Smart Contracts
Nowadays, I am mainly focusing on Defi Smart Contracts. In particular, I am working with those programs that involve lesser known, modest coins, aka Tokens, with an emphasis on staking activity, rather than trading for profit.
There are two key areas to consider here, that will start you thinking that there is another way - Smart Contracts and Staking.
Why Smart Contracts?
Smart contracts are fundamentally code that is deployed on a blockchain, that automatically execute when specific conditions are satisfied. The important thing to note, in this brief overview, is that once they are set up and in place (“fully renounced”), they run 100% on auto pilot cannot be changed or closed down, ever.
This means that unlike previous opportunities that we may have been involved with, human beings can no longer interfere with any aspect of the program or plunder the treasury.
No longer can any owner of a program or other human who is tasked with paying out our commissions or other payments, refuse to do so. Because, simply put, no human is involved.
Think differently to how you may have done in the past. This is extremely powerful and unlike anything that we may have been used to previously.
Why Staking?
There are various reasons. There are very many Crypto Tokens out there, most of which experience constant volatility, with values rising and falling, every day, hour and minute. When Cryptocurrency was first created, people were mainly chasing the model of buying low and selling high. Many still do this and study the markets using their own skill and various software and apps. But even with tools, much luck is involved and trading has very risks of losing funds. It is also very stressful.
Another option is instead to stake your cryptocurrency. Rather than buying and selling, crypto tokens are staked into a Smart Contract Program or Liquidity pool. The big thing to note here, is that once staked, your tokens then enjoy compound interest, often 2 or 3 times a day depending on the contract.
Staking does not rely on any watching of the markets, or timing your buys and sells, often leaving you with just a few minutes or even seconds to make transactions. In fact, the opposite applies with staking. It is designed to be a longer term venture, to be viewed over months or even years. The longer the staking period, the higher the return.
Even if the price of the token drops significantly from when you first made your stake, it will still faithfully compound at the frequency as laid out in the Smart Contract. There is a great saying: Compounding will always outperform the Token price.
The nearest comparison to this in the regular currency world would of course be investing your money in a bank savings account. The difference however, is that you would only receive a very small fraction from bank interest, compared to what you can achieve with staking and compounding in a Smart Contract.
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