I ran following commands so far
sudo dnf install waydroid
sudo waydroid -h # testing if waydroid is installed
sudo waydroid init
[13:03:43] ERROR: Failed to get system OTA channel: /lineage/waydroid_x86_64/VANILLA.json, error: -1
[13:03:43] See also: https://github.com/waydroid
Run ‘waydroid log’ for details.
what to do now?
The link you point to states …
Waydroid uses a container-based approach to boot a full Android system on a regular GNU/Linux system
So you’re running a container inside a container, does that work? I have never tried it.
Instead of running it inside of a toolbox container, you likely need to overlay waydroid on Silverblue using:
$ rpm-ostree install waydroid