It has been approximately 11 months since these Kusama parachains launched and now the lease period is over. Therefore, the network has now returned the locked Kusama to the crowd loan participants. As a result, you will find the same automatically deposited in your account. Therefore, in this article, you will learn how to earn a very attractive yield on Kusama Staking.
Unlock to Stake in Kusama
The network has returned approximately 1.1 million , Kusama’s native token, at Block Number #12700800. Moreover, this same unlock principle will be applicable for the next slots too. So, we need to have a concrete strategy on how to use the Unlocked Kusama. Below are the options.
- Participate in the current KSM crowd loans
- Sell your KSM to purchase a more promising project
- HOLD your KSM and try to maximize rewards.
We have seen a trend that the current crowd loans in Kusama are not giving the same reward values as the previous ones. These projects can win the slots with lesser KSM amounts and mostly use their reserves to not dilute their funds. However, if you can find an extremely good project, with decent tokenomics and a lucrative rewards model, go for it.
Therefore, selling your Kusama might not be a very good idea. Most projects consider Kusama as a testing ground and thus the chain will always hold value. Therefore, as Polkadot becomes more and more popular, the Kusama’s importance will increase. KSM’s price will follow. However, there might always be a new project with a low market cap. So, if you find such a gem, switching to the new token is not a bad option.
option is holding KSM. In this article, we will explore the various options you can use to maximize your rewards by holding KSM. The Kusama Holding rewards fall broadly under 2 categories:
- Staking
- Combination of Staking and Decentralized Finance
1 ) Earn upto 18.6% by staking Kusama in Polkadot.js
You can stake Kusama using Polkadot.js. The current reward is approximately 18.6%.
We have a detailed User Guide on how to Stake DOT using Polkadot.js. You can use the same (just change the network) to stake KSM.
: Remember to select the right validators and also select more than 1 validator. Remember, the Kusama unstacking period in Polkadot.js is 7 days.
2) Earn up to 22.39% by staking Kusama in centralized Exchanges
In case you are uncomfortable using polkadot.js you can use centralized exchanges like BINANCE to Stake. Follow these steps to do it.
- You need to log in to Binance and go to “Earn”.
- Search by KSM.
- See the various options under Locked Staking. Select the option you want.
Check if the product is available, and check the maximum KSM you can invest.
- Select the duration. Input the KSM lock amount, accept the terms and conditions, and confirm.
: It is possible to unlock during a Locked Staking period with a reduced redemption period. However, you will lose all the staking rewards that you have earned during the period. Know the risks of staking with a centralized entity. As you do not hold the keys to your KSM, your KSM is controlled by 3 party.
You can easily understand that the centralized exchanges are taking your KSM and using them for their validator nodes. You get lesser rewards in the 30 days, 60 days, and 90 days (compared to that in polkadot.js). The higher reward in 120 days is comparatively not much and has a maximum of 1 KSM only.
3) Earn up to 75% by Staking and using Defi in Moonriver
Since the first parachains onboarded, the Kusama DeFi ecosystem has evolved a lot. Projects like Kusama, Moonriver, and Shiden have introduced DeFi staking solutions, with Liquid staking as one of the most prominent features. In liquid staking, you can stake your Kusama and get liquid Kusama as a reward. You can in turn use that liquid Kusama to earn additional rewards. The combined rewards can be more than actual KSM staking rewards in polkadot.js.
In the Moonriver network, KSM is known as xcKSM. It follows the XC-20 standard. XC-20 tokens are substrate native tokens that are EVM compatible. Therefore, to stake KSM through Moonrive, you will have to follow these steps:
- Add the Moonriver Network to your Metamask. Use the below details.
- RPC URL: https://rpc.moonriver.moonbeam.network
- ChainID: 1285
- Symbol: MOVR
- Block Explorer: https://blockscout.moonriver.moonbeam.network/
2. Add the Polkadot.js extension. This is where you will be able to access your Native Kusama. Moreover, you can download the extension from this link
3. Get xcKSM when you transfer KSM to the Moonriver Network using this link
4. Connect your METAMASK to the Moonriver application.
Therefore, you will see all the major Kusama parachain tokens compatible with Moonriver, under Cross Chain Assets. Find xcKSM and click on deposit.
5. Allow access to the application.
6. Select your Kusama address and select the amount of KSM you want to transfer to Moonriver.
7. Click send and approve the transaction by entering your Polkadot.js password. As a result, you will have to wait for the transaction. It can take up to 1 minute.
: Moonriver Network is fast and the transaction should be fast. Once the transaction is approved you can see the number updated in the Kusama row.
8. Use the Add to Metamask button to see your xcKSM in your Metamask too.
In addition, now you are in the Moonriver Network. All transactions would be paid in MOVR Tokens. Ensure that you have a minimal amount of MOVR Tokens in your Metamask (Moonriver Chain)
Source:Moonriver Twitter
4) Use Lido Finance to Stake KSM
Now, we will use Moonriver Defi (Lido Finance) to stake Kusama and get Liquid KSM in return. Go to this link. Now, let’s learn how to do it.
- Connect your Metamask with Lido. Ensure you are in the Moonriver network.
2. Select the amount of xcKSM you want to stake. Choose half of the total amount, as we will need the remaining amount later to use on a Farm.
3. Unlock the tokens to stake. Note that there is a reward fee of 10%. This is taken from the staking rewards/ earnings only and not from the original staked amount. So, as per the below example, 10% of the 23.919% rewards will be deducted.
5) Use Solarbeam to Stake KSM
Moreover, now comes the most interesting part. We are already getting 90% (10% fee) of 23.919% (approximately 21.5%) of half the amount of xcKSM in Lido. Therefore, actually the reward is half of 21.5%, that is 10.75%.
Therefore, we will receive liquid Lido KSM and stKSM in return. Also, we will not move to Solarbeam in the Moonriver Network. Solarbeam is an AMM protocol in Moonriver.
In addition, here are the steps you need to follow to stake KSM on Solarbeam:
- Go to Farm and find the stKSM Farming Pool. Click on it
2. Click on add liquidity. This will ask you to add xcKSM and stKSM in a Solarbeam pool. Moreover, as these 2 tokens are pegged to each other approximately in the ratio of 1:1, there is no worry of having an impermanent loss.
: Any movement in xcKSM price will see an equal movement, in equal direction and value, in the stKSM price.
3. Approve both xcKSM and stKSM.
4. Add liquidity. The swap fee would be minimal, at around 0.04% and an admin fee is around 50% of 0.04%.
5. See your Balance and the share of the pool. Now we will go back to the Farm. You will see the farm updated with your wallet balance.
Also, the farm will provide you with 65% returns. This return will be in the form of 3 tokens, Solar (SOLR), Moonriver (MOVR), and Lido (LDO).
6. Select the amount and click Approve and Stake. Note that to approve a farm, the MOVR fees are a little higher than normal. Now just let the rewards accumulate.
Recommendations
On the other hand, note that as a farm is involved now, these are some risks associated. Therefore, we would recommend the below best practices:
- We have seen that the price of the Tokens of AMM protocols can drop drastically. Solarbeam has been there for quite some time and should not drop much, however, it is better to take out the profits occasionally and sell them.
- There is a risk that stKSM and xcKSM might lose their peg. Just keep your eyes open and read about how the pegging is done and what is the risk.
- Solarbeam and Lido are 3 party applications. stKSM is a Lido product. Lido has a strong reputation and is too big to fail now. However, this can still be a risk.
So, we have 10.75% rewards from xcKSM staking and 65% from using Solarbeam DeFi. That adds up to approximately 75%. Therefore, compared to the 18.6% from Polkadot.js staking, this reward is much higher.
Conclusion
Therefore, if you want risk-free staking, then go for Polkadot.js. However, if you are DeFi savvy and want to test out breakthroughs, you can try the Lido + Solarbeam option. Also, apart from Moonriver, protocols like Karura (41.5%) and Parallel Finance (22.5%) also provide good KSM Staking rewards. DeFi is opening new dimensions. Test it (not financial advice).
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