Types of staking pools

Staking with fixed returns

Fixed-income staking means that you receive a certain percentage of your investment over a certain period of time. This interest rate remains the same for the duration of the staking - like a deposit in a bank.

For instance, if you stake 1000 coins at a fixed yield of 5% per year, you will receive 50 coins at the end of the year as a reward. A fixed return provides investors with stability and the ability to plan their returns in advance.

It is important to note that with this type of staking, rewards will stop accruing as soon as the lock-in period comes to an end. To continue receiving rewards, you will need to withdraw tokens from the pool and then stake them again.

Staking with floating returns

Floating returns, on the other hand, assumes that the interest rate you receive on your investment varies with market conditions. The yield in such a pool is directly proportional to the number of rewards allocated and inversely proportional to the product of the time over which those rewards will be allocated by the pool's TVL (the total volume of tokens locked in the pool).

For example, if you stake 1000 tokens, you might get 60 coins one month and 40 coins the next if the average TVL of the steaking pool for the second month is higher than the first.

Unlike fixed staking, rewards in such pools continue to accrue even after the tokens are unlocked. Thus, you can stake coins with a lock-in period of 0 days and still receive rewards for a year before you withdraw funds from the staking pool.