If you put 100 USD in a staking platform, you will receive your staking rewards in the platform’s token. If you stake it for 3 months and as you receive your reward, the platform “prints” more tokens which causes token-flation. This means that the token’s value drops because of that inflation and your total tokens staked and rewards are eventually going to become less than your initial 100 USD. My question is, would that be solved if they gave us more rewards as the token’s value drops?
If they gave more rewards then inflation would be higher, so the token’s value would drop faster.
Why would anyone buy the token? If there is no good answer then the price is likely to drop at least as quickly as rewards are issued, regardless of the rate.
basic math has left the room
Depends on the staking “platform”, but native/protocol staking on a blockchain like Ethereum or example gives you a “real yield”, since there is enough ETH being burned to actually stop the supply from increasing. Check out ultrasound money and stakingrewards to get more info on actual blockchain staking, and not DeFi “staking”
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Where would you want the rewards to come from? I do really love projects like DAFI that regulate rewards based on market conditions. This way, it’s not pushing out a lot of rewards, eventually crashing the whole system. Maybe you should just stake in stablecoin pools.
I think this actually largely depends on the project, if you choose already solid projects which have other means of generating revenues for staking then you’d have little to no worry about inflation. The rewards might be low but better than just holding it without doing anything. I stake Tezos on the sylo wallet and get around 6%, not much but I’d take it lol.
I’ve been staking for quite some time and I don’t think this is the mechanism every project uses.
Yes it worked out so well for Olympus DAO /s
So you wanna fix the problem by increasing the thing that caused the problem? IMO, most “staking” is really just incentivized hodling. It encourages people to not sell the token, thus limiting the supply available on exchanges, which helps prop up the price.
If we’re talking about L1 Proof of Stake chains like Eth, Polygon PoS and Fantom, that’s totally different. Acting as a validator helps provide network security and you get paid for that.