Knowing The Cost Of Farming Rewards Is Crucial To Maximizing The Growth
Yesterday I took advantage of the new COTI Treasury fees which will allow for proper farming to now take place. The old fees just added up so you had to be careful not to waste what you had earned.
The last thing you want is to dilute your rewards by staking and compounding them too early. Now the cost is literally only 15 minutes of stake time per day against what was once costing an hours worth or more. If you don't manage your staking knowing the costs you could end up losing 100's of tokens each year through your own ignorance.
I noticed early on last year that when staking the costs were accounting for nearly 25% of the rewards and why extending the lock periods was crucial to being able to reduce the costs. If you are earning 10% APR but are paying 1% in fees every 120 days you are only making a 6% APR overall. Those fees have been reduced now by dropping them by 50% but they still add up and need to pay attention.
Always in the back of the mind is what happens if the token has more value as if you see it as 7c you wont be bothered, but what if it is $10 as your actions should always be the same. I am sure many don't consider the wastage due to the prices currently and could be throwing away hundreds of dollars every year.
Compounding is the most important part when it comes to staking as the growth accumulating the rewards/APR is the key to maximizing the potential. I did a few calculations highlighting the difference between daily, weekly, monthly and quarterly with regard to compounding farming the rewards. The difference between daily and quarterly on my stake is in the region of 20 tokens per month including the fees. Over time this does start to add up significantly.
Doing the admin/staking is your daily task that has to happen as we are trying to maximise the investment untapping the true potential. The 20 tokens extra per month may seem like a lot of work for an extra $1.40 but could easily be $100 or $200 in a few years time.
This is why you have to take the staking seriously and sacrifice the 2 minutes every day to guarantee the steady growth. On Hive we are lucky as the 3% APR is automatically added continuously and we don't have tons of admin work. The tribal tokens should be taken seriously like any other stake even though they don't seem to have much value. We tend to forget that they will also rise in value when Hive increases with the wallet value easily doing a 10 x from here. Crypto is a serious business and should be treated as such no matter the value you hold.
Posted Using LeoFinance Beta
Goot 2 know, I think I have still locked my COTI in a long-term contract.
Posted Using LeoFinance Beta
Please tell me you are still staking the rewards regularly.
Posted Using LeoFinance Beta
I wasn't claiming the rewards. I've claimed them now, but not sure what should be the next step - create a new Deposit or Update the current Deposit and add the rewards. If I update the Deposit, will the previous terms still be kept as initially?
Posted Using LeoFinance Beta
I just add to the stake on the same deposit. Previous terms as in the time locked? If you add to 120 day stake it still is 120 days and if you withdraw afterwards there might be very small penalty if short of 120 days, but we are talking very small. I would just keep adding to the current deposit and farm weekly.
Posted Using LeoFinance Beta
Great routine and thanks for sharing. Will probably do the same and Update the current deposit while keeping the 120 days terms.
Posted Using LeoFinance Beta
The routine helps keep your trust score higher and the benefit is when the GCOTI is airdropped you will receive more due to your activity. GCOTI will help you increase your APR by what you are given as that is one of the benefits.
Posted Using LeoFinance Beta
You post about COTI -
I follow your steps!
Lol. Keep farming as GCOTI coming next month and this will boost the APR you can earn as your Trust score is how the airdrop will work.
Posted Using LeoFinance Beta
So you have to go in every day and adjust things? Do you just collect and roll those tokens back into what you have staked or do you do something else? The amount you have to pay in fees is based on the amount that you are collecting? I want to make sure I understand all of this for when I am finally able to do it!
More like every other day as it works out to around $1.40 with a cost of a few cents. There is an operational fee/service plus a minor staking fee. The collection fee was around 1.2 Coti before and now is 0.1 so makes a big difference. If you were making 10 Coti per day you were giving away 20% of your earnings which impacts the overall APR as suddenly instead of making a 10% APR you are in fact only making 8%. Now you are making most of the APR and the costs are negligible. The benefit is staying active whilst boosting the trust score as this is what impacts GCOTI on the airdrop. If you just leave the stake your score automatically keeps on dropping so one has to remain active.
Okay, that makes sense. They have started using a reputation model like that in a lot of the NFT stuff that I deal with.