The Evolution Of Crypto Staking: Dynamic APY To Support Increased Engagement
Money making opportunities abound in the world of crypto, but many newcomers are scared off by the very idea of it. While there are people who claim to have made thousands, if not millions of dollars from trading, there are just as many horror stories from those who have lost everything.
Moreover, the world of DeFi can be a very intimidating place too, with complex concepts such as yield farming and providing liquidity immediately causing confusion. But that doesn’t mean there aren’t any easy ways to make money in crypto, as few opportunities are as simple as staking.
Staking Explained
Staking in crypto is a very simple business that can provide for a very stable income stream if you choose the right protocol. But what is staking? For the uninitiated, it can be thought of as crypto’s take on a traditional savings account at a bank. You simply deposit your crypto and get paid an “interest rate” in the form of rewards, slowly accumulating more capital.
Many blockchains require staking to ensure the security and functionality of their networks. Any blockchain that runs on a proof-of-stake consensus algorithm needs staked cryptocurrency tokens as collateral, which is provided by network validators who verify that transactions are legitimate. Stakers essentially put their money where their mouth is, vouching for their honesty in correctly verifying transactions by depositing tokens into smart contracts. If a validator cheats, they can potentially lose all of their staked tokens as punishment – a process known as “slashing”. On the other hand, if they’re honest, they’ll be rewarded with additional tokens that are minted when a new block is added to the blockchain.
Where to stake?
The vast majority of crypto users choose to stake through third-party platforms that simplify the process dramatically. Some of the best known platforms include centralized crypto exchanges such as Binance, Kraken and Gate.io, which offer flexible rewards, often quoted in “annual percentage yield” or APY, which varies according to the cryptocurrency staked, the duration those coins are locked up for, and more. In the case of Binance, the world's number one CEX platform, users can choose from a variety of staking periods and a wide range of supported tokens. At the same time, Kraken and Gate.io provide similarly flexible staking terms.
Decentralized platforms such as Aave, PancakeSwap and Uniswap also offer staking services for a wide range of tokens, eliminating the complexity of direct blockchain interaction.
With these platforms, the APY on offer is essentially fixed once users have decided on the terms and duration of their stake, meaning that they’ll generate a more or less predictable return on their investments. However, recent innovations in DeFi staking provide an opportunity for potentially more valuable returns, without restrictions.
Flexible Staking With Dynamic APY
A case in point is Encore, a new decentralized finance ecosystem project built atop of Ethereum that integrates staking services with a multichain/cross-chain DEX trading platform a decentralized autonomous organization that handles governance, an NFT promotion platform, crypto token tracker, and more.
Encore’s DEX platform is novel in that, unlike many others, it’s a cross-chain platform that provides seamless interoperability across many blockchains, pooling the liquidity from each chain it’s compatible with. This solves one of the major headaches in DeFi, which is the lack of liquidity on trading platforms, causing transaction inefficiencies such as slippage. It’s also working to integrate AI trading mechanisms to simplify the user experience and increase accessibility.
Underpinning this DEX platform is a dynamic staking mechanism, which allows users to stake the ENCORE tokens that power its ecosystem, with utilities including transaction fees and governance. Quite remarkably, Encore has devoted 22.32% of its entire token supply to staking rewards, which shows how dedicated it is to providing strong returns to its community. This allocation is far in excess of any other blockchain protocol, and it can also be much more rewarding thanks to its fully flexible nature
Indeed, Encore has created a novel dynamic APY mechanism in which various factors determine the rewards users can earn. These include the proportion of their stake with regard to other users, the timing of their participation, the amount staked etc. Those who stake more and get in earlier will earn the highest rewards, as the model is designed to provide greater incentives to early adopters with higher engagement.
Unlike other staking platforms, this kind of flexibility does not come at a cost, as users still have the ability to withdraw their crypto assets at any time, immediately, without any penalties, meaning they retain more control over their funds. This is in direct contrast to most other platforms, where users are required to lock up their staked funds for a specified period of time, thereby limiting control.
To sum it up, Encore is unique because it offers generous, dynamic rewards with flexible staking and the ability to pull out at any time without penalties. It provides a much stronger value proposition to crypto users, especially those who are new to the concept and therefore require a more adaptable and user-friendly experience. With Encore, users can better manage their staked assets based on current market conditions, which simply isn’t possible with other cryptocurrencies.
Superior Staking
Compared to many other staking platforms in the crypto industry, Encore is ideally suited for non-technical users, offering a straightforward process that combines control with high earnings potential. With Encore, staking becomes an activity that can generate an alternative income stream that’s on a par with core complicated DeFi activities, such as futures, derivatives and options trading markets.
We should point out that staking isn’t entirely risk free. We already mentioned the possibility of slashing penalties, so it’s essential to do your research before backing any validator. Also be aware that crypto markets are incredibly volatile. If you stake $1,000 worth of tokens with an APY of 20%, you might expect an annual profit of $200. But if the value of that specific token falls by more than 20%, your actual rewards in terms of fiat value will be negligible.
It’s precisely because of these risks and the limitations of other staking platforms that Encore is such a promising alternative. Its laser-focus on stakers and its highly unusual 22.3% token allocation towards staking rewards demonstrates a strong dedication towards ensuring those who support the network will be fairly rewarded for doing so.