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Auto-fixes from the paper accuracy swarm: unambiguous build-breakers, broken \ref/\cite/\input targets, and prose typos. Substantive accuracy findings (dates, contradictory numbers, LP numbering) reported separately for review.
18 lines
1.6 KiB
TeX
18 lines
1.6 KiB
TeX
\section{Introduction}
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Proof-of-Stake (PoS) blockchains face a fundamental tension between security and capital efficiency \cite{saleh2021blockchain}. Tokens locked in staking contracts secure the network but cannot participate in the broader DeFi ecosystem. This creates an opportunity cost for stakers and reduces the total economic activity supported by the network's token.
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Liquid staking protocols resolve this tension by issuing derivative tokens representing staked positions. These tokens are freely transferable and can be used as collateral, in liquidity pools, and in lending markets, while the underlying tokens remain staked. Lido on Ethereum \cite{lidofinance} popularized this model, but introduced centralization risks: a single liquid staking protocol accumulating a large share of total stake can dominate validator selection.
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Lux Liquid Staking (LLS) addresses these challenges through:
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\begin{enumerate}[label=(\roman*)]
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\item \textbf{Validator abstraction}: sLUX is backed by a diversified set of validators selected by governance, preventing single-validator concentration.
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\item \textbf{Slashing insurance}: A dedicated insurance pool absorbs slashing losses before they affect sLUX holders.
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\item \textbf{Dual token design}: sLUX (rebasing) for simple holding and wsLUX (non-rebasing) for DeFi integration.
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\item \textbf{Exit liquidity}: A withdrawal queue combined with a secondary market pool ensures sLUX can be redeemed or sold without waiting for the 14-day unbonding period.
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\item \textbf{Circular staking prevention}: Protocol-level constraints prevent leverage-based stake amplification.
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\end{enumerate}
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