What is Staking?

Staking is a way of earning rewards for holding cryptocurrencies. It offers crypto holders rewards for supporting specific projects in ways that add value to the projects. Staking can be a vital way of securing a particular protocol or blockchain as well as a way to make a project more decentralized through distributing its native tokens. Sometimes when staking a user must lock their assets for a certain period of time, however, this is not always the case. In the context of decentralized projects and PoS (Proof of Stake Chains) users are in control of their tokens and supporting the projects they correspond to.

Unfortunately, some centralized crypto exchanges have corrupted what it means to stake assets. Similar to depositing cash into a high-yield savings account, centralized exchanges may lend out your deposits, and pay you interest on your account balance. While this may feel “more safe” or “better” than self-custody of your assets and interacting directly with chains, it has led to massive losses for users who trusted the wrong centralized exchanges.

Many blockchains use a proof of stake consensus mechanism. Under this system, network participants who want to support the blockchain by validating new transactions and adding new blocks must stake that chain’s native token. The process of staking allows users to “put their money where their mouth is” and allocate their assets to trusted parties who will in turn get to be the ones who propose and add new blocks to their respective chains.

Staking helps to ensure only legitimate data and transactions are added to the blockchain. Participants trying to earn a chance to validate new transactions offer to lock up sums of cryptocurrency in staking as a form of insurance.

What is Algorand Staking & What Are Algorand Staking Rewards?

Algorand Staking may refer to a number of different practices and this article will try to clarify them. Users may stake their ALGOs by contributing to Algorand Consensus, contributing to individual protocol distribution, participating in Algorand Governance, or by holding their assets on a CEX. These various methods have different potentials for rewards as well as different risks/advantages. See the below for a comprehensive list on ways to earn Algorand Staking Rewards:

  • Delegation via a centralized exchange (CEX): Exchanges like Coinbase or Nexo allow you to earn rewards on your Algorand directly through the exchange. With this option, the exchange will keep custody of your $ALGO and there may be less clarity on how your $ALGO is used by the exchange.
  • Earn participation or governance rewards: Algorand pays out a nominal reward, a participation reward, for holding tokens in an on-chain wallet address who also participate in voting. For more information on governance please click here.
  • Liquid staking Algorand: With liquid staking, you can participate in both consensus and governance through a DeFi protocol like GARD. Liquid staking is the process of participating in staking to earn rewards and receiving an IOU in exchange for said assets. These assets should be redeemable for the ALGO you contributed once they are returned to the protocol.
  • Run your own node: Any user can set up a participation node to support Algorand’s consensus protocol, however, Algorand does not pay additional rewards for running a node (yet). This is considered staking in the original sense of the word.

Current Status of Algorand Staking

The most popular way to take advantage of staking on Algorand is by participating in Algorand Governance, where users traditionally lock their ALGOs for a quarter and vote on the future of the Algorand blockchain in exchange for a slice of tens of millions of ALGO rewards distributed each quarter. This was a great way to earn a risk free rate of return and then DeFi protocols like GARD came along and shook things up. Now users take advantage of committing their ALGOs to Algorand governance with DeFi protocols like GARD in order to earn even more rewards. Thanks to efforts by GARD and other liquid staking protocols, the Algorand community has voted to pay out higher rewards to users who participate in Algorand governance through DeFi protocols. By borrowing $GARD against intrinsically valuable collateral, like $ALGO, users are able to earn more rewards for adding more value to the Algorand network and also gain utility from whatever additional rewards each protocol may provide. For example, if users stake their borrowed $GARD they are able to earn additional yield on the borrowed $GARD, currently ~7.33% APR.

There are many more ways in which Algorand ecosystem participants can take advantage of juicy staking APRs by leveraging other $ALGO derivatives like $gALGO and other Algorand Standard Assets (ASAs) like Glitter Finance’s $XGLI.


Glitter Finance x GARD Staking

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Launch $XGLI Staking -> GARD dApp

Users can earn 38%+ APR by leveraging the GARD Protocol’s dApp to stake $XGLI and earn $xSOL via GARD’s world class Algorand staking contracts. This is a no-lock commitment, meaning users can unstake at any time. Many users benefit from this because they can ‘set and forget’ their stakes while being rewarded for raising awareness for the Glitter Finance product suite.


Folks Finance x GARD Staking

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Launch $gALGO Staking -> GARD dApp

Users can earn 7.3%+ APR by leveraging the GARD Protocol’s dApp to stake $GARD borrowed against $gALGO used as collateral. This is a no-lock commitment, meaning users can unstake at any time.


GARD Staking

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Launch GARD Staking -> GARD dApp

Users can earn 7.3%+ APR by leveraging the GARD Protocol’s dApp to stake $GARD to earn more $GARD. Whether community members borrowed $GARD against their Algorand governance positions directly on the GARD dApp, borrow against other whitelisted ASAs like $gALGO, or simply purchased $GARD on a prominent DEX like Pact.fi or HumbleSwap, they can take advantage of $GARD for $GARD staking. This is also a no-lock commitment, meaning users can unstake at any time. Rewards are sustainable and are paid out as a result of protocol revenue sharing (80%) as well as a $1,000 - $2,000 weekly boost in $GARD thanks to an Aeneas grant awarded to the GARD Protocol from the Algorand Foundation.


GARDIAN Staking

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Launch GARDIAN Staking -> GARD dApp

Users can earn 194% APR by leveraging the GARD Protocol’s dApp to stake $GARDIAN to earn more $GARDIAN. This is a no-lock commitment, meaning users can unstake at any time. To learn more about the benefits and utility of $GARDIAN please review the GARD Protocol’s documentation.


Wrapping Up

For those holding $ALGO tokens, there are various ways to earn higher yield by taking advantage of staking compared to other crypto projects by participating in Algorand governance. By taking advantage of liquid staking products like those offered the GARD Protocol users can have additional flexibility and earn additional yield.

For users who prefer the convenience of staking through a centralized exchange, there are opportunities to do so via Coinbase and others.

Disclaimer

This is not to be interpreted as financial advice of any kind and we strongly encourage folks to do their own research. More information on GARD Protocol's disclaimer can be found here.

Frequently Asked Questions

Can you stake Algorand?

Yes, you can stake Algorand via the following methods:

  • Centralized Exchange (CEX): Staking Algorand on Coinbase, Binance, NEXO, and others is possible. These methods are not the best, however, because you don’t know what the exchange is actually doing with your funds and typically you will earn a lower yield.
  • Earn governance rewards: Algorand pays out a nominal reward for users who participate in its governance. To learn more click here.
  • Liquid staking Algorand: With liquid staking, you might take part in both consensus and governance with a DeFi protocol like GARD. Liquid staking is the operation of engaging in staking to earn rewards and getting an IOU in return for stated assets.These assets should be redeemable for the original assets you staked.
  • Run your own node: Any user can set up a participation node to support Algorand’s consensus protocol, however, Algorand does not pay additional rewards for running a node (yet). This is considered staking in the original sense of the word.

Algorand staking rewards have not yet ended.

Yes, you can stake Algorand through your Ledger. Algorand dApps are Ledger compatible and so is the official Algorand governance portal.

No-lock staking refers to the type of staking where users can remove their funds from staking at any time. Locked staking on the other hand involves a time commitment specified by the staking endeavor where users cannot remove their funds for a designated period of time. Users should do their own research to fully understand the risks associated with a particular type of staking.

I have $ALGO, now what?

Once users have $ALGO in their wallets like Pera, MyAlgo, etc. they can connect to a dApp like GARD and get started. For more documentation on GARD staking visit the documentation.

GARD Protocol is excited and humbled to have kicked off some incredible staking partnership and has a growing backlog of protocols looking to leverage our world class staking contracts. To inquire about a staking collaboration, we warmly invite you to reach out to us on Twitter, Reddit, Telegram, Discord, or via email. For more information on how to contact the GARD Protocol team see our documentation.

Many protocols have migrated from web2 staking projects in the Algorand ecosystem to GARD Protocol and for good reason. The ability for users to ‘set and forget’ their staking positions and allow them to compound continuously without the need to fiddle with them day to day is a massive advantage for users looking to maximize their yield. GARD Protocol also offers various tools to enable users to get the most utility out of their Algorand staking journey by cross-pollination staking strategies with borrowing and lending both $ALGO and other $ALGO derivatives like $gALGO.

How do I calculate Algorand staking rewards?

Typically, protocols will display APR or APY rewards for Algorand stakers. We encourage users to do their own research and calculations to make sure staking rewards meet expectations.

This varies protocol to protocol. In the case of GARD, users can ‘set and forget’ their staking positions and have them automatically compound without the need to continuously claim rewards everyday. Other protocols, however, require users to come back daily in order to claim their rewards which can be very burdensome to users.

Not all Algorand staking rewards are sustainable, but it depends on the protocol. Users should, of course, do their own research to better understand how long Algorand staking opportunities will be around on an opportunity by opportunity basis. In the case of GARD Protocol, there is extensive documentation demonstrating exactly where the rewards are coming from as well as sustainability. By allocating a specific percentage of protocol revenues to users taking advantage of Algorand staking on the GARD dApp, users can rest assured that rewards are going to stick around as long as the protocol itself is too.

The amount you can make staking Algorand varies on an opportunity to opportunity basis. Currently, users of the GARD Protocol can earn up to 177% APR (compounding continuously) for select staking opportunities.

Market risk

If, for example, you are earning 15% APR for staking an asset but it drops 50% in value throughout the year, you will still have made a loss. Users need to choose carefully the assets they decide to stake and not do so solely based on APR figures.

The illiquidity of an asset users are staking is worth being aware of. Generally, the more of an asset that is staked the less liquid it will be.

Some stackable assets come with locked periods during which you cannot access your staked assets. If the price drops substantially and you cannot unstake it, you will incur a loss.

The potential for users to lose their wallet’s private keys or having their funds stolen for not paying adequate attention to security.

Similar to lockup periods, some staking assets don’t pay out rewards daily like the GARD Protocol. As a result, users have to wait to receive their rewards. To mitigate this, users can take advantage of Algorand staking opportunities that pay out daily rewards.

Crypto is a bleeding edge technology with many other potential risks that are known or unknown. For more information on risks particular to the GARD Protocol visit our documentation.