixed amount of rewards, irrespective of how big or small the user base is. If users begin to exit the token, the QRT yield is distributed among a smaller group of people.
The result? A token with a hard-coded yield. We’ll reveal more about the yield specifics of QRT closer to the time of launch.
So while the QRT token price might decrease, users benefit from substantially higher rewards when other people exit the LSD.
In Summary
These terms are designed to help users understand some of the mechanics behind the types of LSDs AQTIS has developed.
Standard LSD — this is an AQTIS LSD that has features that will be familiar to most LSD users. qETH is 1:1 pegged to Ethereum and delivers 7.5% APY in ETH + 2.5% in AQTIS tokens.
Hybrid LSD — this is an LSD that has some of the features that are familiar to users, with some novel features that are not. QSD is a Hybrid LSD because it produces a yield in USD of 12.5% APY and 2.5% in AQTIS, but has the additional feature of increasing or decreasing the APY for new buyers depending on the market rate for each QSD.
Exotic LSD — an exotic LSD introduces new mechanisms that have never been seen in the DeFi space. AQTIS’ exotic QRT has a unique yield-to-user mechanism that redistributes the yield depending on how many people have bought and sold the QRT LSD.
More questions?
As always, we’re happy to answer all your questions and suggestions and would love to hear your feedback, do let us know your thoughts in our Discord and Telegram.
That’s all for now. Stay tuned for much more coming up and we’ll catch you in the next update.
