What is Locked Staking?
“Locked staking” refers to the process of locking your digital assets on a Proof of Stake blockchain for a certain period of time. This not only contributes to the network but also provides you staking rewards.
More specifically, Proof of Stake (PoS) is a consensus mechanism that selects block validators based on the number of coins they stake. The more coins you stake, the higher the rewards.
Binance Locked Staking provides an easy way for HODLers to stake and earn rewards.
1. What's the difference between Binance Staking and Binance Savings?
Binance Staking relies on Proof of Stake consensus, meaning that it is conducted on the blockchain through the use of smart contracts. On the other hand, Binance Savings is not conducted on the blockchain. It is a financial product that allows Binance users to lend and earn interests. It provides flexibility to redeem funds at any time and offers daily interest. The Binance Savings interests come from Binance Loan and Margin.
2. Why does it take several days for my funds to arrive after I redeem from Locked Staking?
As staking is conducted on the blockchain via smart contracts, the token redemption time varies according to the blockchain's consensus mechanism. Different blockchains require different redemption times.
For example, to unstake EOS, you need to wait 72 hours, while unstaking DOT requires you to wait 28 days.
Binance optimized the funds' distribution process and shortened the redemption time to 1 day. Please note that the standard redemption time is subjected to the actual redemption time of the project blockchain, Binance may adjust the 1-day redemption time in the future.
3. Why is the APY (Annualized Percentage of Yield) dynamically changing?
APY is a projection based on the rewards we have historically received (“Staking Rewards Rate”) from the applicable asset protocol. This rate is set by the applicable blockchain protocol, and is neither controlled, influenced, nor determined by Binance Staking and will change (and thus, the APY will change dynamically). Each blockchain sets its underlying rewards rate depending on various factors. The APY may be adjusted to account for funds we hold back from staking as part of our liquidity reserve, if applicable.
4. When will interest start to accrue and what is the redemption time?
- When you subscribe to a Locked Staking product, the amount required for the subscription will be deducted from your Spot Account.
- The interest will not incur on the day of the subscription. The interest will start to incur on the second day and will be distributed on the third day. For example, if you subscribe on 1 Feb, interest will be calculated from 2 Feb onwards and will be distributed on 3 Feb. Besides, the staking interest will be distributed daily.
- Users can choose to redeem their funds in advance. After choosing early redemption, you will NOT lose your principal, but the distributed interest during the lock-up period will be deducted from the principal. Moreover, redemption requires a certain unlocking period. It takes 1 day to unlock the tokens and 1 day to redeem the funds. Due to time zone differences, it may take up to 48-72 hours in total.
- Redemption after the product expires: when the subscribed product expires, your assets will be redeemed from the chain and it requires a certain unlocking period. It takes 1 day to unlock the tokens and 1 day to redeem the funds. Due to time zone differences, it may take up to 48-72 hours in total.
5. Staking interest distribution
Interest will be calculated and distributed between 0:00 and 8:00 (UTC+0) on the second day after the subscription day.
However, distribution may be delayed sometimes due to unforeseeable network conditions.
6. Individual subscription limit
Different staking products have different durations and subscription limits. Subscription limit refers to the maximum amount of tokens that each user can subscribe. Binance Staking will dynamically adjust the limits according to market conditions and the degree of risks.
How to use Locked Staking on Binance?
1. Log into your Binance account and click [Finance] - [Binance Earn].
Scroll down to [Locked Staking] and click [View More].
Here you can see all the Locked Staking products with the estimated annual percentage yield (Est. APY), duration days, and minimum locked amount.
2. Choose the asset you want to stake, adjust the duration, then click [Stake Now].
You’ll then find details about the selected staking offer:
- Duration: You can click on the different duration to see their respective estimated annual percentage yield (Est. APY) to pick the best offer. Please note that the Est. APY is adjusted daily based on the on-chain staking rewards. During the staking period, your assets will be locked on-chain, so you won't be able to withdraw or perform any transactions with the allocated assets.
- Available amount: It shows the available balance in your Spot Wallet that you can use to stake on Locked Staking. There is a minimum amount required for staking. If your balance is lower than that, you won't be able to stake.
Once you subscribe to the product, interests will be calculated from 00:00 (UTC) of the following day, and are distributed to your [Fiat and Spot Wallet] every day after 00:00 (UTC). When the process is complete, the staked assets will be redeemed automatically and returned to your Spot Wallet.
After confirming the details, enter the locked amount you want to stake and click [Confirm purchase].
3. To view your Locked Staking history, go to [Wallet] - [Earn] - [Locked Staking].
4. To redeem your assets in advance, click [Redeem earlier].
Please note that unlocking your staked assets requires a specific time based on the specifications of the chain you're staking on. Binance Locked Staking allows you to redeem assets the following day. However, it sometimes takes up to 48-72 hours to receive the tokens due to different global time zones.
Please note that if you decide to redeem the Locked Staking products in advance, the interests generated will be deducted from the principal when you unstake.
To learn more about Staking, please refer to the Academy article What Is Staking?