What is reverse staking? Everything you need to know.
Utrust has recently announced its new app. You can read all about that here. One of the reasons why we were eager to enter this new chapter was so we could unlock the full potential of our token, UTK. There’s plenty more features to come, but we’re starting with reverse staking.
The article above includes a primer on what it is, but we felt like this truly awesome feature deserved an article of its own. Let’s start by looking into traditional forms of staking:
Traditional staking creates weak tokenomics
Many companies started providing incentives for people to lock up their tokens and just keep them in place. If you didn’t move a predetermined amount of tokens for a certain period of time, you got a reward in the form of more tokens. Those incentives, most of the time, came right out of the company’s reserves. This has some very troublesome consequences down the line. As more tokens flooded the market medium-long term, they were mostly sold, creating even more selling pressure.
It’s basic economics.
You increase supply, do nothing to increase demand, what happens?
We don’t believe great tokenomics can be built this way.
But we wouldn’t like it anyway
By encouraging holders to keep their tokens, we are treating these currencies as if they were simple financial assets. We don’t see them that way. We view digital currencies as money. Money isn’t something you keep in a giant bin like Scrooge McDuck, it’s something you use. True adoption only happens if you can use digital currencies to pay for rent, groceries, utility bills, and everything else.
This flies in the face of what we interpret as the vision of Satoshi Nakamoto when creating Bitcoin. Satoshi strongly opposed central banks’ tendency to solve fiat currencies’ problems by pumping more money into the system. Printing money is a recipe for future disaster.
We decided to do the exact opposite
And that’s how we came up with reverse staking. We decided we were going to provide incentives for you to use your digital currencies.
When you use Utrust’s services, we will reward you with 1% of the value of every exchange you make. Regardless of the currency you use, you get the reward credited to you in UTK.
Here’s how it works:
- You put 1000 UTK into a locked pool, so we know where to add your rewards.
- You use our services a lot.
- You watch as the rewards show up on your pool and grow.
- You wait six months for the pool to unlock. This part is important. If you unlock your pool ahead of time, you will lose your rewards.
- You do it all again.
Please note that you can unstake your initially locked up 1000 UTK at any time. If you do this before the 6 months end, however, you will lose your earned rewards.
This is better than traditional staking for several reasons.
Firstly, we aren’t giving you our locked UTKs. We are buying them directly from the open market. By putting them away for a while, we are decreasing the supply in circulation and creating constant buyer pressure. Secondly, We are paying you to shop and exchange. That’s good for you, it’s good for our merchants, and it’s great for our token, because, once again, it’s lowering supply. And, last but not least, it strengthens the company. This is a sustainable model, which finances itself through the fees we generate from usage.
What happens to tokens when someone unlocks their pool early?
We considered several ideas for this. Some people wanted to burn them, but we have arrived at a more congenial solution. It’s yet another way you can benefit from reverse staking.
Whenever someone unlocks their staking pool too early, their reward tokens will be evenly distributed by every single active pool. This means you get rewards actively, by using our service, but also, whenever someone decides to forgo their rewards pool.
One more thing!
We are giving away 50 000 UTK. Oh yes. Just head here right now and sign up. We’ll enroll you automatically for the giveaway and we’ll let you know when this feature and the revamped Hold app are ready.
