# Staking Strategies

When staking SOL on LSD, users select a risk profile that expresses how aggressively they want the pooled SOL to be allocated.

Risk profiles do not route funds on a per-user basis.

Instead, all user preferences are aggregated using a quadratic model to determine the pool-wide strategy that governs how SOL is allocated across staking protocols.

Each risk profile defines strict allocation boundaries that the AI must follow when recommending allocations.

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### Risk Profile Options

LSD currently supports three risk profiles:

* Safe Strategy
* Balanced Strategy
* Max Returns Strategy<br>

Each strategy represents a different trade-off between yield optimization and risk exposure.

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### Safe Strategy

Objective: Capital preservation and reliability

#### Characteristics

* Focuses on validator and protocol stability
* Allocates only to large, proven staking protocols
* Avoids incentive-heavy or experimental strategies
* Minimal allocation changes over time

#### Allocation Rules

* 100% of pooled SOL allocated to:
  * Protocols with TVL above $1B
  * Strong operational track record
  * Consistent revenue and uptime

Suitable For

* Users who prioritize safety over maximum yield
* Long-term SOL holders
* Users who want predictable returns with minimal risk

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### Balanced Strategy

Objective: Optimized yield with controlled risk

#### Characteristics

* Mix of core staking and higher-yield opportunities
* Limited exposure to newer or incentive-driven protocols
* Moderately adaptive to changing market conditions<br>

Allocation Rules

* Up to 30% of pooled SOL may be allocated to:
  * Newer protocols with higher yields
  * Incentive programs that pass AI risk screening
* Remaining 70% stays in Safe Strategy protocols

#### Suitable For

* Users seeking better returns than pure conservative staking
* Users comfortable with limited exposure to incentives
* Long-term users who want measured growth

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### Max Returns Strategy

Objective: Maximize yield within defined safety limits

#### Characteristics

* Higher exposure to incentive programs and emerging protocols
* Broader allocation range
* More responsive to yield and incentive changes

#### Allocation Rules

* Up to 50% of pooled SOL may be allocated to:
  * Incentive-heavy protocols
  * Emerging staking opportunities with higher upside
* Remaining 50% allocated to safer, established protocols<br>

Suitable For

* Users comfortable with higher volatility
* Users seeking higher upside potential
* Early adopters willing to accept more risk for returns

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### Quadratic Strategy Aggregation

Risk profiles are aggregated using a quadratic weighting model, meaning:

* The number of participants matters more than capital size
* Many smaller users can outweigh a single large wallet
* Prevents whales from unilaterally controlling strategy selection

The strategy with the strongest aggregated preference becomes the active pool-wide strategy until the next rebalance.

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### Dynamic Rebalancing

#### Rebalancing Principles

While protocol conditions are monitored continuously, allocation changes are applied only once per Solana epoch (\~2–3 days).

Rebalancing occurs only when:

* Risk-adjusted returns materially improve
* Risk thresholds are exceeded
* Structural changes occur in the staking environment
  * Protocol risk changes
  * Incentive programs end or change
  * Liquidity or withdrawal conditions shift

This approach:

* Minimizes unnecessary transactions
* Reduces operational costs
* Maintains responsiveness without overreacting

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### Key Notes for Users

* Risk profiles do not guarantee returns
* Higher potential yield always comes with higher risk
* Strategy selection influences the entire pool, not just individual deposits
* Allocation decisions are:
  * AI-assisted
  * Strategy-constrained
  * Executed on-chain
  * Fully transparent