Boosted Staking from Fluid Tokens is a feature where you can earn more ADA than you would from simply staking your ADA to a stake pool by lending its delegation to another user. This is a great and easy way to boost staking rewards with little effort.
It is important to note that this is the borrowing and lending of the ADA’s delegation and where it is staked as opposed to the actual ADA itself.
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There are two parties when it comes to Boosted Staking. A lender providing the ADA delegation and a borrower willing to pay a premium fee for the ADA delegation.
Lenders benefit by setting their desired annual percentage return (APR) and the time they wish to lend out their ADA. This is always higher than the current standard staking rewards for staking ADA on a Cardano stake pool.
Borrowers benefit from using that stake in their stake pools, Initial Stake Pool Offerings or airdrops, such as the future Midnight airdrop from IOG, rumoured to be airdropped to staked ADA.
Borrowers pay a premium in terms of interest upfront for borrowing the ADA delegation.
How Does Boosted Stake Work?
Boosted Staking works on a peer-to-peer marketplace with lenders placing offers into an open order book. That is, lenders set what they are willing to offer, the amount of ADA, the APR they desire and the amount of time. This is all set within a smart contract on Cardano. The lender sends the amount of ADA along with the desired parameters to the smart contract and is locked into that smart contract.
These offers are displayed on the Fluid Tokens interface as a bar graph showing the different APRs available and the amount of ADA on offer for borrowers.
Borrowers can choose the amount of ADA along with the period they wish to borrow the ADA for from what is available in the order book. The borrower interacts with the smart contract and then creates a new one based on the parameters and ADA available in the smart contract. The borrowed ADA is automatically staked
It is important to note that only the delegation of the ADA is borrowed and not the actual ADA itself. Users borrow the control of where the ADA is staked. This ensures a safer borrowing experience as the lender is not giving up their ADA in the loan for use in leveraged trading or purchasing of NFTs, which is much more volatile and unpredictable.
Another bonus is that any ADA provided remains delegated to the original stake pool and continues to earn ADA rewards while in the smart contract waiting to be borrowed. You do not lose out on any staking rewards.
Current Staking Rewards vs Boosted Staking Rewards
The current staking rewards for staking to a Cardano stake pool is approximately 3.2% per annum. This varies from pool to pool and epoch to epoch.
Boosted Stake platform returns start from approximately 5% APR, but seeing 9% on most loans is more common. This is considerably higher than simply staking to a stake pool, making it more appealing.
These higher APRs are easily obtained by setting your desired APR when providing the ADA on the marketplace.
Risk of Using Boosted Stake
Cardano smart contracts power Boosted Staking.
As with all smart contract interactions, there is a level of risk. Lent ADA is sent to these smart contracts and does leave your ADA wallet, which is the opposite of simple staking of ADA, which is 100% liquid and non-custodial.
This is considered a level riskier than simply staking in your wallet to a pool since the ADA leaves your wallet and is locked in the smart contract.
Learn More About Boosted Stake
Learn how to borrow stake delegation through to delegate to an ISPO or airdrop.
Learn how to lend ADA delegation and boost your ADA earning potential via Fluid Tokens.
