One of the key benefits of blockchain technology is that it can offer banking services without banks.
Instead of banking clerks, there are smart contracts. Instead of offices and guards, there is a decentralized network secured by its consensus mechanism. This is the foundation for Finance 2.0, or Decentralized Finance (DeFi).
One of the most sought-after DeFi features is staking. Just as banks pay interest on deposits, smart contracts pay income to tokenholders who stake their assets.
Making Your Crypto Money Work for You
Since time immemorial, borrowing and lending has been the lifeblood of any economy. Borrowers need money to grow their businesses, or they may need cash to get out of temporary financial trouble.
In turn, lenders supply funds to meet borrowing demand. To make it worth their while and cover the risk if they don’t get paid back, they charge an interest rate, so that borrowers have to return more than they borrowed. Otherwise, why would lenders bother?
This process is now completely automated. Thanks to blockchain’s distributed and immutable database feeding smart contracts, the demand for borrowing is easier to meet than ever. In the crypto world, it is interchangeably used with different terms.
How Does Staking Work?
Staking is locking up digital assets into a smart contract platform such as Ethereum, Cardano, or Solana. These are all proof-of-stake blockchain networks. Meaning, instead of using specialized ASIC machines to run cryptographic hash functions, as is the case in Bitcoin’s proof-of-work blockchain, they use a different method to secure and verify transactions.
As their name suggests proof-of-stake blockchains use economic validators instead of miners. In this consensus mechanism, validators use their locked crypto funds as a replacement for energy-hungry ASIC miners. This is their stake in the network.
Some view the PoS consensus as a weakness because one would have to own 51% of the network to compromise it. In contrast, a PoW would need to be overcome with brute CPU power, which is at this point virtually impossible.
Whichever system proves itself in the future, validators receive small rewards when people use the network, just as Bitcoin miners do. In fact, when all 21 million bitcoins are mined, miners will also start receiving transaction fees instead of block rewards.
By the same staked token, if validators misbehave, they get slashed. This means their locked crypto funds are reduced.
In the case of the largest smart contract platform, Ethereum, which is soon to transition into a fully PoS blockchain, slashing is done for two reasons — attestation and proposal offenses.
By automating incentives and discouraging dishonesty, proof-of-stake (PoS) networks are secured without centralized institutions. The validators’ stake is the foundation for the network’s trustworthiness. However, staking can also mean something else.
Staking As Liquidity Mining
When people use the word “staking” in reference to cryptocurrency, it can either mean validator staking or liquidity mining. For instance, a crypto trader can say ‘I have staked X tokens into Y platform for a Z yield’. This means they have become a liquidity miner by locking up their tokens for other traders to use in exchange for a small cut.
Although centralized exchanges such as Coinbase or Binance provide token swaps the same way banks provide currency swaps, the same can be done with decentralized exchanges. For that to be possible, liquidity has to be provided, so the swaps can run smoothly without delay.
The measure of any market liquidity is the speed with which traders can sell/buy assets without a major price shift. Case in point, non-fungible tokens (NFTs) are inherently illiquid assets because their price is speculative and low in supply, just like in the real estate market.
For regular tokens, an exchange like Coinbase is the market maker that provides liquidity for token swaps. Without them, how can liquidity be achieved? Through the use of automated market makers (AMMs). For instance, a decentralized exchange Uniswap uses AMM protocol to make everyone into a liquidity provider.
Everyone with a crypto wallet can become a liquidity provider by staking their tokens into a liquidity pool, which is just another smart contract. Then, when a trader wants to exchange token A for token B, they tap into that pool, giving the liquidity provider a cut.
Likewise, the identical process occurs with lending protocols such as Compound, Aave, and others. At the end of the line, staking is a form of passive income utilizing crypto funds. This utilization commonly takes three forms:
- Staking crypto assets to secure the blockchain network itself
- Staking crypto assets to provide liquidity on decentralized exchanges
- Staking crypto assets to provide liquidity on lending platforms
The big question is, which form of staking utilization is the most profitable? The answer to this question is the main focus of yield famers who are always seeking the next highest APY (annual percentage yield).
Staking Size and Profitability
According to Staking Rewards aggregator, the total crypto assets staked across different blockchain platforms stands at about $280B.
Top six cryptocurrencies by staking marketcap: Staking Rewards
As you can see, the staking rewards completely outpace the banking sector’s national average savings account interest rate of 0.06%. Moreover, when we examine lending protocols themselves, the staking rewards are even higher.
This effectively nullifies the erosive effect of inflation on savings. Commonly, stablecoins offer the highest and most reliable staking yields for the simple reason their demand outmatches their supply. After all, stablecoins nullify inherent crypto volatility while also being a cryptocurrency. As such, stablecoins are a natural fit for a cheap and instantaneous global payment system.
How Can You Start Staking?
One of the more popular and easiest ways to start earning passive staking income is through MyContainer. This dApp relieves you of the manual labor of finding the right coin and the right blockchain to stake in.
Instead, all in one place, it offers over a hundred coins for staking. Once picked, MyContainer leverages those deposits in the background, delivering the staking yields back to you. Therefore, their business model is cut inception — cut from a cut.
Is Staking Worth It?
Staking is becoming increasingly popular in both the crypto world and traditional finance. After all, it is no secret that day-trading stocks delivers losses for the vast majority of investors. Case in point, an eToro study concluded that 80% of day traders lose money over a year, with an average loss of 36.3%.
Nonetheless, risks in staking should not be disregarded as well:
- Crypto volatility, if deciding to stake non-stablecoin tokens.
- Lock-up periods – while you retain the ownership, tokens are not available during.
- Hacks – few platforms have insurance. Nonetheless, even those that don’t tend to refund assets unless they suffer a reputational hit. For instance, in a recent $600m Axie Infinity hack, the team promised refunds.
With these caveats in mind, staking is a profitable venture compared to traditional finance by a significant, inflation-outpacing margin. Moreover, because it doesn’t rely on active engagement, staking is a low-anxiety, set-and-forget form of long-term investing.
PrivaCrip to Power a Blockchain Network That Could Follow Cardano & XRP
When the first decentralised blockchain was popularised in 2008 by Satoshi Nakamoto, the door was open for people across the globe to transact more securely and seamlessly. Many blockchain networks have been built and powered by native crypto tokens, including PrivaCrip (PRCR).
Native tokens exist for several reasons. Aside from acting as digital currencies, they perform various functions. Helping blockchains improve data traceability, security, transparency, and trustworthiness shared throughout the network. They also assist in reducing costs through their ever-evolving efficient methods.
Cardano (ADA) and Ripple (XRP) are among the best blockchain-based cryptos that this article will discuss. We will also look at how PrivaCrip (PRCR) will power a blockchain network set to launch into the crypto space.
Top Tier Crypto Makes its Mark – Cardano (ADA)
Cardano (ADA) has been around in the crypto space since 2017. The Proof-of-Stake (PoS), Ouroborous Cardano (ADA), was established using a research-based methodology.
Research is the backbone of Cardano (ADA) and is integral to its success in the cryptocurrency market. Cardano (ADA) uses an evidence-driven mechanism and peer-reviewed research to run its ecosystem to drive its evolution.
Among many things, Cardano (ADA) helps establish DeFi products and provides a suite of financial solutions. Crypto enthusiasts can stake Cardano (ADA) for a chance to earn rewards for their holdings.
With 2022 providing challenges in cryptocurrencies across the globe, Cardano (ADA) is one of the few cryptos to see a surge in on-chain trading volume this year. CoinMarketCap lists Cardano (ADA) as the 7th largest crypto by market capitalization at the time of writing.
Making Waves – Ripple (XRP)
Launched in 2012, Ripple (XRP) is a leading provider of crypto solutions for businesses. Ripple (XRP) provides developers with a solid open-source foundation for executing demanding projects. It is fast, energy-efficient, cost-effective, and reliable.
The solutions provided by Ripple (XRP) enable developers to solve inefficiencies, including asset tokenization and remittance. Therefore, individuals and businesses may apply Ripple (XRP) for DeFi, payments, tokenization, and more.
Crypto enthusiasts with a long-term focus may find Ripple (XRP) a valuable investing tool. Token holders can use Ripple (XRP) for staking its mainnet platform for a chance to grow their earnings and maximise profit.
The New Face Of Privacy – PrivaCrip (PRCR)
The soon-to-launch PrivaCrip (PRCR) is a cryptocurrency built for Web3 data privacy. It will allow users to develop and use permissionless and privacy-preserving applications. This unique feature of PrivaCrip (PRCR) secures apps, protects users, and fosters the creation of many new Web3 uses.
PrivaCrip (PRCR) will drive a blockchain that creates a more empowering and inclusive internet. It will enable developers to build secure dApps using private contracts based on original privacy research (OPR) to revolutionise Web3.
PrivaCrip (PRCR) will begin pre-sale soon and has an initial token price of 0.10 USD. According to the whitepaper, there will be a total supply of 190 million tokens, of which 40% of the total supply will go to the pre-sale.
Crypto enthusiasts who purchase PrivaCrip (PRCR) during the pre-sale will receive the most significant long-term rewards and bonuses. Those who buy with Bitcoin (BTC) will receive a 10% bonus. Also, those using Ethereum (ETH) to purchase will receive 15% of the total PrivaCrip (PRCR) they purchase as a bonus.
10% of PrivaCrip’s (PRCR) total supply is up for distribution as staking rewards, meaning that token holders who stake will receive rewards for their contribution to the crypto’s advancement.
Blockchain networks are continuously evolving, and so are the crypto tokens that power them. Cardano (ADA) and Ripple (XRP) have contributed tremendously to the success of their blockchain networks, gathering mass appeal.
PrivaCrip (PRCR), for its part, will drive a security-enabled blockchain and scalability in private DeFi, empower data tokenization, and bring together a fast-growing community. Acting on its promise, it has the potential to become the next big mover in cryptocurrency.
For more on PrivaCrip (PRCR), check below:
Cardano (ADA) Withdrawal Fees Waved by Bitrue Exchange
Singapore-based cryptocurrency exchange made Cardano one of its base trading pairs earlier this year
Singapore-based cryptocurrency exchange Bitrue announced that it had temporarily waived withdrawal fees for the Cardano (ADA) cryptocurrency.
The trading platform says that the move is meant to celebrate the support it received from the community behind the cryptocurrency.
Users will be able to withdraw ADA without paying any fees until mid-September.
Bitrue has stressed that it wants users to have “as much choice as possible” when it comes to custody options. Those who want to hold their ADA tokens will not be able to do so without paying an additional commission.
At the same time, Bitrue has touted its “Power Piggy” yield-farm investment program for those who want to earn passive income with ADA.
As reported by U.Today, Bitrue introduced the token as its base currency back in February.
In June 2021, it also became the first cryptocurrency trading platform to add support for Cardano-based native tokens.
Last month, Bitrue also announced a staking initiative with the ADA cryptocurrency. It decided to contribute a million tokens to some of the top Cardano staking pools in an effort to boost the level of decentralization.
Earlier this year, SundaeSwap (SUNDAE), the native token of the SundaeSwap exchange, also became available on Bitrue.
WingRiders Losses 59% Of Its Total Value Locked, Plunges Cardano TVL Below $100M
Popular Cardano-based decentralized exchange WingRiders has lost its position as the most valuable DEX on Cardano.
WingRiders slumped from the first position to third after losing more than 59% of the total value locked (TVL) on the platform in the past 30 days.
At the time of writing this line, WingRiders is now the third-largest DEX by total value locked, with a TVL of $19.66 million. It is noteworthy that WingRiders maintained the top spot for more than two months, claiming 42% of TVL On Cardano. However, the DEX has fallen from glory ever since.
Minswap Is Now Cardano’s Most Valuable DEX
The development also affected the total value locked on Cardano. The total value locked on Cardano has fallen below $100 million in the last 30 days after the WingRiders TVL slumped.
Interestingly, Minswap has taken the lead to become the most valuable decentralized exchange on Cardano after the massive decline of WingRiders’ TVL.
At press time, Minswap is leading, with a $49.09 million total value locked on the platform. The DEX hit the milestone after recording a massive growth of 30.9% in its TVL in the past 30 days. Minswap accounts for 51.82% of the total value locked on Cardano.
SundaeSwap, the first decentralized exchange on Cardano, is now the second most valuable DEX in the ecosystem. SundaeSwap is second in the ranking, with $19.72 million in TVL.
Like WingRiders, SundaeSwap has also lost a significant amount of its TVL over the past 30 days. In the past month, SundaeSwap has lost nearly 10% of the funds locked on the platform.
Commenting on the development, Cardano Daily, a platform that shares new developments about Cardano, said:
“After the major decline of @wingriderscom, the TVL scenario of the Cardano ecosystem has stabilized back to normal as we have seen in the past few weeks. @MinswapDEX still led the ecosystem with $51M TVL, contributing 50% of the ecosystem.”
CARDANO TVL STATUS
After the major decline of @wingriderscom, the TVL scenario of the @Cardano ecosystem has stabilized back to normal as we have seen in the past few weeks. @MinswapDEX still led the ecosystem with $51M TVL, contributing 50% of the ecosystem#tvl #cardano $ADA pic.twitter.com/xjZ6cHo8jX
— Cardano Daily (@cardano_daily) August 9, 2022
– Advertisement –