👨🏻🏫BeGlobal Academy: “staking” and warm-up[EN]
📣 Dear BGlobians!
🚨 Another video of the BeGloblal Academy: staking!
The new pool, as you know, is auto-compound. This means that you don’t have to worry about claiming and restaking: it’s automatic!
Please, note that we have changed the number of epochs from 3 to 2. However, the APY remains the same.
How does APY work ❓
▶️ When you see an APY of 10.000%, it means that if you don’t pull the token out from the staking pool, you start the year with 1 token and end up with 100 tokens!! An auto-compound investment strategy is extremely powerful and can support big draw-downs in price. So much, that price actually becomes irrelevant:
👉🏻 Let’s say you buy a GLBD for $400 now and the market decides that in 1 year time, the intrinsic value of GLBD will be $2. Assuming a daily compound interest rate of 2%, your balance would grow to about 1377 GLBD by the end of the year, which is worth around $2754. That is a cool $2354 profit!
By now, you should understand that you are paying a premium for GLBD now in exchange for a long-term benefit. Thus, you should have a long time horizon to allow your GLBD balance to grow exponentially and make this a worthwhile investment.
▶️ A warm-up is a period of time after staking that generates rewards and autocompounds them, but you can’t claim any rewards or you will lose them. Once the warm-up period is over, you can claim your warm-up tokens. You receive sGLBD at 1:1 ratio with your GLBD staked along with any rewards generated. For instance, if you stake 100 GLBD and claim them after the warmup period, you receive 100 sGLBD (+ any rewards generated so far). The idea of sGLBD is simple: it works the same way as LPs. It’s a receipt stating that you have staked some amount of tokens. Why do we need a warm up period? It protects against profit takers who could potentially take advantage of rebases:
👉🏻 There are currently 2 epochs or rebases a day. You could stake 1 minute before the rebase and unstake 1 minute afterwards, selling the extra profit. To prevent this, your staked tokens need to go through 2 rebases warm-up periods, where you are receiving rewards, but you can’t sell them until warm-up is over. It forces you to stake for 2 rebases. Should you exit the warm-up period before it is over, you will lose the rewards generated.
So, how does the full process work ❓
- You stake GLBD.
- Your tokens are considered to be in the warm-up period until 2 rebases pass (at the time of the writing). You are generating rewards that autocompound already.
- After 2 rebases have passed, you can exit warm up. When you do so, you receive sGLBD (staked GLBDs) which basically is a receipt saying that you have staked an specific amount of GLBD. You receive a sGLBD amount equal to your GLBD amount staked + rewards generated so far.
- Your sGLBD grow over time (at every rebase). For example, you start with 1000 tokens but after 2% rebase you have 1020 in your wallet. This tokens can have other use-cases.
- When you want to unstake, what internally happens is that you send your sGLBD tokens to the staking contract and it burns them and pays you back the same amount in GLBD.
- You don’t need to exit warm up if you don’t want to. You do so if you want to unstake or take advantage of other features that require you to have GLBD. Your warm up balance is always autocompounding.
Was this article helpful? We hope so! 💪🏻
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