Staking and Farming

Stake your Claim

There are two main definitions of the verb ‘stake’ in the English language:

  • To risk an amount of money
  • To hold up and support something by fastening it to stakes

But I’m Not a Node and I’m Still Staking!

That could very well be the case, especially if you’re not familiar with the technical requirements to set up a node. There could be one of two things going on:

  1. You’re part of a staking pool or using a staking wallet
  2. You’re receiving rewards called ‘staking’ but it’s not technically staking

So How Am I Staking A Non-Native Token?

When you stake a blockchain native token, you receive interest in the form of that native token back. And that’s because the transaction fees are paid in the native token. Simple.

Look for Sustainable Revenue

Where you should be more careful is if a project does not currently have any sustainable revenue model. It is quite common for new projects to allocate a certain portion of total token supply to a treasury or community/project development pot. These tokens are often used to kick-start interest in a project, whether through airdrops, advertisements, meme-contests, or even a “staking” campaign.

Key Takeaway

The main thing to remember is that staking is about taking assets out of circulation in order to support a network or dApp. These assets don’t do anything, but the mere fact that they are locked away grants you a right to a portion of a system’s revenue, much like stock investors receive dividends for continuing to hold their assets in their portfolios. You can earn single-digit to low double-digit returns, but just make sure you understand the time period and reputation of the service before you dive in.

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