Hi everyone, I’m still pretty new to crypto. I’ve been collecting a few different tokens over the last couple of months, but I’ve just left them sitting in my Binance wallet. I’ve heard about staking, fixed/flexible savings, and Launchpool to earn some extra while my tokens are idle, but I still don’t get the risks involved or how they really work.
For example, with ADA, I heard that I can stake it just by owning it. So, if I leave it in my Binance wallet, do I earn something from it? How often do I earn, and how much is it?
About Fixed/Flexible savings, am I at risk of losing my tokens if I commit to them? If it says on ADA that it’s locked for 60 days at an estimated APY of 7.79%, does that mean I just put my ADA in and can’t access it for 60 days, and then get it back plus around 7%? It feels too good to be true. Where’s the catch? Could I end up losing my tokens or getting back less than what I put in? (I’m not counting extreme situations like Binance getting hacked or disappearing).
As for Launchpool, is it like fixed-term savings, but I get a different token back at the end? I just put 0.41 BNB into the ALICE Launchpool today, which says it’s farming for 30 days (27 days left), so does that mean my BNB is tied up for that time, and then I get my BNB back along with some ALICE? Is there a risk of losing tokens this way?
I’m not too worried about my tokens being stuck in savings or Launchpool since I plan to hold them for a long time anyway. I’m just curious about the risks in staking, saving, and Launchpool options, and how to figure out what I’ll get back at the end of the fixed periods.
I can’t answer all your questions, but I’ve noticed that many people misunderstand APY in savings. In your example, when you stake ADA for 60 days at 7.79% APY, you don’t get that after 60 days. The 7.79% is yearly. You need to divide it for 60 days: 60/365 of 7.79% is about 1.28%. After 60 days, you would earn 1.28%, but you would get 7.79% if you staked for the whole year.
Staking: you lock a certain amount for a set time. You earn some interest, but if you withdraw before the time is up, you don’t get any interest.
Flexible savings: the returns are low, but there’s no commitment. You earn interest daily and can take out your money anytime.
Launchpool: you give funds to a new crypto project and earn rewards in their token based on how long you commit. Stake for a set time to earn rewards that could increase in value.
In all these cases, the main risk is the value of the coin dropping. You will at least get your investment back.
@Kennedy
Thanks, that’s just what I needed to know. I mainly wanted to understand the risks and making sure I at least get back what I put in. It seems unusual to earn savings or rewards without any risk.
@Kennedy
Is there really no risk, though? If we’re talking about DeFi, it seems there could be a risk with smart contracts. I’m not sure about ADA, as it’s not on the Ethereum network, so I don’t know if the staking rewards come from a smart contract.
@Ronald
I’m not sure about Binance’s system, so I can’t say how they handle or give out rewards. I’ve heard they might not have enough liquidity to keep their promises and just use others’ funds.
What I can say is that outside Binance US, they seem to care for their users, especially after past issues where users didn’t lose anything. They don’t want a bad reputation.
My feeling is they have big investors who don’t move their funds often, so they can just add numbers to people’s accounts and keep their promises if they decide to withdraw. This is just my opinion, but I’ve used their services and haven’t lost anything. Even with their “high-risk” options, I made a decent profit.
@Kennedy
Can you clarify something? When I stake my coin, like BNB, does it automatically convert to the token in the Launchpool at listing, or do I need to claim the coins and buy them at the launch time?
@KenDecapry
Hi there! Thanks for your question! When you stake BNB in the Launchpool, it automatically participates. You don’t need to claim or buy the new token when it lists. Your staked tokens are used to earn the new assets, and your rewards depend on how much you stake and how long. You can withdraw your pending rewards anytime and unstake whenever you want. If you need more info, check here: https://www.binance.com/en/support/faq/how-to-get-started-with-binance-launchpool-94ed108ce89d44ab8602aa3c476dfb04
Striker1 said:
Great question! If you don’t get any answers here, maybe try reposting in this forum or something because I want to learn more too.
Thanks, I hadn’t heard of Nexo. I just checked it out, and it seems like their savings work similarly to what’s offered on Binance. They also seem to have good insurance, so I’ll look into it more.
I’ll try reposting if I don’t get answers here, but the last time I posted in this forum, I think it got deleted since I didn’t meet the account age or karma requirement. I’ll check it and give it another shot.
APY means Annual Percentage Yield, so the 7% is what you’d earn if you staked for a year. For 60 days, divide it by about 6 (365/60), so you earn around 1.28%.
As far as I know, Launchpool is flexible, so you can withdraw your tokens or add more whenever.