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Examine the Long-Term Compounding Effect of Staking - per Asset, Provider, Staking Amount and Price Scenario.
Learn about Api3 Staking
How to stake API3
To earn a yield on your API3, you can either lend them out to custodial providers or via a Defi lending protocol, or stake your tokens in the Dao Pool.
We recommend using a Ledger Hardware Wallet to keep full control over your funds. To delegate your tokens, you should ensure you have your API3 on your Metamask Wallet and follow the steps below:
Step 1: Go to the API3 Staking Dashboard and connect your wallet. Please note that you will need to pay gas fees in ETH, so it is recommended to have 0.05 to 0.1 ETH available.
Step 2: Deposit your tokens into the DAO pool. Doing so will remove them from your wallet and place them into the DAO pool under the control of its smart contracts.
Step 3: Click ‘Stake’ and enter the number of tokens to stake.
Step 4: Sign the transaction
Do I need to maintain my staking in any way?
Once you have delegated your API3, there are a few things you need to consider going forward:
- Keep in mind that rewards are not auto-compounded, so to maximize your returns, you may want to claim and stake your rewards more frequently. However, it’s important to consider that each transaction will incur gas fees, so you may want to use our API3 Staking Calculator to determine the optimal re-staking frequency for your amount of API3.
- As a participant in the API3 Ecosystem, once you have staked your tokens, you can vote on and create API3 Governance Proposals. To create a proposal, you must not have created a proposal in the last seven days and you must hold at least 0.1% of the total staked tokens in the pool. You can vote on all proposals regardless of the percentage of staked tokens in the pool you own.
- Consider that the staked tokens in the pool are used as collateral for service coverage claims. Any payout results in the reduction of the total token count in the pool. The reduction is charged against each entity’s percentage of tokens in the pool.
How do I choose API3 validators?
You do not need to choose validators when staking API3. The API3 DAO has a single staking pool called the DAO pool. Staking simply means you are placing API3 tokens into the DAO pool. When staking tokens to the DAO pool you gain access to weekly staking rewards but also share in the risk of service coverage. You are also granted voting rights on active DAO proposals and inflationary rewards.
How are the staking rewards generated?
The Staking Rewards for API3 are generated by:
- Inflation on the Network: Inflationary rewards are paid weekly by an implicit and automatic process through an on-chain contract. API3 targets a staking ratio of 50%, the staking rewards will increase while the staked amount is below the target, and vice versa. It does not have a pre-determined schedule. Take note that inflationary rewards are vested for a year, which results in governing parties sharing the project’s long term interests.
Revenue from the protocol is not distributed, but is burnt, causing a reduction in circulating supply. Whether this will cause the network to be deflationary at some point is yet to be seen.
You’re welcome to use our API3 Staking Calculator to get a better understanding of how these factors can impact your rewards.
What are the risks to staking API3?
Whilst we want to ensure staking is as safe and transparent as possible, there are still things to consider regarding whether a specific staking option is right for you.
Claim risk: The staked tokens in the pool are used as collateral for service coverage claims. Any payout results in the reduction of the total token count in the pool. The reduction is charged against each entity’s percentage of tokens in the pool. For example, user X and Y both stake 500 API3 tokens, so each has 50% ownership in a 1000 token DAO pool. There is a service coverage claim payout of 3.4 tokens and the pool is now 996.6 tokens. X and Y now own 498.3 tokens each based on their 50% ownership.
Unbonding risk: The unbonding period for API3 is 7 days. Crypto markets are highly volatile, and investors need to be aware that they cannot sell their tokens immediately once they have staked them. They first need to wait 7days for the tokens to unbond before they become liquid. Please take note of this lockup before you decide to stake. Consider keeping funds liquid if you do not intend to hold API3 long-term.
Protocol security risks: There is an inherent risk that the protocol could contain unknown bugs. This not only applies to staking but your API3 investment in general.
Please note that this is not an exhaustive list of all the risks related to staking.
What is API3?
API3 is the native token of the API3 network that is used to carry out the key functions of the platform as detailed below:
- Staking: Grants membership in the API3 DAO and rights to inflationary rewards.
- Collateral: The collateral utility has the participants share the DAO’s operational risk and incentivizes them to minimize it. Exposing the governing parties to the risk aligns their incentives with that of the DAO. The governing parties need to be penalized when a dAPI malfunction occurs using an onchain service coverage that provides dAPI users with quantifiable and trustless security guarantees. The Service Coverage uses staked tokens of the DAO pool as collateral, which means that when a dAPI malfunction is confirmed through the dispute resolution protocol, user damages will be covered from the pool’s staked tokens.
- Governance: Staking tokens in the DAO pool gives you governance rights to create and vote on proposals. To create a proposal, you must not have created a proposal in the last seven days and you must hold at least 0.1% of the total staked tokens in the pool. You can vote on all proposals regardless of the percentage of staked tokens in the pool you own.
What are the tokenomics of API3?
API3 is an inflationary token with an unlimited maximum supply. The API3 token is used as a governance token, payment token, and fee-earning token. Its primary function is to align incentives between various stakeholders in the API3 protocol and facilitate smooth operations.
Initial Distribution Breakdown
The initial distribution of API3 tokens is as follows:
- 30% is allocated to API3 founders and team
- 20% is allocated to the API3 DAO
- 20% is allocated to Public investors
- 10% is allocated to API3 partners
- 10% is allocated to Seed investors
- 5% is allocated to pre-seed investors
- $3M was raised in a Private Round in November 2020
- $20M was raised in a Crowdsale in December 2020
From the Staking Rewards Journal