The ACryptoS Guide to Staking on Fantom: 4 Big Gotchas to Watch Out For
Introducing the ACryptoS Fantom Validator and a new type of Liquidizer Vault
We are proud to be Validator #105 on the Fantom Network, launched on Mar-31–2022 06:15:31 AM +UTC.
What’s The Yield?
When staking on Fantom, you can lock up your stake for up to 365 days. The longer the lock up, the higher your yield. As of today it is currently about 4.6% at no lock and 14.08% at maximum lock.
You can check the current estimated yields for staking on Fantom here: https://fantom.foundation/ftm-staking/
Why Stake?
Help secure the network. Earn yield.
“Native” Staking (staking ETH on Ethereum Validators, BNB on BSC Validators, AVAX on Avalanche Validators, etc) is IMO pretty much one of the safest ways to earn yield on crypto. If “something goes wrong”, it would mean something has gone wrong with the entire chain.
Staking on each chain has different risks though. Some chains have no “slashing” risk for example. But some…
Gotchas?
#1: YOU CAN GET SLASHED! OF EVERYTHING YOU STAKE!!!
Your Validator does not even need to be malicious. Operational slip ups like not allowing the node to fully sync up before starting validator mode when restarting can lead to FULL SLASHING.
It’s already happened before and you can review the subsequent governance proposals for a refund via the governance section of the official Fantom fWallet dapp.
So… how do I not lose everything?
Choose a competent Validator? IDK. It seems like all you have to go by nowadays are Tweets and dodgy Medium posts…
#2: YOU CAN LOSE REWARDS!
Your Validator may go down and never come back up. Ever. You would then need to unlock your tokens early and your rewards would be slashed accordingly.
THIS HAS ALREADY HAPPENED TO 3 VALIDATORS RUN BY THE FANTOM FOUNDATION THEMSELVES!!! (so far…)
Of the 105 Validators created till now, only 66 are currently still active.
#3: Choosing the wrong Validator would mean you can’t lock up your stake
This is a really important thing to know, but essentially non-existent in the official UI, and currently not officially documented at all. (Update: This is now addressed in the new v2 beta of the fWallet which has a much improved Staking UI.)
A Validator can choose to lock up its self-stake for up to 365 days and earn a higher yield (just like a delegator). When you delegate to a Validator, you can only choose to lock up until your Validator’s lock up end date. For example, if a Validator locks up its self-stake on 1 Jan 2022 for 365 days, and you delegate to it on 1 June 2022, you can only lock up your stake up till 1 Jan 2023, for a maximum of 214 days. If your Validator chooses NOT to lock up its stake, you would then not be able to lock up your stake either and will only qualify for the lowest yield.
Pro-tip: check your Validator’s lock up end date if you intend to maximize your yield, by clicking through to the Validator’s detail page.
We intend to keep re-locking the ACryptoS Validator self-stake at the maximum 365 days every ~5 days so delegators can always maximize their lock up with us.
#4: Once you’ve delegated to a Validator, you can’t increase your stake
Actually now you can, but you would need to interact with the smart contract directly. The official UI does not support this, and you would need to create a new wallet to delegate more to the same Validator.
How to Stake?
The Native Way:
https://pwawallet.fantom.network/
Or…
Introducing our first Liquidizer Vault
Our first Liquidizer Vault is the FTM Liquidizer Vault which stakes on our Fantom Validator.
Liquidizer Vaults are designed to automate yield farming on top of illiquid farms (like staking FTM with a 1 year lock up), and make them liquid (“liquidize” them).
Liquid Reserves as Built-in Virtual Liquidity Pool
This is achieved by keeping aside a Reserve of liquid tokens which are not staked in the underlying Farm, and allowing users to withdraw against them.
This Reserve is constantly topped up by the yield from the underlying Farm, as well as new deposits.
The Reserve acts as a virtual liquidity pool within the Vault, behaving like a StableSwap AMM when users withdraw. This means when withdrawal volumes are “normal”, users can withdrawal with minimal slippage. But the lower the Reserves get, the more “slippage” users will experience when withdrawing.
Additional Vault Income Stream
This “slippage” disincentivises withdrawals when Reserves are low, and also acts like a fee that the rest of the Vault earns. During periods when there is a large volume of withdrawals, there will be high withdrawal “slippage” which is “earned” by the remaining users in the Vault and the Vault APY will increase.
Parameters of Liquidizer Vaults are:
- Reserves: The amount of liquid reserves in the Vault that are not locked in the underlying protocol and available for users to withdraw.
- Reserve Ratio: The ratio of liquid reserves in the Vault as a percentage of the total Vault TVL.
- Target Reserve Ratio: The Reserve Ratio the Vault aims to maintain. Any yield from the underlying Farm and any new deposits will top up the Reserves to this level before being staked.
- Amp: The StableSwap parameter the Vault uses to calculate withdrawal “slippage”.
When a user withdraws:
- Any amount that does not bring Reserves below Target Reserves is withdrawn as normal.
- Any amount that brings Reserves below Target Reserves experiences “slippage” as if they were trading against a StableSwap pool with 2 balances: Reserves and Target Reserves.
For example, if a user were to withdraw 100 FTM from a Vault with Reserves of 1000 FTM and a Target Reserve of 2000 FTM, it would be as if he was selling 100 FTMA to a StablePool with 2000 FTMA and 1000 FTMB.
Verifying Vault Holdings
Fantom Explorer and FTMScan will show some interesting data on our FTM Liquidizer Vault:
Pro-tip: add up our liquid reserves and staked FTM and compare it to the total supply of our Vault token.
So… what does this mean?
Compared to Native Staking, the ACryptoS FTM Liquidizer Vault has the following benefits:
- Maximize your yield as if you were locking up your tokens for 365 days, but still be able to withdraw at any time.
- Earn additional yield from other users’ withdrawals.
- Automated compounding.
However:
- During times of high withdrawal volumes you may experience significant slippage and limits on your withdrawals.
- You are exposed to greater smart contract risk.
