Staking CULT, and why it’s more than just about the APR
“Why do I have 0 claimable CULT but we’re on Proposal #xx?”
(TL;DR: Be patient with rewards, and staking CULT takes it out of circulation and causes more pressure on circulating supply, giving your CULT value regardless of rewards.)
By far the most common question I have read on Discord, Telegram, and Twitter is the above.
“I’ve been staked for 2 weeks but got no rewards”.
Well I hope I can clear a few things up for you.
Yes, there are rewards for staking CULT. However, this is not staking like you have seen before. 99% of staking yields on other protocols is done by emissions. This means that the other protocols pay their staking yields with newly unlocked tokens, which pumps more of that token into the circulating supply, as people claim and withdraw their rewards.
What they see is a sexy % on the UI, which leads them to believe they are outwitting the system.
“If I stake for 20%, I’m outpacing inflation plus more! It’s free money!”
What you are actually doing is allowing that protocol to flush more supply into circulation, making it harder and harder to counteract sell pressure and grow.
CULT does thing differently.
On our Dapp we display the APR of the staking contract, but you should really look at it as “Projected Yearly Returns”. Same thing, different angle.
That APR calculates the total rewards sent to the contract since the pool opened, and annualises what the return would be for someone staked for 365 days, if that rate of rewards is kept consistent.
Every time rewards are sent to the contract, the APR moves higher, because thats more rewards over the time period, and every time someone else stakes, it moves down, because the rewards are spread amongst more stakers.
All rewards sent to the staking contract are distributed to all stakers at that moment in time. You don’t need to vote or be staked at the time of a proposal execution to receive the future rewards.
There seems to be some confusion between proposals, and when stakers should see rewards. New proposal does not equal, instant rewards for users.
That investment gets sent to the successful project, who may then use it as they outlined in their proposal. Once the investment has matured, the project then must reward the stakers (in the distribution terms laid out in the proposal), in the form of 50% burn, and 50% staking yield.
CULT is less than 3 months old. What this means is that we are only just past the point where investments have been made. Investments don’t grow overnight, there is a time period between that investment being made, and when the project has made use of it, and now has the returns ready to pay out.
Patience is required, something that seems to be thin on the ground these days. Once we are out of this time lag between the first few proposals and the first few rewards, we will begin to see a steady flow of profits (and burns) being delivered. Some proposals directly address this, such as the Inverse Finance proposals, which are being used in a high yield farming pool in order to create a steady farming reward that can be sent back to stakers on a monthly basis. This will be very useful in creating some ongoing reliable rewards while the more sporadic investments deliver at sporadic times.
More than just staking yield
One more thing to consider (and perhaps the most important) is being able to look past the APR. If you believe in the project and are comfortable holding your CULT, then you should be comfortable staking it even without conventional staking rewards.
Every person that stakes CULT, is already benefitting themselves as well as every other CULT holder, because they are taking their CULT out of general supply, causing more pressure on the liquidity available. The more staked tokens we have, we reduce the CULT available for purchase, while that continues to feed the treasury by taxation. This again helps us fast forward the supply burn, as the treasury is the main source of burning, and is totally locked until proposals go through.
I hope this has shed some more light on the staking and rewards system, and helps you to look beyond the numbers, and think more about how staking speeds up CULTs growth, rather than squashing it like other protocols.