Shiden is improving how dapp nominators can restake their dapp staking rewards to reap the benefits of compound growth.
May 5th, 2022 — Albert Einstein once described compound interest as the “eighth wonder of the world,” saying, “He who understands it, earns it; he who doesn’t, pays for it.”
Compound interest is when the interest one earns on a principal balance is reinvested and generates additional interest. This concept helps accelerate the growth of money.
With that concept in mind, we have been hard at work developing and implementing our dapp staking mechanism. Dapp staking is how developers get paid to develop dapps on Shiden via dapp staking rewards. It is also how nominators (i.e. dapp stakers) get compensated for staking their $SDN tokens on dapps they want to support.
It’s a win-win scenario and it’s one of the most important initiatives on Shiden and one that we are continuing to work on.
Coming back to the idea of compound interest, it’s important to know that dapp stakers can also reap the benefits of compound interest in the form of dapp staking rewards. They can achieve this by reinvesting their rewards from dapp staking and over time begin to experience compound growth.
Although users can currently restake their dapp staking rewards, we have been getting feedback from our community since launching dapp staking and one of the main pieces of feedback that we have received is that there should be a more seamless way to restake rewards from dapp staking.
The way the process worked previously is that if a dapp staker wanted to reinvest their rewards from dapp staking, they had to make two extrinsic calls. That is, one call to claim the rewards from dapp staking, and one call to restake the claimed rewards. In total, the user had to sign two transactions to restake their dapp staking rewards. This could be a time-consuming process.
Knowing that this was a pain point for users we looked to improve the user experience, and it is with great pleasure that we are introducing our new compounding rewards feature. With our new and improved compounding rewards feature, users can now claim their staked rewards and the rewards will automatically be restaked. So rather than having to make two extrinsic calls and having to sign two transactions, users need to only make one extrinsic call to claim the rewards and those rewards are automatically reinvested.
The compounding rewards feature is enabled by default. You can disable this feature via the portal.
From a behavioral economics perspective, any reduction in friction related to saving or investing will induce a person to make better financial decisions. The same holds true from a product design perspective, less friction translates to fewer obstacles for the end-user to overcome in order to use your product as intended. Behavioral “frictions” generally decrease the likelihood of a user completing a specific task, and also account for a number of human biases.
As such, it may on the surface seem like a trivial detail but we are confident that this change will have a significant impact on how users behave on Shiden with respect to restaking their claimed rewards. By removing friction, users can now seamlessly restake their claimed rewards, and they can experience compound growth in their dapp staking earnings, which if done over time, can dramatically increase their holdings due to the exponential growth.
Last but not least, this update will not only positively impact users but Astar Network as a whole. This is because, the more that users claim and restake their rewards, the more users will experience compound growth, and the same will happen to Shiden’s TVL. Every time users restake their rewards the more value gets locked into the Shiden ecosystem creating a snowball effect. This snowball effect will translate to more wealth being generated within Shiden which will give more income to developers and nominators, which will, in turn, attract more developers and nominators to Shiden, thus creating a network effect.
About Astar
Astar Network is the #1 TVL Smart Contract Hub for WASM + EVM on Polkadot. Since winning its Parachain auction in January 2022, Astar Network has become the top Parachain in the Polkadot ecosystem in Total Value Locked and most Ethereum assets transferred over. Astar Network is the leading smart contract hub that connects the Polkadot ecosystem to Ethereum, Cosmos, and all major layer 1 blockchains. Astar Network supports dApps using multiple virtual machines — namely WASM and EVM — and offers the best technology solutions and financial incentives via its Build2Earn and Astar Incubation Program for Web3 developers to build on top of a secure, scalable, and interoperable blockchain.
Website | Twitter | Discord | Telegram | GitHub
Introducing Compounding Rewards Feature For Dapp Staking was originally published in Astar Network on Medium, where people are continuing the conversation by highlighting and responding to this story.
