The Encyclopedia Britannica says, “Crypto staking is the practice of locking your digital tokens to a blockchain network in order to earn rewards—usually a percentage of the tokens staked.”
But there are two types of staking - one with a functional basis, the other as a tool to prop up falling token prices. And the latest news about $MOXIE concerns me, because it is an example of the latter type.
The first type of staking represents a valid technical use case – as an alternative to proof-of-work (PoW) – the original consensus mechanism used to validate transactions and unlock new tranches of tokens in networks such as Bitcoin.
Ethereum also began as a PoW chain before transitioning to a proof-of-stake (PoS) chain - where staking tokens is a necessary function for such a network to operate. Because these blockchains require validators (stakers) to put in capital, it rewards them for their locked stakes, generating yields which, over the long term, are likely to reward those who can afford to keep a significant chunk of investment capital locked for an extended period.
But the other, more problematic form of staking is where a project team that has previously deployed a token which does not require native proof-of-stake to function encourages holders to stake their tokens for a reward.
$MOXIE is an example of such a token. It’s deployed on the Base L2 chain, which itself runs off the Ethereum L1 chain. ETH is PoS, and as such, it requires staking to function. Base does not require staking, since it uses “optimistic rollups” - bundling multiple transactions together and then submitting the “rolled-up” transaction summary to the ETH L1 chain for validation. Neither the Base chain nor the $Moxie token require “functionality-based” staking – so why is staking being deployed now?
In my experience, the staking of “social tokens” is a fall-back measure deployed by project teams to prop up token prices – rewards are promised which encourage maxis to lock their tokens – at a price point from which the token often continues to fall below the value of those rewards. And If the token value rises in an interim period, stakers are unable to capitalize on gains.
There are many examples of this, including Shiba Inu, Terra(LUNA), $LIT and Axie Infinity – and while the specific cause or set of causes for the decline in token value in each case may vary, most can be tied to back to one or more of the following issues: excessive supply, market sentiment, lack of utility, and/or profit-taking. This is important, because all of these factors have the potential to impact $MOXIE's value.
One mitigating factor to consider - in my opinion - when evaluating how much to worry in any specific case of non-functional staking is the extent to which this mechanism was (or was not) a publicly-stated element of the token's deployment. In other words, if the use of staking as a price-stabilizing, governance, or incentive mechanism appears in the original whitepaper or tokenomics of a project, I’m less worried than if it suddenly appears at a time when prices / interest is dropping. That said, I still find such "use cases" concerning - if a token has real utility, it should not require the artificial (and time-limited) effects of functionality-neutral staking; there is no reason governance, for instance, cannot be based on "free token" counts in a hodlers account, rather than locked tokens.
In the case of $MOXIE, I’m personally concerned – enough to sit down and write this out. There are a lot of other concerns that I’ve noted throughout the early days of the $MOXIE-verse which I will address in future essays – but for now, this is my way of signalling caution, and reminding folks to DYOR and not follow the herd.
If you don’t already know the answers to these questions, I’d encourage you to look for them.
Who has made the most actual gains off $MOXIE to date?
Have those gains come from liquidity mining, selling $MOXIE for ETH/USDC, or ??
Who has made (and lost) the most in “unredeemed value” of $MOXIE holdings?
Who stands to gain the most from the current staking initiative, and who will be most at risk?
What will staking do to the bonding curves?
I wish I could give you answers to some of these questions – but for now, I can only pose them as a starting point - and ask for your input:
Do you have a solid answer to any of the questions I've raised?
What other questions would you suggest people ask before staking $MOXIE?
Wishing you all the best of luck, and may the odds be ever in your favor!
A month ago I wrote about the dangers of locking Fan Tokens, and the risks I highlighted were the ones I'd seen with previous meme/social currencies. But locking Fan Tokens, it turns out, carries ANOTHER risk - reputational. There are some big names locked into being a "fan" of a cyber-bully for another few months - unless the @airstack.eth team gives us an option to offload the tokens of "bad actors." What about it, @betashop.eth ? https://paragraph.xyz/@degenaissancedigest/whats-at-stake
What are you doing with $Ⓜ️ this week? I've just added to both V2 & V3 liquidity pools, and bought @afrochicks' Fan Tokens... I'm also re-balancing my portfolio to invest in other friends, and locking half of all tokens to boost my reach while still maintaining flexibility in the mid-term cc @betashop.eth
wow this is awesome! thankyou so much🙌
My pleasure! I tried hard to win at auction and lost at the last minute because I couldn't do the whole cancel/rebid thing in time... then I thought I'd bought them afterward, but apparently by didn't, so when I looked and saw I wasn't holding any today, I thought, well, like Confucious said... "The best time to buy Naomi's token was when it was 2000 $Ⓜ️ - the second best time is now!"
Sooo good Congratulations 🩷🎊🪽
Good strategy! I've been thinking of an ideal time to rebalance. And being thoughtful of how to support community and projects I participate in - instead of speculating. I haven't locked many tokens and have taken a major hit to the fsrscore. Will consider locking more in the future, but I'm hesitant about so many fast changes and want to better understand them as I move forward.
I've written about my concerns re: locking - it's most applicable to people who have bought into $Ⓜ️ with cash, which I have not... For that reason, I've started to lock about 1/2 of each of my token stakes, leaving the rest "liquid" to be able to react to the evolving ecosystem. https://paragraph.xyz/@degenaissancedigest/whats-at-stake?referrer=0xd5f45430f18f31FcB4b5129b618e24A9bafaC1e3
I see you moving FT 😆 I’m going to check the price on hers and see if I can get some.
A smol reshuffling - largely so I can pick up some tokens from a few more friends, and also to prep for a new level of "giving back" to my FT holders like yourself! Because part of my rebalancing is to make sure that if I'm selling a few of a friend's tokens, I'm gifting them an equal number of my own!
You are very kind! Thank you!!! I went to check Naomi, but I can't afford her FT 😂 I am buying some as I manage to find them at a good price.
Great question. I changed my mind. Short term holders still provide value to the token.
Would the airdrops be continuous or anytime you feel like?
Continuous until the channel and fan token returns are where they need to be to match the tokens’ market caps.
Is it possible to predict a timeframe?
You also said earlier there wouldn’t be airdrop for the BE channel, I guess you changed your mind on that too Glad to be holding both tokens and I really hope they don’t sell after the airdrop tbh
Everyone provides value, good move
Yes, they still have a role, at least they will contribute to buy&burn
Right. And I think it’s only right if every member of the channel benefits from the airdrops. Zero segregation
Exactly
Yesssir
Have you done any burn to BE yet? BE seems to have remain in same price.
Rewarding everyone all the time is tough. Thanks fren. Not sure how you keep the energy but I guess you got that big degen energy
It’s just a spreadsheet at the end of the day. Not terribly consuming.
Wait you have everyone’s name down and you make sure to reward everyone ? How many names on the spreadsheet ? Whole of farcaster 😂😭
Will people that hold more BE and BDE ft get higher value airdrop as the first airdrop What I mean is that if someone's BDE token value is the same as the combination of the BE and BDE ft of another person will they get the same airdrop
It will be weighted based on token value.
I love it when a person accepts that they can change their minds and then moves on... and states this publicly too... lots of love and reverence homie...
💜
💚💚 right back at ya
They buy and sold and help for burn
A lot of my fans seem to be MOXIE-maxis - so I'm very curious to get their perspective on this essay, which suggests that staking tokens for reasons other than PoS network operational requirements may be a cause for concern. What do you think, @inceptionally @leewardbound @katwolfie.eth @betashop.eth @ipeciura.eth @degencummunist.eth @6bazinga @kristinpiljay @thecurioushermit I look forward to hearing your thoughts/questions/answers!
💯 great read! tokenomics are complex and we are a decade+ deep into many various experiments in tokens and distribution mechanisms, with many more experiments to come. i agree with the author here that staking moxie seems basically like a price-prop mechanism with no explicit utility or purpose. moreover moxie fundamentals seem broken to me, bc it seems to have relatively uncapped issuance, and the only "sinks" or "demand" for it are basically artificial. im enjoying participating in moxie bc it's novel and i like to have a lil skin in the game as i follow an experiment like this, but my gut impression is that i am not hopeful for the long-term valueprop of the coin. it seems doomed to trend downwards because other than buying fan tokens (which is for getting more moxie), there's no real reason to own or hold moxie or buy more. as cryptoenthusiasts, it's important to call this stuff out. all memecoins and tipcoins have basically no value-add beyond hype, speculation, and hoping for gains off the fad.
Great points here! I'll write another essay presently on what might fix the problems s that this essay (and your thoughtful response to it) have raised. 50 $DEGEN
I get why you have reservations about locking, but I honestly don't see it as really any different from traditional banking mechanisms that are meant to get people leaving cash in banks for long periods of time so the banks can maintain liquidity - CDs being just one example of those "locking" mechanisms.
Although the value of the USD is a bit more stable than crypto (changing only with inflation). For example, I bought $25 worth of TN100x back in May and it's now worth $1.80 or so.
Yeah, that is true. Though Moxie seems to hit its sort of stable point, and with the growth of the fan tokens, if it stays stable, that growth makes locking still worth it, and if Moxie value grows, even more so.
This is a great way to explain in an easy manner when onboarding new people to this space. Thanks. I'll be stealing this and pretending to others that I'm a coherent adult who has more than 4 letter words in his vocabulary, 😆
Well, moxie is still quite new and it sounds like there is more to come in the future. But in any case, I was conservative in my locking. I mostly just locked the FTs that were still locked up in my air drop contract. So some of it would be available sooner, but some of it won't unlock until Jan. 25. I also locked my own FTs and a few others. But I only locked about 35% of my total. I noticed the whales locked 90-99% and are competing with each other for the max boost. 😂 I'm very much more hesitant and only have a smaller amount anyway and so the boost available to me isn't that much.
I haven't had time to read this yet. I'm far from a Moxie maxie. First, I couldn't sign into Charmverse to apply for the grants. Now, I can't even lock my own token. The devs don't even reply to me when I try to ask for help. All of this is leaving a very bad taste in my mouth. I've been swapping my daily Moxie claim to buy and lock my hamcaster token for the past month. It's so much easier to use and the lp tokenomics are better. https://warpcast.com/katwolfie.eth/0x80813f76
Important point IMO. I'm playing the FT game myself but only with coins I got for free, I wouldn't put money into it. There is a chance Moxie outlives other farm tokens and early investors reap large returns... Jason has been around working on it for a long time and is well connected in the dev world, Base and FC could gain a lot of retail users potentially, more functionality could be added that builds actual value. But it's still among the riskiest of plays to put money into for the reason you laid out. It's sort of on the edge... Is it a useful protocol, is it a MLM scheme... Both? 🤷♂️
Stuart, I'm glad I'm not the only one seeing this - a token must have some elements of a currency stable store of wealth, medium of exchange, working capital. Look forward to seeing how this evolves! 50 $DEGEN
Yup. For me, Moxie is a fun experiment to play with. If I had money to invest though I'd just be buying Eth rn https://warpcast.com/olystuart/0xcdc23083
😗taking a look I’d clarify that I’m an algo coin maxi and Moxie is just the first iteration of one but I look forward to more of them😋
Great clarification! I do like a lot of things about this token, and think there's a better way to relieve sell pressure than by locking/staking. Markets for products and services is one; dividends is another.
Just finished my first read and will formulate my own paragraph response too bc I need to be more on top of doing that😅 Some initial thoughts tho 1. gotta consider the context of the entire crypto economy we’ve been in to how $moxie is earned and widely distributed now with SocFi > how airdrop/coins were farmed in the past? All the miner/coding knowledge or when and where to stake/trade to farm the most airdrops? Eww and expensive$$$! Was solely a whales game 2. locking your moxie and boosting your FarPower IS a form of yield rewards bc A. You’re distributing more moxie to your fans and in your interactions and B. If you also own the FanToken of the people your rewarding more moxie to, then you also earn more in the immediate term and it’s also unlocked Moxie 3. More points to come in paragraph but I gotta get ready for work so brb ttyl💋
I'll just pin this up here and look forward to hearing what folks have to say... https://paragraph.xyz/@degenaissancedigest/whats-at-stake?referrer=0xd5f45430f18f31FcB4b5129b618e24A9bafaC1e3
It’s important to look for utility and value before jumping into hype projects. I locked what I had for the farboost and my holders. Tbh, I’m over it. Daily claims are all going into ham.
Staking is a cause for concern, not celebration. https://paragraph.xyz/@degenaissancedigest/whats-at-stake?referrer=0xd5f45430f18f31FcB4b5129b618e24A9bafaC1e3
Interesting I've never really been a fan of staking either way
I'm free, but despite holding the required 0.1 "fan tokens", I can't cast into /airstack - maybe it's that I'm raising a red flag with my writing... https://paragraph.xyz/@degenaissancedigest/whats-at-stake?referrer=0xd5f45430f18f31FcB4b5129b618e24A9bafaC1e3
What's at Stake?I've been meaning to write about $MOXIE for a while now - and I hope to write more about it as time allows in the days and weeks to come. Don't get me wrong - there's a lot of things I like about this unique token - but my experience has led me to be concerned by the imminent implementation of staking.
I've been meaning to write about the $MOXIE for a while now - and I hope to write more about token as time allows in the days and weeks to come. Don't get me wrong - there's a lot of things I like about this unique token - but my experience has led me to be concerned by the imminent implementation of staking.