With MAXI Staking, many tedious and costly aspects of traditional staking disappear entirely. MAXI Staking primarily improves:
- Gas Costs
- Reward Distribution Efficiency
- Balance and Profit Transparency
- Ease of Use / User Experience
- Reward Compounding (APR -> APY)
MAXI significantly reduces the cost associated with distributing rewards to stakers and nullifies the cost to claim or compound those rewards. In fact, with MAXI, claiming and auto compounding rewards are 100% Gas Free and automatically performed on behalf of holders every time rewards are sent into its smart contract.
Just to reiterate: It costs $0 in gas to claim and compound rewards with MAXI Staking!
For blockchains with relatively high gas costs like Ethereum, this is extremely beneficial. With a gas-free reward system, holders with small balances are still able to stake and earn profit without needing to pay large fees every time they wish to participate.
For example: User A stakes $100 into a Traditional Staking Pool with a 5% APR, and it costs $5 in gas to claim their reward tokens. User A then needs to wait an entire year before breaking even, as the cost to claim the rewards after a year is equal to the reward itself!
MAXI Staking solves this problem by automatically compounding rewards for all users based on a dynamic exchange rate evaluated by the MAXI Smart Contract. This exchange rate is not saved as a state variable, which would cost gas to update, instead, it is dynamically read during a transaction. This exchange rate is a ratio between the number of reward tokens in the MAXI Smart Contract to the number of MAXI Shares that have been issued to Stakers. As more reward tokens enter the MAXI Protocol, this exchange rate rises, proportionally increasing the balance of all Stakers without any gas needing to be spent.
With traditional Staking Models, rewards are distributed by calling two transactions: the first is an approval function that allows the Staking Contract to accept tokens from the caller, the second is a donation function that transfers tokens from the caller’s wallet and updates state variables to reflect the new pending reward. This archaic system requires two transactions to operate and is prone to user error since sending tokens directly to the contract itself results in tokens being lost without contributing to rewards. With MAXI, no functions need to be called, and reward tokens can simply be transferred into the contract by anyone, and MAXI will function exactly as intended: auto distributing and compounding the received tokens for all holders.
One of the best features of MAXI is the transparency it provides users about their current balance, without any need for a user to connect their wallet to a decentralized application or remember their public key. MAXI accomplishes this by tokenizing the Staking Pool, allowing for the MAXI Smart Contract to be added to a user’s wallet as a Custom Token. The balance that appears in the wallet is the user’s current balance of tokens. As rewards are sent in, all users will notice their balance increase in real-time. This is similar to the effects of reflection tokens which gained massive popularity in 2021. The end-user can open their wallet and immediately see how many Staked Tokens they have in MAXI, track how many rewards they have gained, and have fun watching their token balance rise!
Since the MAXI Smart Contract can be added to a staker’s wallet as a custom token, not only do holders gain the ability to view their data without connecting their wallet to an application, but they can also interact with the MAXI Smart Contract directly. MAXI has special functionality built into its receive and transfer functions which allow users to both Stake and Unstake tokens without any wallet connection necessary. If a user sends the blockchain’s native token, such as Ethereum, to the MAXI Smart Contract, MAXI will buy tokens and stake them on behalf of the user, immediately reflecting the balance in their wallet. If the user then decides to exit the Staking Protocol, they may transfer to themselves the number of MAXI tokens they wish to remove, and MAXI will un-stake those tokens and deposit them back directly into their wallet. This drastically improves both the User Experience and Safety of Staking, as connecting wallets to websites now becomes an option, instead of a requirement.
With traditional Staking Protocols, the return on investment a user can expect is expressed as an APR. If User Alice stakes $100 into a traditional staking pool with a 100% APR, Alice would expect $100 back in rewards after a year in the protocol. Alice may choose to manually claim and compound these rewards, but on gas-heavy blockchains such as Ethereum, she would end up losing value, unless she either staked with a much larger amount of principal or waited enough time for the rewards to offset the cost of executing two separate transactions.
With MAXI, however, rewards are automatically compounded, for free, on behalf of all holders every single time rewards are sent in! This means that while Alice is earning a 100% return on Principal, her principal is growing at the same rate as the rewards are being earned! This turns Alice’s APR into an APY since the rewards are constantly compounding into Principal instead of accruing linearly. In the scenario given above, instead of Alice earning $100 profit annually, Alice would walk away with $172 profit at the end of the first year. In the first year alone, this increased Alice’s expected return by over 71%, without her needing to pay a dime in gas to make it happen.
Over time, auto-compounding rewards turn exponential when evaluated compared to a user’s initial principal. Using the same 100% APR example given previously, here is how Alice’s $100 would grow with MAXI compared to a Traditional Staking Protocol.
Year 1: $200
Year 2: $300
Year 3: $400
Year 4: $500
Year 5: $600
Year 1: $172
Year 2: $637
Year 3: $1,900
Year 4: $5,330
Year 5: $14,640