# L-Token

L-Token represents tokenized staked token that is fungible and liquid. L-Token releases the derivative value of the underlying staking asset fueling and powering more applications without sacrificing the security of the whole network.

The exchange rate between L-Token and the underlying asset will increase over time as staking yield continuously accrued

The L-Token and underlying asset exchange rate starts from an co-efficient index

$Real Rate = Exchange Rate * CoefficientIndex$

- Co-efficient index = 10, meaning the protocol starts as 1 LDOT = 0.1 DOT
- If current exchange rate = 0.1203
- Exchange Rate / Co-efficient index = 1.203, meaning if you stake 1 DOT from day one, you would have 1.203 DOT now

The Annual Percentage Yield is an indicative rate based on the average return for Polkadot and Kusama validators that meet our staking strategy. Homa protocol aims to balance risks (e.g. slashing risks) and staking reward, while focusing on liquidity e.g providing liquidity for staked assets and instant redemption of underlying asset.

Last modified 2yr ago