WHY DOES CRYPSTATER HAVE EXTREMELY HIGH APY STAKING UP TO 100,000%?
Posted by : Crypstarter Team
Category : Blog, news
Crypstarter – An emerging DeFi 2.0 force – will prepare to launch the Soft Launch event from May 24 to 27. This is an extremely rare opportunity for you to own CST early at a very cheap price: 1 CST = 3.2 BUSD (while the public price is expected to be 5 BUSD) and will be able to stake them with extremely high APY up to 100,000% after the Fair Launch event!
Regarding APY Staking, do you believe this is one of the highest APY staking platforms in the market? Visit the website https://app.crypstarter.finance/ and use the calculator to calculate the amount of interest you will receive if you stake on Crypstarter. The number will surprise you!
And why does the project have such an extremely high APY? Let’s find out through the article below!
1. Project overview
Crypstarter is a Blockchain built to make it easy for startups to access the cryptocurrency technology revolution and crowdfunding. The goal of Crypstarter is to create a highly connected decentralized economy within its own ecosystem based on blockchain technology, where all participants in Crypstarter can earn profits through economic activities on the ecosystem.
Instead of relying on fads like GameFi or the Play-to-earn model, Crypstarter promotes a model called Work to Earn, which encourages individuals to make money by doing real-world work, rather than on fads that go away over time.
The Crypstarter ecosystem is made up of a variety of tools that may be readily replaced and adapted. In order to build a worldwide decentralized commercial and financial system, these technologies are essential:
– Crowdfunding platform: raise funds for early stage Startup projects.
– Secondary Market (POI): An investment in a startup, or any company, is very difficult to sell in the first 2-3 years. That’s why the Secondary Market was created: to provide investors with liquidity for their assets.
– Crypstarter DAB: Crypstarter Decentralized Banking (DAB) includes protocol-controlled Treasurys, protocol-owned liquidity (POL), bonding mechanism, and staking.
2. CST and Treasury
2.1. CST – Crypstarter Reserve Currency
CST is considered the “Collateral of Valuable” by Crypstarter and is the most liquid for holders.
So is CST a stablecoin? The answer is no. Instead, each CST is backed with at least 1 stablecoin in the treasury.
When the transaction price of CST falls below 1 BUSD, the procedure would purchase it back and burn it. As a result, the price of CST returned to 1 BUSD. Because there is no protocol-imposed maximum limit, the transaction price of CST might always be >= 1 BUSD.
Since CST price is always above 1 BUSD, the excess value will be used to back the next CST generated to pay staking incentives. For example, when a user buys 1 CST at the market price of 10 BUSD, the system will receive 1 BUSD and 9 BUSD left over. That 9 BUSD will continue to be deposited into the treasury to back the new amount of CST used to reward staking users. That’s why APY is so high.
2.2. Crypstarter’s Treasury
The Crypstarter Treasury is considered a “basket” containing stablecoins, LP tokens, and other assets that are used to back the value of CST. This is a very important part of the bonding and staking features.
Based on intended use, Crypstarter has three Treasurys:
– Backing Treasury: This treasury reserves crypto assets from users bonding to back minting of CST
– Investment Treasury: Part of the profit from bonding is deposited into the investment treasury. The assets in this treasury could be entrusted into partner fund managers or invested into projects in the Crypstarter ecosystem. 50% of the investment profit is deposited into the backing treasury, increasing the risk-free value of CST
– Balance Treasury: Assets in this treasury are used for stabilizing the value of AURE toward its pegged value of USD 1. The balancing protocol utilizes this treasury to buy and sell CST depending on whether the value of AURE is higher or lower with respect to USD 1.
APY staking is affected by the Treasury, but what is that effect? Let’s have a look at Crypstarter’s Staking function!
3. Staking on Crypstarter
In short, Staking is a form of passively earning CST. You stake CST in the Crypstarter DAB website for a period of time to earn even more CST. And the APY will be extremely high.
The rise in your CST stake translates into a steadily lowering cost base that eventually converges on zero. When CST’s market value falls below your initial investment, you’ll still make money if you hold on for long enough.
When you stake, you lock CST and receive an equivalent amount of sCST in exchange. At the conclusion of each epoch, your sCST balance is automatically rebased. Because sCST is transferrable, it may be combined with other DeFi protocols. When you unstake, you burn sCST and obtain CST in exchange.
Unstake means you will have to skip the next rebase bonus. Note: lost rebase rewards only apply to unstaked amounts. The remaining staked CST (if any) will continue to receive rebase incentives.
There are two main things that affect APY:
– Rebase: This is a process that automatically enhances your staked CST balance. When the protocol generates fresh CST, a major amount of it is distributed to the stakers. The protocol uses the rebase technique to enhance the staked CST balance so that 1 staked CST is always redeemable for 1 CST.
– Reward yield: The proportion by which your staked CST balance rises on the next epoch is known as reward yield. It’s sometimes referred to as the rebase rate. This number may be found on the Crypstarter staking page.
4. Then what is APY – Annual Percentage Yield?
Annual Percentage Yield (abbreviated APY), or actual annual rate of return, is the actual rate of return earned on a savings or investment deposit taking into account the effect of compounding.
Unlike simple interest, compound interest is calculated periodically and the amount is immediately added to the balance. With each subsequent period, the account balance gets slightly larger, so the interest paid on the balance is also larger.
In the case of Crypstarter, your staked CST represents your principal, while the rebase process adds compound interest on every epoch (28,038 Crypstarter blocks, or roughly 8 hours).
One unique feature of APY is that your balance will grow exponentially rather than linearly over time! If you start with a balance of 1 CST on day 1, and assume a daily compound interest rate of 2%, your balance will rise to about 1377 after a year. That’s a lot!
4.2. How is the APY calculated?
– APY is calculated using the following formula: APY = (1 + rewardYield)^1095
It raises to the power of 1095 because a rebase happens 3 times daily. Consider there are 365 days in a year, this would give a rebase frequency of 365 * 3 = 1095.
– Reward yield is determined by the following equation: RewardYield = CST distributed / CST totalStaked
– The number of CST distributed to the staking contract is calculated from CST total supply using the following equation: CST distributed = CST totalSupply x rewardRate
Note that the reward rate is subject to change by the protocol.
4.3. Why is Crypstarter Staking APY so high?
According to the formula above, if the protocol aims for an APY range of 1,000% to 10,000%, this translates to a minimum reward yield of roughly 0.2105%, or a daily growth rate of about 0.6328%.
If 100,000 CST are now staked, the protocol would need to mint an additional 632.8 CST to accomplish this daily increase. This is attainable if the protocol generates at least $632.80 per day in income through bond sales.
Even if the protocol does not generate that much income, the surplus reserve in the treasury allows it to maintain 1,000 percent APY for an extended period of time.
4.4. Are high APYs sustainable?
To issue fresh CST tokens, APY relies on the selling of CST bonds. High APY rates may be sustained if enough bonds are sold. If the protocol aspires for a 10,000 percent annual percentage yield and 10,000 CST tokens are staked, 200 CST tokens must be produced daily to meet the APY (Roughly 2 percent growth a day). The APY is sustainable if at least 200 CST tokens are brought into the system via bond sales.
A high APY is possible as a result of interest compounding. Every day, funds are automatically staked in order to produce exponential growth.
The information presented above should help you better understand the Crypstarter protocol and be prepared for the forthcoming Soft Launch event.