Pools: Staking on Smarty Pay platform
Staking allows cryptocurrency users to interestingly evaluate their resources. In this article, we will introduce you to how staking works, how much you can earn and what the risks are. In the last part of the article, we will guide you through staking on Smarty Pay step by step.
What will you need for Staking?
- Account on Binance through which you buy a BNB
- Crypto wallet Trust Wallet (for smart phones) or MetaMask (for personal computers)
- Transfer BNB from Binance to your crypto wallet
What is Staking?
Staking is basically locking cryptocurrencies under a Smart Contract in order to earn a reward. To understand staking, you must first understand the Proof of Stake (PoS) mechanism.
Proof of Stake (PoS)
Bitcoin works on the principle of Proof of Work (PoW). It is a mechanism that allows you to collect transactions into blocks. These blocks are then linked to form a blockchain. The Proof of Work system has proven to be a very robust and efficient mechanism for decentralized finance. Its biggest disadvantage, however, is that it requires a large amount of computer power to function.
An alternative is the Proof of Stake (PoS) concept, which uses, among other things, the Binance Smart Chain network. The main idea of PoS is that individual users lock (stack) tokens, through which the blocks in the blockchain are subsequently verified. Similar to Bitcoin mining, staking entitles you to a reward for locking your cryptocurrencies.
Where is it possible to stack?
There are hundreds of exchange offices offering staking. Smarty Pay is the new exchange office within Binance Smart Chain. If you are new to crypto, we recommend avoiding lesser-known platforms and starting with SPY Token. Within Smarty pay you stack SPY (Smarty Pay native token) and as a reward for staking you receive either BNB or USD pegged fiat cryptocurrencies. For the purposes of this article, we will describe staking with the Auto BNB-SPY pool in more detail. Auto BNB-SPY is one of the most interesting staking options with regard to risk and potential return. Unlike Manual BNB-SPY, it has a restaking (or compounding) function, which ensures that you do not have to manually reinvest earned tokens.
How much can you earn by staking?
The yield from staking is directly dependent on the volume of SPY in the pool. Your reward is calculated according to the proportion of your SPY in the total pool. The more SPY in the pool, the lower your reward. So the profitability fluctuates. At the time of writing, staking yields were as follows:
|Staking length||Profit||How much BUSD you get when you invest $ 1,000|
|1 day||0,68 %||$6,84 BUSD|
|7 days||4,88 %||$48,86 BUSD|
|30 days||22,68 %||$226,84 BUSD|
|365 days||1103,16 %||$11.030 BUSD|
At the time of writing this article the APY from the Auto SPY-BNB pool was 1108.12% APY
Disadvantages and Risks of Staking
Staking revenue can seem too good to be true. However, staking itself is not without risk. The biggest risk is that the value of the SPY token (or any token you stack) will drop.
As can be seen from the calculation above, interesting money can be made by staking. If the SPY price falls by 1000%, you are still in the green and (normally) you will cover inflation. However, with a decrease in SPY of 1103% or more, your profitability becomes negative.
What is the probability that SPY will fall so significantly? That is very difficult to say. It is important to note that on Nov 28, 2020, the SPY was about $ 0.03. On Apr 05, 2021, SPY reached $ 21.12 (all time high). If you bought SPY at the end of April and packed it, its value would be 99% lower today than you bought it for. The market capitalization is about $17,787,663 at the time of writing (Apr 2022) and the current price about $0.17/SPY remains stable for several past months.
Benefits of Auto Pools
The biggest advantage of the car pool is that there is a so-called compounding effect.
This means that the money you put into the pool earns you money that earns you more money. The SPY token automatically increments the amount earned from the pool every 12 hours. So your return is growing exponentially.
Earning on SPY after 30 days with 22.63% return:
Possible Earnings on SPY-BNB Auto Pool after one year with 1000 USD investment:
How to Stake on Auto Pools with Smarty pay
- Go to the website of Smarty Pay
- On the upper right click connect wallet
- Connect your preferred wallet (More about how to setup metamask for chrome extension or trust wallet for smartphones)
- Go to the menu – Earn – Auto Pools
- In the Auto Pool click Enable Contract
- Click in the BNB-SPY (or any other pool you prefer) to STAKE button
- Click that you understand the staking risk due to price fluctuation
- Now you can stake the amount of BNB you have on your wallet
- Click the amount you want to stake and confirm, you will be asked to approve gas fee
Now you can enjoy the passive income earnings from staking SPY.