What is Staking?
Jigstack’s STAK staking solution — Stakbank
If you have been in the crypto space for some time, you have probably come across the topic of cryptocurrency staking. On the surface, the user experience is similar regardless of the staking product the user decides to interact with. The user buys some cryptocurrency, finds a staking protocol they are comfortable with, adds their cryptocurrency to the staking protocol, and waits with the hope of generating some interest in return for their efforts.
Staking, from a user’s perspective, is essentially earning an interest return on a cryptocurrency. The interest generation is sourced from a variety of different areas depending on the staking solution in question.
Interest returns can vary from >1% APY to, some even reaching, <2000% APY at times. The reason for the massive differences in staking returns is due specifically to the staking protocol, the type of rewards, and the number of rewards that are offered to its stakers.
NOTE: Staking and participating in liquidity mining rewards programs are not the same thing. Check out this Jigstack Academy article on What is Liquidity Providing? HERE
What are the different staking solutions for cryptocurrencies?
This is a difficult question to answer because new staking solutions are being created, tested, and deployed at such a high frequency. That being said, the most popular staking solutions currently for cryptocurrencies could be categorized into:
- Validator Staking
- Centralized Staking
- Protocol Staking
- Governance Staking — Jigstack Stakbank
Validator Staking is the process of actively participating in transaction validation (similar to mining) on a proof-of-stake (PoS) blockchain, dPoS, and similar. On these blockchains, anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn Staking rewards.
These are the most tricky out of all of the staking solutions available to participate in and are the most non-liquid staking solution as you are usually required to stake for a minimum amount of time. There have been developments for solutions for the non-liquid aspect of Validator Staking to become liquid and we will most likely see more solutions like this emerge in the future.
Centralized Staking solutions, such as the DeFi staking options that Binance offers its users, generate a return by taking your staked asset and then participating with various DeFi protocols on your behalf. This usually supplying your asset to a lending contract to earn Supply APY from people borrowing your funds. The centralized entity will keep a % of the interest gained from your asset.
The majority of crypto enthusiasts seem to hate centralized staking, due to the fact these central entities are stealing potential yield that could have been given to the user. A rebuttal to this view would be that not everyone is technically sound and capable of interacting with DeFi protocols.
The benefit of participating in Centralized Staking can be found in the user experience and the user interface offered. All the user has to do to be exposed to unique DeFi protocols is to interact with one screen and click one button. All of the tricky protocol interactions, such as depositing value to a lending contract, or harvesting your yield, are taken care of by the Centralized Institutions.
Centralized Institutions are able to provide the highest level of UX/UI for their users so they can interact with and participate in unique DeFi protocols. This is a justification for the fees they scrape from their users.
On the other hand, however, centralized solutions do not provide the certainty of ownership of one’s own coins. Remember “Not you Keys, not your $STAK”
Protocol Staking is similar to Centralized Staking except the user is depositing directly into the protocols vault themselves. As said above, this is much trickier and the user experience isn’t always the best as some protocols are quite complex and not user-friendly at all.
Protocol Staking interest returns are, more often than not, sourced from Supply APY, farming rewards, auto harvesting, and auto compounding. Some protocols even incorporate all of these functionalities into one staking solution.
Governance Staking — Jigstack Stakbank
Apart from contributing to the DAO and dictating the future of the protocol, Governance Staking rewards its stakers by providing platform revenues to those staking the protocols native token on their platform. The majority of revenue from Governance Staking solutions is generated by fees from protocol interactions but can vary widely depending on the DAO in question.
Decentralized Autonomous Organizations allow for the existence of Governance Staking
Staking on Jigstack — Stakbank (DAO BANK)
Stakbank is the DAO staking solution for the JigStack platform. Unlike other platforms, Stakbank lets users withdraw funds at any time without repercussions.
STAK token holders can stake their STAK in the Stakbank and earn 80% of all transaction fees that occur on the platform. The other 20% of the transaction fee revenue is used for buying back STAK on the secondary market and then burning the tokens. This is a positive for the price appreciation of STAK as there is continuous buying pressure towards the token.
Users who are staking STAK tokens within the Stakbank will receive a cut of this fee depending on the % of STAK staked relative to the total STAK staked at the time of the transaction taking place.
As a user of Stakbank, you can stake/unstake STAK tokens to the staking pool. You will receive rewards paid in STAK that are calculated based on the APY. You can compound your rewards into the current staking STAK. In general, a user compounds his current reward to increase his current staking STAK to earn more incentives
What makes Stakbank unique is how the revenue generated can be other ERC20 tokens, or even Ethereum, depending on how our partners implement this concept. Holders can earn revenue from any activity, regardless of how much money is involved. This approach is unprecedented in this industry and elevates Jigstack above competing concepts.
We would also like to note that we are working with different companies to present unique opportunities to the Stakbank community. Jigstack offers a variety of opportunities for companies to generate revenue that they would not be able to generate on their own. This includes rewards to Stakbank holders that they would not be able to offer otherwise. We will continue to offer unique products and solutions to our STAK holders that can only be found through the Jigstack protocol.
Jigstack’s vision to bring back wholeness, simplicity, and understanding to the users. The Jigstack protocol aims to do this by developing a suite of productive flagship DeFi products that are all governed under a single Decentralized Autonomous Organization (DAO). Jigstack is positioned as the DAO of DeFi.
The platform is the “One Stop Shop” for everything DeFi, and on top of that, it offers an interactive and interesting interface for users thereby allowing them to easily understand each product and how to interact with it, thus gaining exposure to the DeFi ecosystem in a safe and effective manner.