Anyone HODLing tokens for the long-term should be aware that these prized possessions can be safely put to work in the world of decentralized finance (DeFi). Staking crypto tokens is a low-risk, low-effort, and sustainable way of generating token yields. Ultimately, the potential for increasing earnings via staking far outweighs any benefit offered by HODLing dormant tokens in a wallet.
Staking with MANTRA DAO — using our system of non-custodial smart contracts — is a safe and sustainable way for our dedicated community of Sherpas to earn passive income on their tokens. Staking tokens with MANTRA DAO also earns Sherpas KARMA and extra OM tokens on top of their sizable staking rewards.
The Basics: How Staking Tokens Works
Staking tokens can be described as a happy marriage between finance and technology. Tokens have a dollar value, and this in turn makes them valuable for users participating in DeFi. In addition, tokens possess value in their utility, in that they can help secure a blockchain’s network.
Blockchains like Polkadot require a massive number of tokens to secure their networks through a Proof of Stake (PoS) consensus model. So, if you allow Polkadot’s network to use your DOT tokens to help secure their blockchain, you get rewarded with additional DOT as a thank you.
Another incentive for staking is that network security models that depend on staking tokens through PoS use 99% less energy than those relying on Proof of Work (PoW) consensus models. To put that in context, it’s estimated that Bitcoin’s PoW consensus model may consume more energy than several countries combined. For a planet facing the challenges of global warming, this level of waste is an unsustainable prospect, when greener alternatives like PoS exist.
Thanks to advancements in eco-friendly blockchain technology and DeFi, you can stake your tokens on a platform you can trust, yield more tokens, and help blockchains operate, all without contributing greater harm to the environment.
Yield Interest From Securing PoS Blockchains
When you stake your DOT or Kusama (KSM) tokens with MANTRA DAO, you’re contributing to a process that helps validate transactions on Polkadot and Kusama. By just clicking a few buttons every staker has contributed to improving network security.
Blockchains need to ensure the security of their networks, and they can do that by ensuring validators are processing transactions in accordance with the rules. Polkadot and Kusama operate on a Nominated Proof of Stake (NPoS) consensus model to assure their validators follow these rules. To abide by this model, large amounts of tokens are necessary to validate transactions quickly and safely.
For most of the blockchain technology era, proving the validity of transactions has largely depended on mining. When mining in a PoW consensus model — like the one Bitcoin pioneered — computers are tasked with solving complex equations in order to earn the right to create a new block. Generating a new block earns miners rewards in a blockchain’s native token, and this process has been very lucrative for those who have dedicated their CPUs to the cause.
But as blockchain technologies move away from PoW, financial power is replacing computing power through PoS. Validators working under a PoS consensus model are only allowed to confirm transactions equal to the value of the tokens they have staked in the system, and they can lose their tokens if they are found to have acted dishonestly.
For example, if a validator stakes $100 in tokens, then they may only validate $100 worth of transactions in a new block. PoS validators, therefore need to stake a large number of tokens for the system to work efficiently. The tokens staked on MANTRA DAO are delegated to validators who are then able to help Polkadot, Kusama, and other PoS blockchains run at secure optimal processing speeds.
Staking tokens is an incentive for validators to do a good job when finalizing transactions. If any validator tries to juke the system, the bad actor has their stake slashed. When a stake is slashed, the system gets its money back and improperly recorded transactions are restored to their correct state.
When a PoS validator receives fees and newly minted tokens as a reward for generating new blocks, users who have staked their tokens with that validator receive proportionate rewards as a fee for staking funds and helping secure the network.
Earn Extra OM Rewards for Staking With MANTRA DAO
The more tokens you stake, the more rewards you’ll receive. It’s that simple. For example, if you staked $1,000 worth of DOT with MANTRA DAO and gained a 20% return on your stake, MANTRA DAO would give you back $1,200 worth of DOT along with an additional $100 worth of OM.
Of course, you’ll likely want to HODL your OM, which is why MANTRA DAO lets you stake your current OM to earn more. You can then compound the yields on your OM by staking DOT or KSM, harvesting the OM you earn from that, and then staking that OM on MANTRA DAO, earning even more OM!
Moreover, re-staking your newly generated OM earns you KARMA on the MANTRA DAO platfrom, reducing your interest rates on loans, gaining you entry to the MANTRA POOL, and reducing staking fees for tokens (other than DOT, KSM, and OM) so they can be staked for free. As an extra bonus, Sherpas who accrue enough KARMA can gain up to 100% in additional interest, paid out in OM, for staking their PoS chain tokens.
Stake Your Tokens With MANTRA DAO Today
MANTRA DAO’s staking contracts focus on assets associated with Polkadot. In the future, we’ll expand into staking assets from other PoS chains. These additional tokens may incur a deposit fee set by a DAO vote, with the Sherpa community retaining control over how these fees are applied.
There is no minimum duration for staking tokens with MANTRA DAO, but it takes 28 days to unbond DOT from Polkadot and eight days to unbond KSM from Kusama. There are also zero fees or penalties for withdrawing tokens staked with MANTRA DAO.
MANTRA DAO’s OM token distribution has set aside 30% of its total supply, or 226,666,666 OM, for staking rewards. That’s a lot of OM out there for user who stake with us.
So, stop just HODLing and start staking your tokens with MANTRA DAO to get your share of up to 100% in additional OM token rewards today!