Staking
What is Staking
Staking is a process that allows users to lock up their cryptocurrency funds in a wallet in order to participate in the validation and creation of blocks on the corresponding blockchain. It can contribute to ensuring the liquidity of an asset, preventing sell-offs, and more, depending on the specific blockchain.
Excluding NFTs, all Klever Digital Assets (KDAs) are fit for staking. Nevertheless, KLV and KFi have some singularities. A node who holds 10 million KLV or more is eligible to be a validator in Kleverchain. For KFI, the stakers of this token will have to right to vote in proposals. Moreover, regular users can accumulate more of both these assets through the freeze and claim contracts.
When users interact with Kleverchain to create their own assets, they will be faced with two types of staking: APR and FPR staking.
APR staking stands for Annual Percentage Rate. It is a well-known term in the market that represents the percentage earned annually on an investment. On Kleverchain, when creating an asset and choosing this staking modality, the creator must choose what the annual return will be for users who stake their asset. It will be up to the creator to control the emission limits of their token (through initial supply and max supply). The return on investment is always in the currency in which the staking was made. The KDA creator does not need to control the distribution of rewards, since it occurs automatically by Kleverchain. Users will just need to claim the rewards when they meet the conditions.
On the other hand, FPR stands for Flexibe Proportional Return. It is a new modality of staking that the Klever ecosystem offers. When creating a KDA and choosing this option, a pool will be created for depositing any assets from Kleverchain. This pool will always be fed by the owner of the asset, and after the deposits are made, the stakers of that coin during the deposit period will have the right to withdraw the assets deposited in the pool according to the amount of staking they made of the owner's coin.
For example: Some user creates coin A with FPR. This user deposits assets B, C, D, E into his pool. A staker who has 10% of all staking of asset A will be entitled to receive 10% of all assets B, C, D, E that were deposited in the pool in that epoch, provided he had those 10% at the time of deposit and only for that deposit. If in the next deposit that staker no longer has any coins staked of asset A, he will not be entitled to receive the deposited assets.
For a staker to be eligible for withdrawing his rewards, he must have staked in an epoch prior to the deposit. If when the owner deposits the coins but there are no currently stakers from his asset on that epoch, that means no one will receive the deposited coins and after 100 epochs they will return to the owner.
The great advantage of FPR staking is that it allows the owner of the asset to create an additional incentive for people to buy their asset, as they will not only receive yields from their own coin.
This means that the owner of the KDA with FPR will be responsible to their staking community for communicating when and how much assets will be deposited, as well as which assets they intend to deposit. Klever cannot control or guarantee that the deposits will be made according to what the owner of the asset published. That is why it is essential that anyone who intends to stake an FPR asset has a full understanding and confidence in the respective project.
Important note: Although KLV and KFI are considered to have FPR system. Their staking returns are always in KLV and the distribution is made automatically through KleverChain in every epoch, based on the KLV spent on fees and according to the network params.