• General Web3 Staking Inquiries

• Liquid Staking — bbSOL Related Inquiries

 

 

 

General Web3 Staking Inquiries

What is DeFi? How does it generate revenue?

DeFi, short for Decentralized Finance, encompasses financial smart contracts and protocols on blockchain networks. DeFi facilitates various activities such as peer-to-peer transfers, trading, payments, lending, and more.

How does DeFi staking work?

Earning interest with DeFi staking involves depositing eligible tokens into a DeFi protocol to help verify blockchain transactions. Not all cryptocurrencies support staking — Bitcoin, for example, uses Proof-of-Work instead of Proof-of-Stake. However, cryptocurrencies like Ethereum allow staking, though they may require a minimum deposit, like 32 ETH to become a validator.

 

Staking pools offer a way to participate without meeting these high minimums by combining assets from multiple users. When you stake your tokens, they are used as collateral to verify transactions, and in return, you earn rewards. 

What is Bybit Web3 Staking?

Bybit Web3 Staking allows you to stake your tokens and earn returns in one place without switching between protocols or making multiple transactions. It simplifies DeFi by enabling easy tracking of your staking positions across platforms and the management of your investments whenever needed.

What are the advantages of Bybit Web3 staking?

Passive Income: Bybit Web3 Staking allows you to earn rewards on your cryptocurrency holdings with competitive returns, often higher than traditional savings options.

 

Convenience: Bybit simplifies the staking process by allowing you to manage and track your staking positions across multiple platforms in one place, without needing to switch between protocols or make multiple transactions.

 

Lower Entry Barriers: Bybit Web3 Staking offers access to staking pools, allowing you to participate even with smaller investments by pooling assets with others to meet network requirements.

 

Security: Bybit’s professional team carefully selects and filters quality projects, ensuring that only reliable projects are listed on the Web3 Staking page, which helps minimize the risk of fraud.

What are the risks associated with DeFi staking?

DeFi staking offers potential rewards, but it also comes with several risks.

Market Volatility: The crypto market is highly volatile, and your staked assets are exposed to price fluctuations, which can lead to losses.

Smart Contract Risks: DeFi staking relies on smart contracts, which could have vulnerabilities or coding errors, potentially leading to the loss of your staked funds.

Impermanent Loss: In liquidity pools, the value of your staked assets may decrease compared to holding them outside the pool due to price changes.

Market Liquidity: Low liquidity can make it difficult to exit positions or result in unfavorable trading conditions.

 

It's advisable to conduct thorough research before participating in any DeFi protocols. Bybit Web3 Staking does not assume responsibility for token losses due to these reasons.

How can I stake or redeem my assets to/from the staking pool on Bybit Web3 Staking?

You can visit this page to learn more about how to get started with Bybit Web3 Staking.

Liquid Staking — bbSOL Related Inquiries

What is Liquid Staking?

Liquid Staking means tokenizing staked assets to provide liquidity and staking yields simultaneously. A liquid staking token is a tokenized representation of staked assets. When users stake their assets, they receive an equivalent amount of liquid staking tokens (LSTs). These LSTs can then be traded, sold, or used in other DeFi protocols, providing liquidity to the staker even while their original assets remain staked.

 

Read more:

5 Opportunities to Maximize Your Returns via Liquid Staking

A Guide to Native Staking vs. Liquid Staking vs. Liquid Restaking

What is Bybit Staked SOL (bbSOL)?

Bybit Staked SOL (bbSOL) is a liquid staking token you receive when staking SOL on Bybit. It represents your staked SOL in Bybit’s stake pool and serves as a receipt to later redeem your SOL. These tokens also let you earn staking rewards while still participating in DeFi activities using bbSOL. For more information, please refer to Bybit Staked SOL(bbSOL): The World’s First Exchange-Backed LST.

How does bbSOL Work?

You deposit SOL into Bybit’s liquid staking protocol, and the respective amount of bbSOL is issued to you. As staking rewards accumulate, it will reflect on the value of bbSOL, leading to the value of bbSOL increasing relative to SOL. For example, after holding bbSOL for a year, its value against SOL could rise from 1 bbSOL:1 SOL to 1 bbSOL:1.1 SOL, due to the rewards earned. 

 

The rewards are automatically reflected in the growing value of bbSOL, so there's no need to claim them manually. When you’re ready to unstake, you can easily convert bbSOL back for SOL, along with any accrued rewards. Bybit also offers instant unstake options. 

What is the composition of bbSOL’s earnings calculation?

The earnings of BybitSOL consist of three parts:

Stake Rewards: Staking rewards from the Solana network, based on rewards earned by validators participating in consensus.

MEV Rewards: Additional earnings obtained through optimized validator nodes by Sanctum Labs, primarily derived from opportunities in transaction ordering.

Liquidity Rewards: bbSOL, as a type of LST, earns additional rewards by providing liquidity through Sanctum.

What is the estimated update time for bbSOL’s earnings?

The earnings update time is primarily determined by the length of Solana’s epochs, and it is roughly updated every 2-3 days. You can view your cumulative yield in your investment details.

Is there any risk associated with staking in SOL-bbSOL pools?

There are risks like slashing penalties if the validator misbehaves or there is any potential volatility in bbSOL’s value compared to SOL. Despite these risks, bbSOL provides a convenient way to earn staking rewards while staying active in DeFi.

What can I do with bbSOL?

As the liquid staking token for Solana, bbSOL offers several functionalities:

Provide Liquidity: You can add bbSOL to liquidity pools to earn trading fees and incentives. This can help reduce the risk of impermanent loss, where the value of your assets may drop compared to when you first deposited them.

Trade: bbSOL can be traded on decentralized exchanges (DEXs) and will soon be available on Bybit. This allows you to take advantage of its benefits within both the Solana and Bybit ecosystems.

Restake: You can restake bbSOL to earn additional rewards and support the Solana network's security. Using protocols like Solayer, you can increase your returns and help strengthen the network.

Are there any fees to stake in the SOL-bbSOL’s pool?

Aside from the gas fee (paid in SOL) required on the chain, a 0.1% deposit fee will be charged when you stake your SOL. The 0.1% deposit fee is part of bbSOL’s protocol mechanism, designed to prevent users from staking and quickly unstaking to arbitrage rewards. When users stake 1,000 SOL, the conversion rate of bbSOL is 1:1. Theoretically, you can get 1,000 bbSOL in return, but after deducting the corresponding fees, you will get 999 bbSOL. 

Can bbSOL be redeemed promptly?

It depends on the amount of SOL tokens you wish to redeem. If the amount is less than 400K SOL tokens, it can be redeemed promptly. If the amount exceeds 400K SOL tokens, you will need to wait for the Solana Epoch to be executed. The estimated time for redemption completion is 2 to 3 days.

What is the redemption mechanism for bbSOL?

BybitSOL holders can redeem their tokens for SOL at any time. When users wish to exit staking, their BybitSOL tokens will be exchanged back for SOL tokens. The amount of SOL redeemed is calculated based on the current conversion rate between BybitSOL and SOL. Over time, the conversion rate may increase due to the accumulation of staking rewards and MEV rewards.