Introducing Compounding Rewards Feature For Dapp Staking

Astar is introducing its new compounding rewards features which will allow users to claim their staked rewards which will automatically be restaked. When it comes to dapp restaking, the process has historically been time-consuming. Knowing that this was a pain point for users, Astar has investigated improving the user experience.

With compounding rewards, rather than having to make two extrinsic calls and signing two transactions, users need only make one extrinsic call to claim the rewards, which are automatically reinvested.

DApp Staking

Dapp staking is how developers get paid to develop dapps, such as Shiden via dapp staking rewards. Shiden is now improving how dapp nominators can restake their dapp staking rewards to reap the benefits of compound growth.

It is also how nominators get compensated for staking their $SDN tokens on dapps they want to support, and it’s a win-win scenario being one of the most important initiatives on Shiden and one that Astar Network is continuing to work on.

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.

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, blockchain networks for cryptocurrency have been hard at work developing and implementing our dapp staking mechanism.

Although users can currently restake their dapp staking rewards, community feedback centers around how there should be a more seamless way to restake rewards from dapp staking.

The New Staking Process

The way the process worked previously is that if a dapp staker wanted to reinvest their rewards, they had to make two extrinsic calls: one call to claim the rewards from dapp staking, and one call to restake the claimed rewards. In total, the user historically had to sign two transactions to restake their staking rewards. This proved to be a time-consuming process.

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, where 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, while accounting for a number of human biases.

As such, on the surface, it may seem like a trivial detail, but 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 seamlessly restake their claimed rewards, and experience compound growth in their dapp staking earnings, which if done over time, can dramatically increase their holdings due to the exponential growth.

The more that users claim and restake their rewards, the more users will experience compound growth. Every time users restake their rewards, the more value gets locked into the Shiden ecosystem, ultimately creating a snowball effect. This snowball effect will translate to more wealth being generated within the network which will then give more income to developers and nominators. In turn, this will 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.

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