Backed by cutting-edge blockchain technology, DeFi has emerged as a superior and innovative alternative to conventional financial institutions. DeFi stands for “decentralized finance” and refers to a broad category of blockchain and cryptocurrency applications that are focused on getting rid of the financial “middlemen”. Essentially, the main difference between traditional financial trading and trading on DeFi platforms is that the latter do not rely on any third party to act as an intermediary. The trust and transparency in DeFi space lie within the tamper-proof blockchain mechanism.
The evolution of the DeFi ecosystem has given numerous opportunities to investors to make transactions with complete freedom. These transactions are much faster, safer, and more confidential in comparison to traditional finance. Apart from this, various DeFi applications have created possibilities for investors to earn high returns on investment that increases their wealth significantly.
Today, DeFi platforms offer various services to investors, including lending, staking, payment processing, custodial services, and trading. However, staking is one of the most lucrative services for DeFi, since it allows for passive income to accumulate.
But first of all, let’s understand the basics of staking.
What is Cryptocurrency Staking?
One of the ways cryptocurrency networks keep themselves safe and secure is via the Proof of Work (PoW) mining algorithm. Miners are getting paid to solve complex mathematical puzzles to secure the network and are getting rewarded for their input with crypto. Yet, this process is extremely energy-consuming and sophisticated, turning away some of the less tech-savvy crypto enthusiasts from mining via PoW.
Staking can be seen as an easier way of mining cryptocurrencies, via Proof-of-Stake (PoS). By definition, staking is the mechanism that enables investors to participate in transaction validation actively while also being a significant part of the overall governance system.
With staking, participants can earn passive income by receiving staking rewards just for holding the tokens. Staking rewards is an attractive and convenient way for the participants to make a profit effortlessly.
So, on the one hand, participants empower the platform and strengthen the network by holding tokens, on the other hand, more tokens are rewarded to the participants, thus, motivating them to hold tokens in the system for a more extended period. Staking can also be used for adding funds to a staking pool.
How does Proof-of-stake work?
Proof of Stake (PoS) allows transactions to get stored in the blocks. And these blocks together form the blockchain. Staking involves validators, instead of miners that are present with the PoW mechanism, who lock up their coins so they can be randomly selected by the protocol at specific intervals to create a block.
A new block is only added if the participant has a minimum-required number of tokens to stake. The size of a stake is directly proportional to the chances of that node being chosen, which means the more tokens a user holds, the higher the chances of him or her being chosen. If the new block is created, then the participant receives rewards. The holding of tokens is what incentivizes validators and ensures the security of the network.
The amount of staking rewards distributed to the participants differs from one DeFi platform to another. Each platform might have its unique way of computing staking rewards. Though, there are certain factors that the platform developers keep in mind while evaluating the rewards –
- The number of coins staked by the validator
- The duration the validator has been actively staking
- The total number of coins staked on the platform
- The inflation rate
How does staking work?
While staking rules vary by network and staking scheme, some ground rules are similar across the majority of staking platforms. With staking, users purchase a cryptocurrency with the purpose of “locking it up” (staking it) in a smart contract or delegating it to a validator node. Once the cryptocurrency stake is locked up, users have the right to vote to validate transactions. Usually, the process is as follows:
1. Staker approves a particular valid transaction on the network
2. The network rewards the staker with a reward in the exchange for validating the transaction
It is important to note that stakers are expected only to approve valid transactions (no double-spend transactions). If a user approves an illegal transaction, he/she may lose a part of or entire stake.
What is a staking pool?
Various PoS blockchains have quite long lockup periods and minimum capital requirements to be met for staking. In such a scenario, when entry barriers are significantly high, investors are either unable to redeem their tokens or are not able to leverage the profit-making system of the blockchain like other validators.
Thus, many cryptocurrency token holders prefer to combine their staking capabilities and invest their assets in a staking pool. By bringing their assets together, participants have a much higher possibility of validating transactions and earning rewards.
In a staking pool, rewards are distributed proportionally to each participant based on the amount of funds invested. Sometimes, these staking pools deduct a small amount of fee from the staking rewards distributed. Staking in a community-owned pool is much more beneficial for a new participant who has little knowledge and limited money for the investment.
Which staking platform should you invest in?
Currently, there are many staking platforms in the cryptocurrency ecosystem. However, it is often difficult for investors to choose the one platform which will increase their funds exponentially. Due to this confusion, very few invest and leverage the remarkable benefits offered by these platforms.
MANTRA DAO wants to provide a solution for this confusion with the help of the Polkadot network. MANTRA DAO is a Decentralized Autonomous Organization (DAO) built on the Parity Substrate for the Polkadot ecosystem, focused on staking and lending.
To provide investors with a reliable and innovative staking platform that will offer attractive rewards, MANTRA DAO introduces you to the MANTRA DAO staking platform. The platform works towards the global mainstream adoption of cryptocurrency and plays a significant role in its investors’ business growth.
MANTRA DAO has also launched their own token dubbed the OM token. Users are able to purchase these tokens and use them for staking on the platform. By staking OM tokens, you can earn attractive rewards in a non-custodial manner, meaning that you will be completely in charge of your funds. Aside from enjoying 100% ownership of their funds, stakers of OM tokens will also be able to appreciate the ease of navigation and user-friendliness of the MANTRA DAO platform.
Over the coming week or two, MANTRA DAO will also be rolling out several other staking pools:
- Pool #2: RFUEL (ERC-20) staking pool;
- Pool #3: OM/ETH Uniswap-V2 Liquidity Provider token staking pool;
- Pool #4: RFUEL/ETH Uniswap-V2 Liquidity Provider token staking pool;
By staking coins in each pool, you will get an opportunity to earn returns. We will soon be launching more staking pools as well.
How do MANTRA DAO Staking Rewards Work?
Let’s understand the crucial details regarding earning rewards by staking OM tokens:
Estimated annualized reward: - In Pool 1, investors like you will gain estimated reward of 88.88% every year. The daily reward rate will be almost equal to 0.24%.
Reward accrual terms: These rewards will be accumulated every 24-hours at the daily equivalent reward rate, starting from the moment a staking transaction is completed.
Reward distribution: Users have the liberty to choose to either stake or claim rewards at any point once they have been accrued.
Freedom to unstake staked balance anytime: Users can unstake OM tokens; that is they can get their funds back as per their convenience with no minimum or maximum staking duration for OM.
Airdrops: If users stake on the MANTRA DAO platform, they will be eligible to receive airdrops (free tokens) from our partners, starting with the BOND token airdrop.
No KYC is required: People who stake on the platform dont need to verify their identity before being able to stake their tokens!
In addition to staking the MANTRA DAO OM token, delegators of other PoS cryptocurrencies will also be eligible for additional staking rewards paid out in OM tokens. Our consistent growth in partnerships has already lead to strategic alliances with the following entities that will use our staking platform for their token:
● Band Protocol
● Kira Core
As The MANTRA DAO ecosystem expands, when you opt for staking on the MANTRA DAO platform, you’ll get extra benefits (staking dividends & airdrops) from having access to these projects, all of which can be easily accessed via the MANTRA DAO staking platform: https://app.mantradao.com/
More about MANTRA DAO
MANTRA DAO leverages the crowd’s wisdom to create a community-governed, transparent, and decentralized ecosystem for web 3.0. The MANTRA DAO ecosystem consists of 3 main features –
1) OM tokens – These tokens that allow its holders to participate in the governance decisions affecting the parameters of the system. OM token is distributed as a reward for contributions made to the platform and provides access to a variety of economic incentives.
2) Lending and staking platform – A platform whereby depositors can earn interests on their pooled digital assets.
3) KARMA Protocol – It is a reputation mechanism that assesses participants’ behavior within the system and keeps track of OM holders’ performance metrics
MANTRA DAO aims to work relentlessly towards creating a staking platform that will ensure wider adoption of cryptocurrency in the near future.
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MANTRA DAO is a community-governed DeFi platform focusing on Staking, Lending, and Governance. MANTRA DAO leverages the wisdom of the crowd to create a community-governed, transparent, and decentralized ecosystem for web 3.0. Built on Parity Substrate for the Polkadot ecosystem, MANTRA DAO focuses on staking and lending to give financial control back to the people to grow wealth together.