NEST Roundtable 15: Staking opportunities in the next year
Nicole: Space Hoster at NEST Protocol
Justin: Business Development Contributor at Lido Core DAO
Johnny: Senior Researcher at Huobi Research
Noah: Builder at WhaleCoinTalk
Sunny Jain: CEO at Krystal DeFi
Desmen: Marketing Lead at Magpie
Keith Yong: Core team member at Baklava Space
Ken Tran: Business Development Manager at Kyber
Andrew Forte: Chief Brand Officer at MoonNation0
Nicole: For those who had no experience in defi, staking usually refers to the locking of cryptocurrency as collateral to secure a particular blockchain network or smart contract protocol. In return, those who participate in staking cryptocurrencies will receive more tokens as a reward.
Staking is important because if others are getting a share of the reward and you are not, then your money is being diluted.
But of course, it is not true that the higher the staking, the better, as this will reduce the circulation ratio of that token and affect the ecology.
Anyway, for the average investor, the main concern is what staking opportunities are available in the future.
What are the potential coins that you see as staking opportunities for the upcoming year?
Justin: I think the bullish area in terms of staking coins is around liquid staking tokens on any different kind of proof of stake network. This is the safest and real yield that you can get from staking any type of token because it comes from securing the network in which you’re participating. Ethereum or Solana or Polygon for example. There’s a huge variety of proof of stake networks now that you can participate in securing the network and earn rewards on your tokens.
Johnny: I believe there are many good staking opportunities out there, for example, proof of stake protocols like Ethereum or Solana can guarantee some profitable returns, which are great and secure. Ethereum is the greatest investment strategy.
Ken: The most exciting thing about staking is liquidity staking. With Lido and Kyberswap, you can do it.
Keith: From my point of view, we look at staking broader. So other than proof of stake, we are looking at that kind of exchange or utility platform that offers rewards for staking, like DYDX, and GMX. This model is sustainable because you generate income from activities and then they can go on for a longer term. So, I see that as a potential opportunity in staking next year.
Sunny: I do believe this model is very sustainable. Maybe in the future, I see more L2 chains offering a similar solution for users to generate passive income. Also, there would be any new chain even L1, I don’t think that proof of work is going to be dominant in the future. Proof of stake would be dominant, so any new chain that comes up in the future would be offering to stake and that’s good for our users. Other projects like CAKE are offering staking of CAKE through their pools. It was very unsustainable in the start, offering 90% APY, and now I think they have revised their model.
Desmen: All coins that are going to do well in the future need to come from a sustainable business model. Profit sharing is the key. There are users that are seeking a riskier investment. Those are more suitable for people that deal well with volatility and price changes and all of that good stuff. For users looking for low risks, staking in stablecoins would give more passive income.
How do you tell if it’s a good staking coin?
Justin: Fundamentally, there are two different types of staking tokens: tokens that represent state assets that are actively being used in a proof of stake network and then there are tokens that you can stake to claim or participate in the rewards from defi protocol. In terms of security, I would put forward liquid staking tokens as they are much more likely to be safe in terms of economic vulnerability.
Johnny: There are some risks that are actually unaffordable, for example you have the smart contract risk because of attackers or bugs. I would tend to stake tokens that have very good liquidity and a large order book. I would also check out the background of the protocol, whether there will be needs in the future and if it’s the sustainable development. I’ll also like to hedge the position when I’m staking.
Ken: You need to see the background of the protocols to see whether the community stand. You have to assess the liquidity and constant flow of trading volume, the popularity, the APY, partners, etc.
Keith: Good staking coin is also equivalent to a good coin. It has to have good fundamentals such as usage, transaction volume, tvl, number of developers and addresses.
Sunny: There are 3 perspectives. The first one I normally check is the source of the rewards. Is the staking reward coming from a sustainable business model or minting new tokens? The second option for me is a no-go. The second one is what are those tokens doing when I stake them. Are they just lying in a smart contract or are they somehow contributing to the protocol, like being secured or being used by other people to borrow etc.? The third one I normally check is APY.
Desmen: There’s no right formula that we can plug in, but there’s obviously some tricks that we would usually look at. One of them is the community behind it, so how supportive is the community? Does it have a very active discord or Twitter community? About the tokenomics, obviously the most important thing is to prevent mass inflation and unlock period.
Is staking really profitable? Could people lose money? If so, please give some suggestions on dos and don’ts of staking for users
Justin: Let me walk you through the process for staking with Lido. If you have Ethereum, Solana or Polygon tokens, you can navigate to a liquid staking token provider's website that hosts their smart contracts and you will take that and stake it. You have a variety of options available. You can simply hold it in the cold wallet or hot wallet. If you’re interested in taking on additional risk, you can then participate in other use cases as collateral. You need to assess the long-term implications of your strategy
Johnny: Do your own due diligence, check the background, liquidity, and reputation to see if they have a solid background. Then deploy risk management and diverge your portfolio.
Ken: Crypto is a very high-risk market, and staking is actually one of the safest options. You also need to consider the price of the asset as well.
Keith: There are always winners and losers. The reward could move up and down with the price moving, so don’t look at the APY only. Risk management is very important, like how fast the events move in the crypto, the unlocking period things.
Sunny: It can be profitable. The first thing that I always ask before I get into staking is do I believe in the token? The scenario where I think it’s trading staking can be lost making is when people look at the token only to earn a staking reward.
Desmen: So, in the cryptocurrency market, investors must be aware that they can lose money at any time. Obviously, you may lose money depending on the volatility because we invest in tokens, and when we measure our profitability, we do that usually in stablecoins, so there’s a discrepancy there and obviously that can go both ways.
Do you know about NFT staking?
Keith: A lot of NFT staking currently happens within the protocol. Baklava Space is looking to partner with NFT projects, we can give them a boosted reward. I think it can bring benefits to both the NFT because there are more utilities and us. Crypto staking will get the rewards in APY, but NFT will not generate a new NFT.
Desmen: Staking NFTs can be one of the ways that you would increase the value of the NFT, so obviously depending on what utility and benefits.
Lido: @AnkruAiran asked: How safe are our assets if we stake on lidofinance
Justin: No Lido staked assets have ever been lost. The biggest risk is exploited when engaging in providing liquidity to dex or most especially on money market protocol. We’ve seen two primary types of defi crypto protocols being targeted really heavily by exploiters. Those are money markets and bridges. Lido does not actively partner with multi-chain or cross-chain bridges.
Huobi: @Mohitrajsingh8 asked: Does Huobi planning something big for upcoming year to attract more users?
Johnny: We just finished the acquisition of capital and new partnerships. We are actually planning to launch a lot of new listings in the coming days. We also have attractive yields on our platform as well.
Kyber: @ AnkruAiran asked: There will be a growing demand for staking services that offer security, governance, and yield-optimization features in 2022/2023, how well is kyberswap prepared for it?
Ken: Yeah definitely, there’s a lot of growing demand for other staking protocols that offer for like more securities or governance. We actually one of the first defi protocols that have audited and insured even from the early days. And we are actually one of the most capital efficient in in defi, which means you don’t have to lock in so much of your liquidity, but you can still facilitate a lot of volumes and more volume mean a lot of returns.
Baklava Space: @Srajal25 asked: What is meant by “Synthetic Asset Creation”?
Keith: Synthetic asset means equivalent tokens. In fact, you can strictly speak all the stablecoins are a form of synthetic assets, because they represent $1.00 in USD but actually, they are not USD, so they are a kind of synthetic form of USD.
Magpie: @AnkruAiran asked: Can you talk about how can we get rewards on magpie xyz by staking stablecoins and what is the process?
Desmen: We have the main pool. Our main pool is comprised of four stablecoin options: BUSD, USDT, DAI, and USDC. If you stake that right now, you will go to the website, you’d click on the main pool at the bottom of the website to see that there is a 13.8% APR right now. And there is free of impermanent loss risk, meaning there’s no impermanent loss risk because this is a single-sided stable coin pool. So, you would go and you would put down the amounts they want to stake. After that, you just wait, and you will see the rewards coming in.