Where does earned money from crypto staking come from?

Helo guys,

My question is: in projects like Sandbox, Axie infinity..etc in which you have an option to stake the native coin (not a pair) and receive rewards.. how exactly does this work from a technical point of view?

Please note that I’m not referring to Liquidity providing, Yield farming, proof-of-stake validating or Lending.. I’m asking about the native staking on those platforms (as well as most of the new blockchain play-to-earn games projects).

Another question.. When I stake those tokens, does it leave, my wallet? or it just gets locked-in using a smart contract?

I would be very grateful if someone can answer this for me.

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7 thoughts on “Where does earned money from crypto staking come from?”

  1. Usually inflation but you have to look at the white paper or tokenomics docs for each to be certain. Sometimes it’s fees generated by the project or a combination of both.

    Locked into a smart contract is leaving your wallet. You no longer have full control of the funds because they’re locked into that contract. For verification, you can look up your wallet address on the block explorer to get a better idea.

  2. There are a certain amount of coins that get paid out to validator nodes. If you stake/delegate your coins with the validators, they give you a % of the rewards.

    There are also other places where you can single stake your coins/tokens or even lend them. In this case you are rewarded much higher for this but it’s usually given as a farm token which you then sell for something else.

  3. Usually staking is minting new tokens and allocating to the user and hence inflationary
    Sushiswap SUSHI staking via xSUSHI is basically using protocol fees to buy SUSHI of market and pay stakers, hence not inflationary
    LUNA staking is certain percent of transaction fees on the network routed to the stakers,the rest being burned , hence deflationary
    AAVE staking is minting new AAVE tokens , but the staking is a reserve fund or insurance to help protocol incase of hacks, so inflationary and you act as insurers for the protocol

  4. Okay let me explain how staking and earning works in kaddex, if that can answer your questions.

    Kaddex is gas free, When a swap is performed the user is charged a standard 0.3% trading fee, of which 100% goes to Liquidity Providers. Now if you stake your KDX you will eran from all happening that place in kaddex.

    I hope I’ve been able to throw some insight to how staking works and where the profits come from..

  5. some passive income platform generate their reward through transaction fees from traders or those entering the pool the first time, certain amount is allocated to each LP providers. Just like Teneo, not staking platform, but they reward hodlers through their reflow mechanism


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