fStaking - higher yield depositing in Folks Finance
Folks Finance released the fStaking feature that allows users to increase their deposit yields.
Users can now stake their deposit token (fTokens) and keep earning the deposit interest plus an additional staking revenue. It is very simple! The users must commit an amount and ensure their balance stays above.
These staked fTokens will remain available to the user wallet, unlocked, and free to be used. However, to be eligible for the 24-hour rewards, the user balance must stay higher than its commitment.
How does fStaking work?
By depositing an asset on Folks Finance, you receive the fToken that represents the ownership of that deposit.
Ex. Bob deposits 10 USDC on Folks Finance → Bob receives 8 fUSDC, representing the entire deposits plus the interest accrual. (to learn more about the deposit dynamics, read here).
The users have five options after depositing on Folks Finance and receiving the relative fTokens:
- Send them back to withdraw the deposits.
- Transfer them to another wallet.
- Use them as collateral for borrowing.
- Hold them and earn deposit interest for lending the deposited assets.
- Stake them and earn an additional yield.
The fStaking application consists of the user signing a transaction that sends an amount zero of tokens to the staking address, declaring his commitment amount in the note field.
The fTokens remain in the users’ account, not locked, and free of use. The Folks Finance UI preserves the users from losing their commitment by disabling the usage of staked fToken for collateral or withdrawing the deposit. Moreover, the committed amount can be changed at any time at no cost. However, if the user changes its committed amount, this will only occur in the subsequent 24-hour period.
TO REMEMBER: the assets are not locked, but if the assets are used, and the balance goes below the commitment, the user will not be eligible for that rewards cycle.
The amount of rewards for a 24-hour period is fixed. For example, setting a daily amount of 1000 ALGOs for staking fUSDC, if there are 100,000 fUSDC staked, then 1 fUSDC is earning 0.01 ALGO daily. The rewards distributed are in Algo and come from the 2M Algo Aeneas program for Folks Finance.
At the launch of the fStaking, a total of 16,000 ALGOs are set to be distributed weekly, divided respectively into 10,000 for the USDC pool and 6,000 for the USDt pool. In case of significant adoption, the team will be able to increase the incentives distributed. Moreover, the system has been designed to accept any ASAs to be distributed as incentives with fStaking.
The user’s fAsset balance must remain above their committed amount for the 24-hour period. If they are successful, they are entitled to receive rewards for the committed amount.
Rewards will be paid weekly via a direct transfer to users’ accounts.
Please note: The first cycle of rewards starts Monday, and to be eligible you must commit by Sunday, 8 pm EST.
The fStaking utility for Folks Finance
Folks Finance fStaking has been designed to primarily mine liquidity for the highest requested asset on Folks Finance. Strong incentives would bring new depositors also coming from different ecosystems attracted by the high yield.
The consideration brought to starting with USDC and USDt the top used stablecoins. However, the fStaking is designed to be used for any other asset supported on Folks Finance.
fStaking vs Lock & Earn?
On the other hand, after making a classic deposit, it is impossible to put the obtained fTokens into Lock & Earn due to the Smart Contract differences.
The primary mission for Lock & Earn is to ensure liquidity when launching a new pool for a known time and decrease the risk of lack of liquidity in case of big holders redeeming. Instead, fStaking wants to be an incentive to mine borrowable liquidity and new users’ attraction in Folks Finance.
For the users, both Lock & Earn and fStaking symbolize a way of increasing yield on the deposit APR. Therefore, the two features have been grouped on the Folks Finance dApp Menu under Farm Deposit. The design has been kept consistent and minimal with the other protocol features.