The Reserve Telegram is filled with questions regarding RSR staking. Is it possible to stake RSR? How much APY does it earn? What are the risks? And so on…
This post serves as a simple guide on RSR staking through Bancor, which to me seems like the easiest way of staking RSR at this moment. Please note that staking RSR is done through third-party applications and that there are risks involved with it. See the bottom of this post for an overview of those risks.
As a disclaimer, I have no affiliation with Bancor whatsoever.
What is Bancor?
Bancor Network is the world’s first decentralized liquidity network. In other words, a company that enables automatic conversion of any particular token into another. This has been possible by the creation of a smart token named Bancor Network Token (BTN). Based on its website, this is a digital currency with an embedded converter that allows it to be automatically exchanged to any token in its network directly from the client’s wallet.
Bancor is owned and operated by its community as a decentralized autonomous organization (DAO). The Bancor Protocol is governed via a democratic and transparent voting system which allows all stakeholders to get involved and shape Bancor’s future.
How does staking on Bancor work?
Staking on Bancor is done by providing liquidity to a pool of crypto assets. A liquidity provider is a user who funds a liquidity pool with crypto assets she owns to facilitate trading on the platform and earn passive income on her deposit.
Bancor’s staking mechanism differentiates itself from other staking applications by:
Providing single-sided liquidity: basically, instead of having to provide 50% of both tokens in a pool (e.g. RSR/ETH), with SSL the liquidity provider can provide 100% of one token. This gives the LP 100% exposure to his/her preferred token (for more info, see this blog post).
Providing impermanent loss insurance: impermanent losses are a big problem in staking. Bancor claims to insure the user against IL by transferring the risk onto the Bancor Protocol (for more info, see this blog post).
How much do I earn by staking RSR on Bancor?
As with most staking pools, the APY/APR fluctuates depending on the liquidity of the pool. At this moment, the average APR lies somewhere between 2% - 5%.
How to stake RSR on Bancor?
Navigate to https://app.bancor.network/.
Connect your wallet that holds RSR by pressing the “Connect wallet” button on the right upper corner of the screen. Possible wallets include MetaMask, CoinBase wallet but also hardware wallets like Trezor and Ledger (and many more):
A pop-up screen will appear that asks you to give the Bancor app access to your wallet. Press the “Approve” button to continue.
Search for the RSR/BNT pool by using the search bar in the Pools section. Once found, press the “+” button to add liquidity to this pool:
Choose the RSR token next to the “Stake amount” field and enter the amount of RSR you would like to stake. When ready, press the “Stake and Protect” button.
After step 5 you will receive a prompt from your chosen wallet to execute the transaction. Complete the transaction to start staking.
Once you have your RSR staked, you can use the “Portfolio” tab on Bancor to follow up on staked amount, return on investment, and to withdraw the staked amount. The amounts on the screenshot below are not mine:
Risks of staking on Bancor
Except for the existing risks of crypto staking (e.g. Not your keys, not your coins), there has been a questionable incident with Bancor in the past:
On July 9th, 2018, Bancor has suffered a cyber attack with total damage adding up to $23.5 million in various currencies. The claim is this security breach was done over a wallet that was used to upgrade smart contracts. As a consequence, the company decided to freeze BNT to reduce the damage. This action has been highly criticized by Litecoin creator Charlie Lee who believes that the company is not fully decentralized as it has the ability not only to lose customers funds but also freeze clients tokens.