After our recent white paper update, we saw a sharp increase in questions on Telegram about staking: how it works through Balanced and what the advantages are. Balanced offers a number of advantages for ICX holders, including staking, increased liquidity, automatic compounding interest, and the ability to leverage your staked ICX holdings. We’ll keep this (and future posts) short and to the point. If you have follow up questions, join our Telegram channel to discuss!
Staking without Balanced
If you stake without Balanced, you can’t just set and forget. To maximize your compound interest, you need to claim I-Score, re-stake, and re-delegate on a daily basis.
With Balanced, it can be better.
Staking with Balanced
At a high level, there are 4 key benefits to staking with Balanced: liquidity, leverage, mining Balance Tokens (BALN), and autostaking.
Liquidity means you’ll be able to stake, but you won’t be subject to the unstaking period. You’ll receive a token called sICX when you unstake from Balanced, which you can trade for ICX on the DEX. To learn more, read our white paper.
Leverage means you can do things with your ICX, even though it’s staked in Balanced. You could:
- Borrow Balanced Dollars (bnUSD) and trade it for ICX, then stake the ICX in Balanced to increase your staking rewards.
- Borrow bnUSD and buy ICX, then convert it to another stablecoin to earn interest in DeFi on the Ethereum blockchain. You can borrow bnUSD for 0% interest, so you’ll make money no matter what the interest rate is on other DeFi platforms.
- Borrow bnUSD and use it to trade on the Balanced DEX.
Mining Balance Tokens occurs if you stake on Balanced and borrow even a small loan from the network. You can stake BALN to earn network fees, participate in the Balanced DAO governance, and vote for P-Reps using the ICX staked in Balanced.
Autostaking means you will not need to claim I-Score, re-stake, and re-delegate. This happens automatically anytime someone interacts with Balanced.
In summary, staking with Balanced gets you voting rewards plus liquidity plus leverage plus BALN tokens plus autostaking. That’s why it’s the one-stop-shop for ICX holders.
While Balanced offers a lot of benefits, it’s important that you also understand the risks:
- Smart contract risk — We will have audited contracts, but there’s always the possibility of a bug or vulnerability in a smart contract that compromises user funds. It would not be possible to recover them.
- Liquidation risk — If your collateralization ratio drops below 150%, you will lose all your collateral, but you will get to keep any borrowed assets.
- Rebalancing risk — When you deposit ICX into Balanced, it’s used to keep a stable value of Balanced pegged assets (i.e. keeping bnUSD pegged to $1). Some of your collateral will be sold over time, but it will also lower your debt by an equal amount.
If you’re confused about any of these risks, talk to us on Telegram.