Staking (finished)
Last updated
Last updated
As we approach the release of native staking for PBX holders we decided to give a broad overview of how Paribus staking will work. This article takes you through some of the key concepts behind PBX staking and why this is such a rare opportunity.
Staking is based on a smart contract that locks in a set number of PBX tokens for a given period of time. When the contract has been completed the tokens that were staked and the reward tokens are released. You can then choose whether to sell, hold, or further invest your tokens. The unusual aspect with PBX staking is that it’s a one-off event, after the pools are filled there will never be another opportunity to stake your PBX, even after the contract has been successfully completed.
Before the staking program was developed the only way people could earn a return on their tokens would involve trying to guess the market by selling highs and re-buying the lows. The difficulty with this approach is that it’s an easy way to lose tokens rather than grow them. Despite the wild claims of certain Crypto-Twitter and YouTube influencers, timing the market is incredibly difficult and fraught with risk. By staking your tokens they remain secure and increase in quantity. Deniz, the CEO of Paribus said, “This gives everyone an opportunity to earn PBX as an early supporter thus better their return prospects as the project grows.”
In general, there are two types of cryptocurrency models, called Proof of Work (PoW) and Proof of Stake (PoS), which use different approaches to secure and validate transactions on their blockchains. Bitcoin has a PoW structure whilst Cardano is PoS. When you stake ADA tokens on the Cardano network they’re delegated to a particular stake pool and the level of ADA staked within a pool is used to validate transactions, so staking is essential for the continued functioning of the network. However, as Paribus is a DeFi protocol rather than a blockchain it doesn’t require any staking of PBX in order to function, so from the point of view of functionality PBX staking is very different from ADA staking. In addition, the yield you would expect to get from PoS staking would be around 6%APY whereas the yield from PBX staking is 5 times greater at up to 30%APY.
To help people make the clearest decisions about how they choose to stake we’ve expressed the rewards as an industry-standard APY percentage. APY stands for Annual Percentage Yield and PBX staking rewards vary between 20–30% APY. The important aspect for people to understand is that APY is based on a yearly figure, so 20% APY in a 90-day staking contract doesn’t mean that you exit with 20% more PBX as the actual number of tokens your reward will amount to is pro-rata. So 100,000 PBX at 20%APY for 90-days doesn’t mean you would exit with a reward of 20,000 PBX, it would instead be just below 5,000PBX. [20,000/365 x 90 = 4,931.5]. Likewise, if you staked 1,000,000 PBX in the Aurum pool it would be locked for the full 365-days and your reward would be 300,000 PBX. In deciding which pool to stake you’ll want to take into account both the APY% and the duration of the staking contract — the higher both are the higher the end rewards will be.
The three pools are Aereus, Argenti, and Aurum.
Aereus allows you to stake anywhere from 50,000 to 2,000,000 PBX, locked for just 90 days with an incredible reward level of 20% APY.
Argenti allows you to stake between 500,000 and 3,000,000 PBX, locked for 180 days in return for a substantial reward level of 25% APY.
The largest pool, Aurum, allows you to stake from 1,000,000 to 6,000,000 PBX for 365 days in return for a jaw-dropping 30% APY reward level.
The pool capacity for Aereus is 250 million PBX, for Argenti, it’s 375 million PBX, and for Aurum, the maximum pool capacity is 500 million PBX. In total up to 1.125 billion PBX (over 50% of the circulating supply) will be locked out of circulation. As Deniz, the CEO of Paribus explains, “We have set our pool limits so each pool can accommodate the desired amount of unique wallets. Without limits a single “whale” can fill up the largest pools and this is not something we want as we want PBX in the hands of as many people as possible.”
Anytime a barrier to entry exists it necessarily prevents some people from taking part and that can seem contradictory with the ethos of Paribus at first glance, but we can assure you it’s there for good reasons. The main reason for a minimum limit of 50,000PBX for staking isn’t to encourage participation only from people who can afford to buy that number of tokens, it’s simply due to the difficulties of being an ERC-20 token. For various reasons, we’ll address in later articles, Paribus has started life as an ERC-20 token, as such any transactions are subject to Ethereum gas fees. Because of the generally high and unpredictable costs of gas fees on Ethereum it means that low quantities of PBX staked could be counterproductive because it could end up costing people more in gas fees than they make in rewards. Likewise, we thought long and hard about the time lock periods and came to the conclusion of a higher entry to the longest lock period. If someone can afford to buy and hold 1million PBX they would be more likely to be able to lock them away for a year. The last thing we wanted would be to incentivize long lock periods for those who couldn’t afford to tie their funds up for the duration of them. Nothing in life is perfect but we hope that following this logic maximizes the number of people within the Paribus community that can participate in staking. Deniz explained, “We looked at our token holder’s chart on etherscan and got a sense of average holding amounts. Based on this figure and token release schedules we came up with these pools to accommodate for users across the spectrum.”
Staking will be available through the Paribus website. Once live you’ll find exactly how to stake your PBX tokens through the official Paribus staking app. It’s incredibly user-friendly and our developers have worked hard to make it as easy and accessible as possible.
As a special holiday gift, we’re releasing the live staking app on Tuesday 28th December at 2:00 pm GMT. You can stake from this point onwards provided there’s still space in the pool for you to stake to.
Originally we had no concrete plans to develop native staking of the PBX token and all our efforts were focused on our main app development. However, soon after the launch of PBX a community began forming, much faster and larger than anything we’d anticipated. There were growing calls for a way to stake the tokens people were holding so we felt we had to honor this desire and give the community a staking program. For Paribus the benefit is that it reduces some of the volatility we’ve seen with people trying to scalp and swing trade and it incentivizes HODLing. Many people within the community share our passion and vision and we wanted to give them something back to show how blown away we’ve been by their huge levels of support. As well as giving the community a place to securely grow their PBX we’ve structured the pools to maximize the number of people that can get involved. Once all the slots are filled we’ll have locked up over 50% of the entire circulating supply of PBX.
Although we’ve tried to maximize the pools to give everyone the chance to take part we can’t guarantee how long the opportunity will last. The staking program is a one-off chance to give the community a way to earn passive income with their tokens until we have the MVP available, so it won’t be repeated again in the future. Even the MVP yield won’t be on the scale of the staking rewards, so this really is a once-in-a-lifetime opportunity for PBX holders.
Unfortunately not. As each time lock expires that pool will cease to exist. We’d recommend people choose carefully, bearing in mind how many PBX they want to stake and how long they can realistically afford to stake for. We want everyone to have the opportunity to benefit as much as possible from the staking program
