Is staking the main theme in the crypto bear market?

Author: Staking

The fervor of 2021 has faded, and the cryptocurrency space is becoming increasingly calm. However, there are still some hotspots or fresh events that emerge, leaving different marks on each stage of the industry's development. For example, the Shanghai upgrade, Ethereum 2.0, LSD, PEPE & MEME, HongKong, BRC20, Fair-Lanch, etc., always stir up waves unexpectedly. Tides rise and fall, and if one is not careful, they can vanish in an instant, leaving behind a trail of sand. The sand is blown in and out repeatedly, just like the call of "All IN WEB3" resonates, as the world of crypto continues to write new chapters that never fade away.

Looking at the current cryptocurrency communities, activities have decreased, and the number of active members has diminished, with most falling into a state of wait-and-see. Some small project communities, especially those that rely heavily on market enthusiasm and speculative sentiment, have been hit harder or have fallen silent. In contrast, project communities with real applications and good fundamentals have relatively better resisted the pressures of a bear market. Some active communities still engage in discussions around the projects themselves, continuing to drive innovation and seek new opportunities and solutions.

In such a market environment, "HODLing in a bear market" resonates with the behavior and thoughts of most token holders, and Staking has become a prevailing theme. Staking refers to the process where holders of crypto assets pledge their assets to support the operation of a specific blockchain network. By staking, holders can participate in the network's consensus mechanism and receive corresponding block rewards as returns. Staking is a natural product of POS, and POS blockchains seem like perpetual motion machines, capable of continuously generating block rewards according to the underlying consensus mechanism without consuming excessive material resources. Staking plays an important role as a comprehensive entity of input and output for blockchain assets.

According to on-chain data, as of early June 2023, the total amount of Lido Ethereum staking has surpassed 7 million ETH, equivalent to approximately $12.6 billion, with a staking APR of 4.7%. The total locked value of Ethereum Layer 2 has reached $8.31 billion, with the top five projects by locked value being: Arbitrum One ($5.41 billion), Optimism ($1.52 billion), zkSync Era ($431 million), DYDX ($343 million), and Metis Andromeda ($93.56 million).

In addition to Ethereum, other blockchain projects that adopt POS mechanisms are also practicing and innovating in Staking. Among them, the NULS blockchain is an example that has been committed to promoting the development of Staking. Currently, the total amount staked on the NULS mainnet has reached 53,330.65K NULS, accounting for over 53% of the total circulation. This demonstrates the important position of Staking in the crypto bear market and its popularity within the community. According to the NULSCAN browser, the annualized staking yield on the NULS mainnet is approximately 8%; while LP liquidity providers within the NULS/ENULS ecosystem can enjoy an annualized yield of around 50%.

Next, let's analyze the relevant Staking mechanisms of ETH and NULS.

With the release of Ethereum 2.0, POS proof of stake has been amplified again, and ETH Staking has become very attractive to institutional and individual investors, like the North Star in the night sky, becoming a more stable source of income. To become a validator on the Ethereum mainnet, one needs to hold at least 32 ETH, which poses a certain barrier for average users (approximately $56,000 at current value). Most investors choose to join staking pools and stake through various third-party DApps to earn ETH block rewards, such as derivative protocols like Lido, DApps on Layer 2, or staking channels on various CEX platforms.

Taking Lido as an example, it allows ETH holders to participate in Ethereum's staking by converting their ETH into Ethereum 2.0 validator tokens (stETH). Holders can send ETH to the Lido contract, which will stake it on the Ethereum 2.0 network. After staking, holders will receive stETH tokens corresponding to the amount of ETH they staked. As stakers, holders can earn rewards from validators on the Ethereum 2.0 network. The Lido project distributes these rewards to stakers, increasing participants' earnings and motivation, thereby enhancing the security of the Ethereum network. More stakers mean more decentralized staking, reducing the potential risk of network attacks.

Typically, the Staking mechanism of POS blockchains is relatively flexible, with some third-party applications setting different staking yields for users based on the type of token and staking duration. The longer the staking period, the higher the annualized yield. Of course, the more tokens staked on-chain, the lower the annualized yield of block rewards, which is determined by the underlying mechanism of block rewards in each POS network.

The NULS mainnet adopts a Proof of Credit (POC) consensus mechanism, where nodes in the network are called credit nodes. During the consensus process, nodes must adhere to protocol rules, verify transactions, and ensure the security and consistency of the blockchain. If a node violates protocol rules or exhibits malicious behavior, it faces penalties such as yellow cards, red cards, or loss of credit value. Investors can create a node by holding 20,000 NULS (approximately $3,800 at current value), and when staking reaches 200,000 NULS, the node will start to produce blocks and generate block rewards, with a maximum staking amount of 500,000 NULS per node. Users can choose any node with a credit value of 1, with a minimum staking amount of 2,000 NULS. The more NULS a user stakes, the more block rewards they receive.

NULS POCM (Proof of Credit Mining) is a form of NULS Restaking used to distribute token assets across any blockchain and ecosystem. It allows projects to use smart contracts for on-chain asset distribution while giving supporters the opportunity to participate in the project and receive corresponding rewards. Users can stake their NULS into the project's POCM contract to earn token rewards distributed by the project, while the project receives staking rewards from users' staked NULS on the mainnet. For NULS holders, there is never a risk of principal loss, as staked assets remain in their own wallets. Even when offline, they can still earn project tokens. Users wishing to participate in POCM platform project staking can start with as little as 100 NULS.

POCM differs from general financing issuance platforms by providing a simpler, safer, and more transparent way for projects to issue tokens, obtain initial development funds, and gain long-term support from a loyal community of users. NULS POCM has made significant contributions to the development of the NULS ecosystem, currently attracting dozens of projects from ecosystems such as Ethereum, BNB Chain, Polygon, Arbitrum, Avalanche, and Fantom, achieving high participation in staking from community members. Some projects initially supported through POCM have already launched on CEX platforms like Coinbase and Gate.

Additionally, the decentralized trading platform Nulswap in the NULS ecosystem has launched aiNULS, which is another NULS Restaking mechanism similar to Lido, lowering the participation threshold for users in the NULS mainnet, allowing staking from just 100 NULS. Holders send NULS to the Nulswap contract, which will stake it on the NULS network. After staking, holders will receive aiNULS corresponding to their staked NULS. Nulswap will distribute mainnet rewards to stakers, along with additional NSWAP token rewards.

In summary, although the crypto market is filled with significant uncertainty, Staking, as a stable investment strategy, offers a way to earn returns gradually and steadily. Unlike short-term speculation, Staking requires holders to have confidence in the long-term development of the project and network. By continuously staking assets and participating in the network's consensus mechanism, one can earn stable returns while contributing to the security and development of the network.

Seize the main theme of Staking, choose reliable projects with relatively sound delegation mechanisms, healthy inflation, and flexible entry and exit, and patiently await future rewards!