Maximizing Returns with Staking
Staking is the primary value-accrual strategy of many DeFi protocols. For Asgard, users would stake their $Asgard through Asgard’s dApp website to earn rewards. These rewards derive from bond sales proceeds and may vary based on the number of Asgard staked within the protocol and the reward rate which is set by an algorithmic monetary policy.
When you stake, you:
1. Lock in Asgard and receive an equal amount of sAsgard.
2. Your sAsgard balance then rebases up at the end of every epoch automatically.
3. sAsgard can be eligible to be transferred so it is composable with other DeFi protocols.
To do it is easy!
1. Go to the Asgard website and select “stake.”
2. Send your Asgard to the staking contract and receive sAsgard at a 1:1 basis.
Remember that sAsgard is a transfer-restricted rebasing token so it’s not meant to be traded or used for anything except holding.
When you unstake, you:
1. Go to our website and select “unstake.” Send sAsgard back to the staking contract to receive Asgard at 1:1.
2. Burn your sAsgard and receive an equal amount of Asgard.
3. Unstaking also requires the user to forfeit the most recent rebase as an exit fee.
In cryptocurrency, rebasing is the process of adjusting the value of a derivative (sAsgard) to its underlying base (Asgard).
Because Asgard's protocol distributes Asgard by sending them to the staking contract without asking for sAsgard back, this increases the ratio of Asgard staked to sAsgard outstanding. Thus, resulting in a rebase to correct the difference.
For example: there are 100k Asgard staked and 100k sAsgard outstanding. The protocol produced $5k profit for the day, which it uses to mint and back 5k Asgard. It sends those Asgard to the staking contract; there are now 105k Asgard staked and 100k sAsgard outstanding. sAsgard supply needs to increase by 5k, or 5%, to return to balance. So, sAsgard is rebased up by 5%.
Rebases occur retroactively. For example, at the end of epoch 10 triggers a rebase of profits from epoch 9. This delay lets you see what you’re missing if you want to unstake or what you’ll get if you want to stake.
The reason to stake — Compound Interest
Annual Percentage Yield (APY) is a measurement of compound interest. This is different from Annual Percentage Return (APR), which is a measurement of simple interest.
Staking on Asgard allows users to receive compounded returns automatically. When users stake Asgard, they receive sAsgard. sAsgard represents our staked Asgard. sAsgard can always be exchanged 1:1 for Asgard, but it rebases to reflect profits. This means we can compound; for example, every day of our first week we rebased ~0.45% per epoch. If you held 100 Asgard, your first rebase of the week was 0.45 Asgard and your last rebase of the week was 0.49 Asgard. This is a 10% increase in yield! If we had simple interest, every epoch would be 0.45 Asgard.