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Staking HBAR tokens offers Archax custody clients a compelling commercial opportunity to generate returns while supporting a robust digital asset network.
Hedera staking provides yield on HBAR holdings from network fees. This creates a solid passive income stream on any HBAR assets.
Staking bolsters the overall Hedera public network which builds value for the ecosystem and HBAR tokens. The more decentralised nodes that validate transactions, the greater the security, speed, and fairness of the Hashgraph platform. Token holders want to see widespread network adoption and stability, which staking facilitates.
Staking with Hedera
Hedera staking allows HBAR token holders to earn rewards for participating in the security and consensus of the Hedera public network. By staking HBAR coins, users help validate transactions and secure the decentralised Hedera Hashgraph platform.
Hedera uses a staking model called "hStaking" which is different than traditional proof-of-stake systems. With hStaking, HBAR coins never leave a user's account or get locked up. This allows staked coins to remain liquid for transfers or transactions. Users simply set a desired amount of their HBAR balance to stake. The staked coins then generate points over time that make the account eligible for staking rewards.
When an account stakes at least 1 HBAR, it begins accruing stake points proportional to the amount staked. The more HBAR staked, the faster stake points accumulate. These stake points act as a proxy for the staked coins. Network nodes select accounts with high stake points to validate transactions and consensus operations.
Validating transactions earns staking rewards. The rewards come from network fees generated by each transaction. A portion goes to the treasury, while stakers split the rest based on their stake point balances. Rewards are dynamic based on network usage, but Hedera targets 3-12% annualized yields for stakers.
A key advantage of Hedera staking is users retain control of their HBAR coins instead of locking them away. They can withdraw from staking instantly without delays. Hedera also utilises proxy staking to promote decentralization by having many small stakers validate transactions, rather than just a few large holders.
Overall, Hedera staking provides HBAR token holders with an opportunity to earn passive income while securing a fast, sustainable public ledger. It represents a unique staking model that maintains liquidity and decentralization for stakers in the Hedera ecosystem.
Archax charges 10% of the yield for its services, leaving investors with the remaining 90%.
Please note the advertised Rate of Return (2.50%) may not be achieved. The following points highlight circumstances in which this may be the case in addition to explaining further risks associated with staking:
- Technical issues - Bugs or failures in staking infrastructure can lead to slashing of staked funds or lack of access.
- Penalties - Violating staking policies can result in slashing of staked tokens as penalty.
- Changes to staking - Hedera governance decisions could alter staking yields, rules, or duration.
- Opportunity cost - Staked HBAR may underperform other investments during the lock up period.
- Network downtime - Technical issues on Hedera preventing consensus and transaction processing would halt earnings.
- Stake dilution - Continued HBAR token minting may dilute yields for stakers over time if rewards don't keep pace.