As you all may know, PSI has partnered with Ferrum Network to bring staking to its investors. Staking is a process in which you lock up your tokens in return for interest. This partnership will allow PSI investors to lock away their funds for a time frame and in return receive more PSI as a reward.
Lets start with the basics so you can understand the process and get the details needed to get you started with Ferrum Network staking.
PSI staking on the Ferrum network will open on the 2nd of April 2021 9.00PM UTC and deposits will be open for 7 days following.
You can find the link to the Ferrum staking by clicking the pool on the staking page at passive-income.io/staking or by clicking here. Please note that the staking will not go live until the start date/time.
- In order to earn stake with Ferrum, you will need to create a CAKE-LP pair with PSI/BNB. We have decided to use a liquidity pair in order to boost our BSC liquidity and allow us room for the growth we expect to see in the coming months. There are some quirks that come from using CAKE-LP’s and for those unfamiliar I will detail this process further.
- The ‘Maturity period’ for the Ferrum Staking is 60 Days. This means that when you stake your PSI/BNB-Cake-LP, they will be locked inside Ferrum for this time frame.
- The total returns from staking for 60 days will be 100%. The way this is calculated is by using a peg price on the CAKE-LP. Further details will follow this once staking has begun but essentially, you will get 100% APR during your 60 day stake.
Pancake LP Quirks
Anyone familiar with adding liquidity via PancakeSwap will know that with it comes some quirks. I’ll do my best to explain what you might expect to see when providing liquidity to PancakeSwap.
Impermanent loss is when you supply liquidity to a PCS pool and when you take the liquidity back out, the amount of tokens you get back is less than what you supplied. This is caused by price movements in either of the tokens and unfortunately come with the nature of supplying liquidity. Fear not because in staking with ferrum, any potential impermanent loss will made up by the % return from staking rewards. To save this article from becoming an essay, if you’d like to know more about this, please watch this video!
Potential Scenario Examples
I’d like to give a few scenarios to demostrate what we might expect to see during staking with Ferrum. Note that these examples are not a true representation due to us not knowing how Ferrum will calculate the Peg and potential price movements on either token.
We supply 1 PSI at $700 and the matching amount of BNB for a total pool value of $1400. During the 60 days, PSI rises by 25% to $875 and BNB stays at the same price as when we supplied. Due to this price movement, after the 60 days, when we remove our liquidity, we will have lost roughly 11.5% of our PSI. This would leave us with .885 PSI. Also, due to the movement in price, we would be returned roughly an extra .2 BNB.
That leaves us down 11.5% PSI, up roughly 10.6% in BNB and we also gain 100% on our PSI. Leaving us roughly 99.1% up in total.
We supply 5 PSI at $700 and the matching amount of BNB for a total pool value of $7000. During the 60 days, PSI rises by 75% to $1225 and BNB drops by 20%. During this price movement, after the 60 days, we will have lost roughly 31% of our PSI. This would leave us with .69 PSI. Also, due to the movement in price, we would be returned roughly an extra 1.13 BNB.
That leaves us down 31% on PSI, up roughly 46% in BNB and we also gain 100% on our PSI. leaving us roughly 115% up in total.
If you would like to play around with possible impermanent loss scenario’s then use this handy calculator here.
I hope that explains things well enough, as always, any questions you may have about Ferrum staking, impermanent loss or anything PSI, feel free to drop a message in the telegram and one of our team members will be happy to assist. Stay tuned for a YouTube video for full details on how to stake with Ferrum Network!