What is Staking?
Staking is a method for crypto holders to earn returns by committing their digital tokens towards a blockchain network, which is using them to confirm new transactions. Therefore, both the crypto holder and the blockchain network can benefit from this “commitment”. The crypto holder earns passive income and the blockchain network grows by adding more participants, liquidity, and decentralization to its ecosystem.
Crypto staking is a process for Proof-of-Stake (PoS) cryptocurrencies to validate new transaction blocks. PoS assigns validators with creating new blocks, considering their staked amount on the blockchain. It is a popular alternative consensus mechanism to Proof-of-Work (PoW) which is inefficient in terms of energy consumption to the users due to the mathematical mining efforts and the computational power requirements. No additional costly and energy-consuming equipment is necessary for PoS procedures, while the ethical aspect includes the support for environmental awareness.
Staking on DeFi
Several DeFi projects are running staking pools where users can easily participate as validators and share returns. There are 2 main types of staking; staking tokens individually and staking liquidity tokens, both methods give out rewards. However, there are a few risks when participating in these types of pools and committing certain tokens. Poor projects may experience price drops and potential losses can eventually surpass expected returns. In addition, vulnerabilities in smart contracts can enable cybercriminals to maliciously steal tokens that participants commit for staking. If the pool requires locking up tokens for a minimum amount of time, consequently stakers cannot withdraw this amount. However, the locking of tokens is also a benefit, since this reduces sell pressure, creates loyal holders, and is the main reason projects offer staking opportunities.
Furthermore, there are functional staking initiatives by launchpad platforms where users stake their native token and in exchange get tiered access to participate in token presales from crypto startups.
This blog post explains how staking on TrustSwap is able to offer additional advantages in comparison with other similar services. These advantages include both benefits to the SWAP community as well as avoiding the inconvenience of the first come – first serve launchpad models.
Why Should I Stake $SWAP?
$SWAP is the native token of the TrustSwap ecosystem. Staking $SWAP enables stakers to accrue staking rewards and launchpad allocations.
Staking Rewards
$SWAP offers a flexible APY where 80% of all fees paid on the TrustSwap ecosystem are used as staking rewards. This is a simple yet significant detail that attracts stakers to our ecosystem.
TrustSwap’s plethora of services enables a complete DeFi toolkit with the majority amount of fees accrued being paid out to $SWAP stakers. In addition, our smart contracts technology burns 10% of the fees, making the $SWAP token more scarce.
Launchpad Allocations
Launchpad services are usually running on a first come – first serve basis, where bots fill in whitelist spots. This means that many participants are left out due to not queuing up at a specific time/date, or not having paid enough gas fees to be among the fastest responders. TrustSwap adopts an alternative model. The main reason that stakers buy and stake $SWAP tokens is to receive guaranteed allocation* for the most promising DeFi projects. A panel of industry experts extensively evaluates start-ups before they get accepted as launchpad projects. Consequently, $SWAP stakers have the chance to participate early in some of the best quality DeFi projects.
Guaranteed allocation* gives stakers a unique opportunity to participate as early participants in DeFi projects before those tokens get listed on crypto exchanges. The 24-hour allocation window gives stakers the ease of mind that they are able to acquire tokens against competitive rates before exchanges list the token and bots boost the purchase price to much higher levels. An additional advantage for stakers is that the bigger the staked amount, the higher the allocation multiplier the stakers will receive (see table below).
Significance of Guaranteed Allocation*
TrustSwap provides the opportunity for stakers to participate in a launchpad by staking at least 4000 $SWAP tokens. Furthermore, long-term stakers receive an extra benefit. They can stake less $SWAP and earn a higher allocation if they obtain a 2500+ Swapscore (a 60-day rolling average of $SWAP staked on the TrustSwap Dashboard). For example, stakers committing 2500 $SWAP tokens for 60 days would receive a 1x allocation. Stakers committing 4000 $SWAP tokens for 60 days would already receive a double (2x) allocation. The concept of guaranteed allocation* introduces a low barrier to entry for potential participants.
Allocation amount differs per project, depending on the project’s raise amount. Stakers will receive their exact allocation figure later in the process. According to current raises on TrustSwap Launchpad, 1x allocation is usually in the range of $200-$600. In addition, guaranteed allocation* eliminates the hassle of the first-come, first-serve launchpads, where many users are left out of projects because they showed up late or did not pay enough gas fees to claim their positions. The fact that the crypto community operates globally, means that timing on such occasions is difficult for some people. The timing is challenging for many reasons i.e. people must wake up at 3:00 am to claim launchpad spots or simply they do not have hundreds of dollars available to increase their gas fees and battle for the first spots!
Therefore, TrustSwap ensures that the staking activity of a user is the primary selection tool for early participation in promising DeFi projects.
Additional Benefits for $SWAP Stakers
- Each launchpad project gives out tokens after the vesting ends to the top stakers, the so-called SwapDrop. For example, some projects may choose to drop a significant amount of tokens to the Top 1000 stakers. The amount is a percentage of the project’s total supply.
- Stakers can receive lottery tickets for upcoming FlashLaunches. FlashLaunches are provided exclusively for projects raising below $750,000. This aspect ensures a reasonable allocation amount for stakers regardless of the small raise.
How Can I Stake $SWAP?
- Make sure you hold $SWAP in your wallet. There are plenty of ways to buy $SWAP. Please note that only the ERC20 version of $SWAP is currently available for staking in launchpads.
- Make sure you hold $ETH in your wallet. It is essential to pay for staking transaction fees.
- Navigate to our Staking Portal and connect your wallet. We recommend Metamask.
- Complete the simple steps outlined and “Confirm” by signing the transaction with your wallet.
Note that a 7-day unstaking period is active, which means that your tokens remain locked for 7 days after you initiated the unstaking process. You can always check your personal staking stats including your SwapScore here.
*Pending KYC and geographical restrictions
Follow the TrustSwap Blog for more insights on our complete crypto services toolkit.
