WAVES staking 2.0
An improved staking model for WAVES, the Waves ecosystem’s native token, offers users more transparency and options for managing their assets.
What is staking?
Staking is one of the simplest and most popular ways to invest in the crypto space. By staking their tokens, a user temporarily blocks them, supporting the network and receiving passive income in exchange.
Most blockchain projects, including Waves, offer staking opportunities. The staking of the Waves ecosystem’s token, WAVES, has been available since 2017.
Meanwhile, time has come to improve the existing WAVES staking mechanic, making it more transparent and profitable for users.
The existing mechanic
Currently, staking on Waves works like this:
- a user chooses a node for staking their WAVES;
- makes a leasing transaction ;
- receives rewards from the node on an agreed schedule;
- at any point, they can cancel their staking and withdraw the staked assets.
This model has one major advantage: the user retains full control of the staked funds.
However, there are some drawbacks, as well. Mainly, the user is unable to do anything with the locked tokens. Also, dependence on the selected node is too heavy, which entails the risk that the node may not pay applicable rewards in full or may unilaterally change the schedule of reward payments. In addition, mass transfer transaction fees are deducted from users’ rewards. See more
PepeTeam is currently working on an improved mechanic for WAVES staking, which prioritizes users’ ability to manage locked assets, based on smart contracts and tokenization of staking.
Under the improved mechanics, a smart contract will issue new tokens, sWAVES, in exchange for users’ WAVES tokens. The smart contract will manage sWAVES minting and burning.
The staking process is supposed to work like this:
- an investor deposits their WAVES tokens to a smart contract;
- the smart contract stakes the token and issues sWAVES tokens to the user at the current exchange rate — rate1;
- the investor begins to receive passive income.
The investor can cancel the staking at any time by calling the smart contract’s withdraw function. Their sWAVES will be swapped back to WAVES at rate2, which will always be algorithmically higher than rate1, as new WAVES tokens will be added to the smart contract . Thanks to the difference between the rates, the user will collect a profit.
This model has several notable advantages. Primarily, the user can manage staked funds — store, transfer, trade or reinvest them. Another major plus is the transparency of all operations ensured by smart contracts. This rules out situations when rewards or portions of rewards are not paid to the staker. Finally, under this mechanic, stakers save on mass transfer transaction fees deducted from their earnings.
Still, the new model comes with a tradeoff, as an infrastructure risk of using smart contracts is added. However, this risk can be mitigated by thorough testing and auditing.
The improved WAVES staking mechanic will soon become available on the updated PepeTeam platform. Meanwhile, please, take part in voting for the token’s best logo.
WAVES staking 2.0 from PepeTeam is coming soon! Stay tuned!