Let’s say you put 100 USD in a staking platform, and you will receive your staking rewards in the platform’s token. You stake it for 3 months, and as you receive your reward, the platform “prints” more tokens which causes token-flation to take place. The token’s value drops because of that inflation and your total tokens staked + rewards are even less than your initial 100 USD. Do you see where the problem is? The whole system is flawed and is built to provide everyone with short term gains, with no long-term value. If you create more tokens out of thin air, there’s no way you can maintain its value, and thus, benefit long term stakers. Isn’t that true?
11 thoughts on “Why staking/farming is a scam”
I think you don’t understand that staking is a broad concept and what you are saying could or could not apply.
Can be token farming, but if the emission is for a certain period and then it stops then it’s the same as raising funds and seeking valuation. Uniswap used to give uni tokens. Link gives you link for validating oracle data. Many tokens staked in protocols just earn revenue distributions.
So yeah, if it’s a ponzu, what u said applies
There are platforms/protocols that focus on real yield based on user activity and not on inflation.
If you’re starting real stables your initial value shouldn’t be changing. Might even go up slightly if the protocol has any volume. And you’re supposed to swap the shitcoin into stables and add to your deposit
I learned that from experience, that’s why I only farm stablecoins. If you’re wondering where, I do that on FlatQube. But I would add another reason why your rewards are low af. You’re forgetting about fees, a lot of these platforms take a percentage of your rewards, one example is Coinbase, which takes 35% of your reward as a commission. That is a criminally high rate, close to half your reward…
you need to read more.
You haven’t described why staking is a scam, you’ve described why native token rewards can be worthless.
Staking can be done on any token pair, including stablecoins, Bitcoin, and even an NFT like a cryptopunk.. I think you should keep learning about how Defi works and keep your embarrassing opinions to yourself.
That’s why you need to understand the tokenomics. Ethereum for example will burn more eth and issuing under a set condition, which makes it deflationary.
Harvest and swap , timing is key.
The point is to incentivize liquidity. Ideally the token you’re earning as a reward for staking has some legitimate purpose and becomes more valuable as the platform grows. But yeah, the platforms that offer their exchange token that actually doesn’t do anything is pretty scammy. Most people just farm and immediately sell to something useful.
Most of these platforms, the good ones at least, have mechanisms in place that can counteract a lot of the inflation. It’s not as bad as you’d think, Frax is a good example of not having their token be very inflationary. But if you have doubts about their long term value which is understandable just sell them, it’s by no means a scam though.
It’s not a scam just a risky game where you need to take many things into consideration and even if you play it safe you could lose it all to contract hack or rug or something else.
Of course in case of single token farming you need to pick projects with ascending or stable price and stop losses short if things go sour/market dumps. Also tend to avoid long locking periods as it will certainly prevent you from selling before it’s too late.