STOP! Heres why your break-even point in staking is important
Staking The Graph? What are your options and which ones should you pick? Well, the main factor in determining the best place to stake your GRT is how much GRT you hold. Many users prefer a non-custodial staking solution such as delegating your GRT directly from your wallet but this might not be the right choice for you. We won’t make you read all the way to the end and will answer this question here, staking anything below $5000 GRT, at least from our calculations seems to be the cutoff point where the GRT gained outweighs the Eth Fees you pay. However by the time you read this, these numbers might be outdated, so I have built a simple calculator in excel which you can duplicate to your own sheet and use the numbers from our The Graph Asset Page which has up-to-date staking data to recalculate your break-even point. Simply click on the Image below and update the reward rate from the Staking Rewards Asset Page to Return your Break-Even Point and your Net Profit From Staking over time.
Between moving your Graph off a centralized exchange to paying for the staking contract fees, you can be looking at paying around $70-80 USD in fees alone. Currently delegating your GRT on a wallet can earn you an 11% APR, this would mean even if you were staking 1000USD of GRT, you would be recuperating fees for a large majority of the year. Although this number is arbitrary, we would suggest not going down this path unless you are looking at staking 5000USD worth of GRT and up as the opportunity cost is too high to make it a good financial decision. So you may be thinking, what are my other options?
Well if you are staking less than this amount, we would suggest using the Binance Earn feature which is currently paying 5.11% APR which can be compounded monthly without any transaction fee. This APR is subject to change and at times can be much higher. So what are the downsides? Contrary to the rosy picture that has been painted for this option thus far, the custody risk associated with centralized exchanges exists where you are reliant upon Binance to not steal your crypto and run away.
Ultimately the decision you make will come down to a number of factors including your investment time horizon, how much GRT you plan to stake and how much you trust centralized bodies like Binance. If you continue to read you find both a staking guide on how to delegate GRT directly from the Moonlet Mobile Wallet along with how to stake your GRT on Binance Earn.
Staking GRT using a non-custodial wallet
- Enough GRT/ETH to cover ERC-20 transaction fees ($85.70 of Eth in Total for us)
- A Metamask wallet
Step 1 – Buying The Graph on Bogged Finance
Buying The Graph is quite similar to the process of buying any other ERC-20 based token. Using a DEX aggregator like Bogged Finance will mean that you are getting the best rate possible. Since you are using the ERC network, it’s important to make sure that you try to minimize the fees. In our case we paid a total of $35.20USD in fees, lets’s keep track of these fees for future steps as well.
Step 2 – Connecting your Metamask to The Graph
This next step involves connecting your Metamask to The Graph Website. This is a pretty simple process that just involves making sure your Metamask is on the Ethereum Network, clicking connect, and then approving the Metamask permission pop-ups.
Step 3 – Staking The Graph
Your major consideration in this step is which validator you validate to as if a validator misbehaves it can result in your stake being slashed or you missing out on rewards. We sorted the list by delegated to show us who everyone else was delegating to and then chose framework labs.
There is also a chance for optimization in your indexer choice as each indexer has different commissions. In the above photo, both the query fee cut and effective reward cut impact your final APR greatly, with the lower the commission, the greater your final reward is going to be. In this case, I have filtered the results by amount delegated, this is an effective way to compare the top providers as they are likely the top provider for a reason.
Fees for this step = $7.60 + $42.90 = $50.50
Total Fees = $35.20 + $50.50 = $85.70
Staking your GRT on Binance
Step 1 – Heading to Binance Earn to stake The Graph
Step 2 – Choosing how long to stake The Graph for
Conclusion on staking The Graph
Ultimately which method you choose will be dependant on how much you plan to be staking. If you are staking anything below $1000, at least at the rates which GRT offers, it doesn’t make a lot of sense to stake in a non-custodial wallet. Our analysis in this guide doesn’t even account for the unstaking fees which will be similar to the staking fee of around $40 USD. However these numbers are subject to change depending on what Binance offers on their app, this number can range anywhere form 6% to up to 14% at times. If you input your amount into the spreadsheet and the effective APR is higher than what Binance is providing then you should aim to stake on a non-custodial wallet. Be sure to include on-ramping fees such as moving your GRT into the wallet plus also add a rough estimate of the off-ramping fees of unstaking your GRT and then moving it back onto an exchange. Our estimates put this process at around $200 in Eth Fees but this can be higher or lower depending on the state of the network. If you found this guide useful make sure to share it with anyone looking to stake their graph and help us grow crypto staking.