Earn NFTs and Yield in RugZombie Staking Pools
RugZombie offers single asset staking and yield farming, both of which earn ZMBE tokens along with exclusive NFTs which will later have utility in our upcoming NFT gaming ecosystem. What is the difference between these two DeFi services and how can you start earning yield and NFTs on RugZombie.io?
What is Single Asset Staking in DeFi?
A single asset staking pool allows users to lock up tokens in a smart contract and earn a yield. For proof-of-stake (POS) blockchains, staked tokens are used to validate transactions. However, staking generally refers to locking tokens in a smart contract to earn yield, and is commonly used to earn governance rights in a DAO.
RugZombie offers single asset staking pools known as Graves. These pools require the sacrifice of a minimum of 1 rugged token of the corresponding grave to unlock access. Then, users must stake at least the minimum amount of ZMBE for that pool to start earning yield in the form of ZMBE tokens. To earn NFTs, users must stake for a specific amount of time depending in the Grave or Tomb.
What is Yield Farming?
Yield farming, also known as liquidity mining, is very similar to staking. The key difference is instead of one token, the user creates a liquidity pair with two tokens by depositing an equal value amount of each into the liquidity pool. After depositing into a liquidity pool, the user will receive a receipt in the form of an LP token. A liquidity pool is a pool of cryptocurrencies locked in a smart contract used to provide liquidity for swaps on a decentralized exchange (DEX). LP tokens represent the share that the liquidity provider owns of the liquidity pool.
RugZombie offers yield farming via Tombs on 2 different DEXs, PancakeSwap, and ApeSwap. All 3 allow users to stake ZMBE-wBNB LP tokens to earn ZMBE tokens and NFTs. The NFT rewards are randomly generated after staking for the specified time, and contain common, uncommon, rare, and legendary rarities. The more LP tokens you provide, the greater chance at earning a rare NFT you have. Or if you aren’t interested in providing liquidity, you can always purchase our NFTs on the Oblivion Marketplace.
What is Impermanent Loss(IL)?
The main difference between single asset staking and yield farming is that yield farming involves supplying an equal value amount of each token as opposed to simply 1 token. This can result in impermanent loss. When the price of the tokens in the liquidity pool changes, the amounts of each token in the liquidity change with it. Therefore, the initial capital deployed in the farm will change as the values of the tokens change. When you remove liquidity from the pool, the number of each token you will receive will be different than what you supplied.
Impermanent loss does not always result in a loss of the value of what you supplied. For example, say you supplied 10 USDC and 1 BTC (worth 10 USDC in this example) and the price of BTC went up to 40 USDC. When you remove your liquidity, you will receive 0.5 BTC and 20 USDC. This would result in a profit of 20 USDC but the impermanent loss is from the fact that if you simply held the same amount of the tokens you supplied, you would have profited 30 USDC. If the value of the tokens decreases, the value of the tokens supplied would drop.
What is a liquidity pool?
A liquidity pool is a pool of cryptocurrencies locked in a smart contract used to provide liquidity for swaps on a decentralized exchange (DEX). LP tokens represent the share that the liquidity provider owns of the liquidity pool.