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

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

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

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