As our Rare Staking app release is just around the corner, its about time to learn about how the staking app will work and what you can do now to maximize yield!
In this article we will cover what staking is, what you need to know before you should stake, the different ways you can Stake in our app, how to maximize yield in our app and what you have to do first before you can Stake. Before we start, we will assume you know the following things.
- You know what Rare Coin is, why its special and how to get some.
- You know Rare Coin lives on the xDai network.
- You know Rare Coin Staking requires pooling your Rare/xDai on honeyswap. (Learn how to do that here)
What is Staking?
“Staking” is a term used by the DeFi (Decentralized Finance) community to describe locking one or more of your crypto assets up for some time to earn a reward for you lending it out. That reward can be in the form of another asset, the underlying asset, or a share of fees perhaps. We call these people who loan or offer their assets up “Liquidity Providers” Or “LPs” for short.
Someone might want to do this as a more casual approach to earning with their assets without needing to manually trade the price every week. This also appeals to the savvy crypto investors who just want to lock in and earn while they sleep. Of course, there are risks you should know before staking.
Inherent Risks of Staking
You may have heard the term “Impermanent loss”. What this means is when you provide liquidity to a liquidity pool, and the price of your deposited assets changes compared to when you deposited them. The bigger this change is, the more you are exposed to impermanent loss. In this case, the loss means less dollar value at the time of withdrawal than at the time of deposit.
Pools that contain assets that remain in a relatively small price range will be less exposed to impermanent loss. Stablecoins or different wrapped versions of a coin, for example, will stay in a relatively contained price range. In this case, there’s a smaller risk of impermanent loss for liquidity providers (LPs).
So why do liquidity providers still provide liquidity if they’re exposed to potential losses?
Well, impermanent loss can still be counteracted by trading fees & additional crypto payouts. In fact, even pools on honeyswap that are quite exposed to impermanent loss can be profitable thanks to the trading fees & in our case additional staking rewards and staking fees!
Now before we get to the rewards, now that you know a bit more about what liquidity providers are, let’s cover exactly what you need to provide to earn rewards in our Rare Staker app.
What You Stake in Our App.
In the case of rare staking, to earn rewards in the app, you are required to lend an equal supply of Rare to xDai in terms of value which is then added to the Rare/xDai pool on Honeyswap. When you do this, Honeyswap rewards you Tokens that represent your share of the pool.
Now, what you are actually staking in our app is not rare/xdai but the tokens Honeyswap rewards you with that represent how much liquidity you supplied to the Honeyswap rare/xdai pool. After doing this you will start to earn your proportionate share of the 0.25% trading fees to the total supply of liquidity supplied to the pool.
Of course, you could leave it there, but you would be missing out on your weekly share of Rare rewarded exclusively to the LP providers staking in our app.
Every day, one new Rare Coin is sent to the Stakers App where active Stakers can claim their share of RARE. The reward percentage is calculated at claim time and determined by the size of your current share of liquidity pooled relative to the total current pool size plus any liquidity bonuses you may have active. This weekly amount of rare that is available to claim each week is known as a “Rare Dividend”.
To qualify for your share our app requires you to lock up the special tokens awarded to you from Honeyswap also known as “LP Tokens” over some time or “Term” as we call it. The minimum term is an estimated 7 days or 1 week (every 119,000 blocks to be precise).
In addition to this, you will also earn a share of the staking fees acquired through our app at the end of your stake. This share is also paid in the same percentage of your stake against the pool size allowing you to earn that percentage of the total fee balance in the app at the time of claim.
So all in all you will receive the following rewards from staking :
1) A weekly percentage of the contracts supply of Rare paid in Rare
2) A weekly percentage of the contracts supply of Staker fees paid in xDai
3) A constant percentage of the 0.25% trading fees on Honeyswap paid in both Rare & xDai.
Understanding Staking Terms
It’s important to understand the staking terms so you are prepared for your staking adventure ahead. You need to know what “Terms” are, when you can claim and when you can unstake or relock.
Every stake instance starts with staking a portion of or all of your Honeyswap LP tokens. After you decide how much you want to stake you will need to pick a term length. The longer the term length the more Rare you will be paid out but the longer time you have to wait before you can claim or unstake your tokens.
Once you commit to a term it is locked and can’t be changed or withdrawn until the timer expires. Once your term is up your LP tokens will be unlocked allowing you to claim your reward, remove your tokens or renew your tokens on a new term.
You don’t need to claim right after your term expires as it won’t disappear on you. In fact, if you left your stake in there even after your term expires you will still hold & accrue all of your bonuses you gained when you initially signed up. It’s only when you make your first claim after your term expires that your bonuses will be reset and freeing you to renew your term, remove your LP tokens or simply make weekly claims at your true liquidity percentage.
Maximize Your Yield With Staking Bonuses
There are a few ways you can maximize your yield in our staking app to increase your payout of weekly rare dividends. Increase your Term Length when starting your stake, The Weekly Hodl Bonus, or NFT bonuses
1) Increase the term length.
Increasing the term length will increase your liquidity multiplier and the amount of rare you collect after your term. This bonus virtually increases your supplied liquidity percentage.
There are three terms lengths to choose from:
1 Week Term | 0% Bonus | Default | Weekly claims
4 Week Term | 100% Bonus | Investor | Monthly Claims
12 Week Term | 200% Bonus | Hodler | Quarterly Claims
For example, if you supplied 3 LP tokens that equal 1% of the pool total. A 4-week term will increase your pool percentage to 2% effectively doubling your Rare payout otherwise without needing to supply that extra liquidity to achieve that percentage.
*NOTE* The more Stakers enter the system the more your share is diluted including other Stakers bonuses.
For example, if John supplies 50% of the liquidity with the Default term and Allice supplies 50% of the liquidity with a Hodler term then after three months of staking, John will have collected 22.5 Rare and Alice will have collected 67.5 Rare!
(Assuming no other Stakers enter the system & a total of 90 rare coin flowed through the app)
2) The Weekly Hodler Bonus.
For every week you do not claim including your term weeks you will receive a never-ending 1% liquidity bonus per week. Think of this as a super staker reward bonus for true hodlers of Rare. As soon as you make a claim, the bonus resets and starts again for as long as you keep the instance active (not withdrawn) For example …
1st Week | 0 Bonus
2nd Week | 1% Bonus
3rd Week | 2% Bonus
67 week | 66% bonus
256 week | 255% bonus
3) Collect Rare NFTs.
We will be releasing a few ULTRA RARE, semi-rare, and common NFTs that will all have utility in the Rare Stakers App. The perks will range between liquidity bonuses or fee discounts when held. The rarer the NFT the better the bonus. Follow our telegram group for the first announcements of the drops and what you need to do to qualify for them. Telegram: Contact @rarify_community
4) Supply More Liquidity.
You can always add more staking instances which will increase your overall percentage of the pool increasing your yield significantly. There is no reason you can’t set multiple staking instances with different terms to have the best of both worlds.
You can have some long-term high yield and some short-term high-frequency payouts. You can always increase your Rare holdings through the trading pool and stake it to earn the weekly bonus supply of rare only collected in the Rare Stakers App.
So where and when can we start staking!?
The staking app will be official open May 3rd @ https://rare.fyi/stake . We will only be supporting Metamask at this time until Alphawallet devs fix an ongoing issue with their browser.
So now that you know how Staking will work you might want to get some more rare while you still can!