Staking

Overview

Stakers are incentivised to turn unproductive assets into productive assets which earn fees on swaps. Stakers increase depth of liquidity in the continuous liquidity pools and own an overall % share of the pool which fees are calculated on. Staking is permissionless and non-custodial, and can be withdrawn at any time.

Staking Incentives

Every token holder has idle and unproductive assets which can be used to provide liquidity for a market which turns those assets into productive ones. Swappers cause a slip in the liquidity pool for each trade based on the proportion of the trade to the assets in the pool. The fee is based on the slip. Since staking is permissionless & non-custodial, staking assets is an attractive proposition for long term HODLers who are not active trading their assets.

Staking Process

Stakers can either create new CLP's or add liquidity to existing pools. New pools require symmetrical staking of $ASSET & $RUNE based on the stakers subjective opinion of the current fair market value. This avoids someone from coming in and arbitraging the asset price asymmetry.

Liquidity can be added to existing pools to increase the depth of that pool and attract swappers. The deeper the liquidity the lower the fee, however deep pools generally have higher volume of transactions and so generate fee revenue for stakers. Stakers are incentivised to stake symmetrically, but should stake asymmetrically if the pool is already imbalanced.

At the time of staking, the staker owns a share (%) of the overall pool and earns fees according to his/her stake. The staker can withdraw their share (including fees) at any time.

Staking Returns

Returns vary depending on the depth of the CLP, transaction volume and size of trades. Passive stakers should seek out pools with deep liquidity to minimise risk and maximise returns. Active stakers may seek to maximise returns by seeking out pools with shallow liquidity but high demand. This demand will cause greater slips and higher fees for stakers.

Returns are expected to be in the order of several basis points per day for deeply liquid pools, and potentially 7-10% for low liquidity pools.