The Ethereum Foundation has brought about Ethereum 2.0 to enhance the speed, security, efficiency, and scalability of the network to process more transactions and bridge more applications. Ethereum 2.0 is based on the Proof-of-Stake (PoS) consensus mechanism that is more energy-efficient and provides security for blockchain protocols.
This PoS-based blockchain uses Staking 2.0 to select validators to produce or validate new blocks on the blockchain. In Staking 2.0, validators propose, verify and vouch for the validity of blocks in exchange for financial rewards. Each validator is required to stake 32 ETH as collateral. Validators with less than this amount need to lend their tokens to a pool by a process called delegation.
However, the problem with staking remains the same: impermanent loss. The value of a staked token is subject to significant change by the time a miner can receive rewards. Most often, the value in rewards is far less than that held in the first place.
The DXB smart contract solution
The DXB platform alleviates the problem by introducing the DXB smart contract that applies a 7% fee on all transactions. From this, 2% is reserved for liquidity generation in the liquidity pool, and 2.5% is sent to a burn wallet to be removed from circulating supply forever. The remaining 2.5% from the fee is exchanged into BNB (native coin of the Binance Chain), where 70% is distributed to the original holders.
Unlike staking in Ethereum, the amount of BNB in a user’s wallet increases as more transactions occur. Moreover, the reward for staking DXB is set to be in BNB, unlike other tokens, where the same token is rewarded as staked, which negatively affects the price and growing supply of the token.
Cons of Staking 2.0
The most significant risk in Staking 2.0 is “slashing,” where a validator is penalized by the algorithm for acting outside the interests of the network. For example, suppose a user validates a transaction accidentally or loses connection. In that case, they begin to lose the stake of 32 ETH and if it falls below 16 ETH, they’re removed from the network entirely. Other risks in Staking 2.0 are similar to typical investments in crypto. When the market crashes, the value tied up in stake loses value significantly as it takes time to withdraw funds. Any gains made through staking may not recover these losses.
The benefit of DXB token against staking
The DXB token represents an anti-farming, anti-staking platform with its smart contract platform that provides the best use case in investing and hodling. As the price of DXB grows due to lower circulating supply in both DXB and BNB with ongoing transactions, holders get rewarded significantly. It is prone to the deficiencies and risks of slashing in Staking 2.0 and represents a distributed proportionality among its holders. Moreover, the token has anti-whale protection enabled, rejecting any transaction worth more than 1% of the liquidity pool.
The concept of Staking 2.0, for now, caters best to long-term investors and those that genuinely want to support the network. For others, its current rewards are appealing, albeit with a few downsides. However, due to market uncertainties, unfair rewarding mechanisms, and penalties such as slashing, Staking 2.0 takes a lot more away than it gives.
DXB, the world’s first smart contract platform, lays the path for future scalability in this scenario. The platform resides in a unique class of assets that rewards investors for hodling. The rewards are given in a different token to maintain a price floor balance and increase the value of the DXB token. The platform, compared to the inadequacies of Staking 2.0, presents a smart and charitable ecosystem that provides investors an active stake in the platform’s success.