How can investors participate in APE staking?

Original Title: "How to Choose Between the Three Major Platforms for Ape Staking Mining with APY 1000%+: ParaSpace, BendDAO, and Binance NFT?"

Author: JamesX

Yuga Labs, in collaboration with Horizen Labs, officially launched the ApeStake.io website on December 5, marking the beginning of a one-week pre-staking phase for Ape Staking. The official Ape token staking incentives will start being distributed on December 12. For investors and NFT collectors, Ape Staking is an investment opportunity not to be missed.

This article will detail the official rules of Ape Staking and the risks involved, as well as compare the staking rules and expected returns of three third-party Ape Staking platforms (ParaSpace, BendDAO, Binance NFT) to help you make the most rational decision based on your situation.

ApeStake.io Official Staking

The earliest proposals for Ape Staking, AIP 4&5, were voted down by the community. After extensive community discussions, the voting for AIP 21&22 passed, establishing a community consensus on the details of the Ape Staking activities and preparing the process.

https://snapshot.org/#/apecoin.eth/proposal/0xcf4d7199323572b9cc7e212d29d07df974280bc3d18e35dcfeafb30d1c3e17fb

The following chart shows the release amount of APE token incentives for the three-year Ape Staking activity, indicating that early participants can receive more APE token incentives and higher expected returns.

https://forum.apecoin.com/t/aip-22-staking-pool-allocation-reloaded-ecosystem-fund-allocation/5071

The participation in APE Staking is divided into four independent staking pools: APE token staking pool, BAYC pool, MAYC pool, and BAKC pairing pool. In the APE token staking pool, participants can stake any amount of APE tokens directly, so their returns depend on the proportion of APE tokens they contribute to the total pool. In the BAYC and MAYC staking pools, NFTs act more like containers for APE tokens, requiring APE tokens to be paired for participation in Ape Staking mining, with the mining share determined by the number of paired APE tokens, and each NFT has a limit on the number of paired APE tokens.

BAKC must first be paired with a BAYC/MAYC before participating in staking with APE tokens. For specific APE token collateral limits and the release amounts of APE tokens in each asset pool, please refer to the chart below.

Horizen Labs Twitter

Note: If you choose to participate in the staking mining activity directly through ApeStake.io, please be aware that if you sell the corresponding Ape NFT during the staking period, you will lose all paired staked APE tokens. Therefore, remember to un-stake your Ape NFT and reclaim all staked APE tokens before any transactions occur to prevent being attacked by arbitrageurs.

The above introduces the details of participating in Ape Staking through official channels, but please note that this requires you to own BAYC/MAYC/BAKC NFTs and the corresponding limit of APE tokens to achieve the highest expected returns. If you only own the corresponding NFT or APE, or if you want to achieve higher expected returns and more liquidity, you have three better options: ParaSpace, BendDAO, and Binance NFT.

ParaSpace

ParaSpace may be a relatively unfamiliar name, as it is indeed a new player in the NFT lending market, but its sister project, Parallel Finance—the largest lending protocol in the Polkadot ecosystem—is well-known, and the development team is also Para Labs.

Para Labs' first exploration of multi-chain deployment and multi-market layout is ParaSpace—an innovative NFT lending platform based on the Ethereum ecosystem. This strategic layout is somewhat similar to Uniswap Labs' recent foray into the NFT trading market. As the first battle to open the Ethereum NFT lending market, the ParaSpace team has also developed a complete set of products for Ape Staking, and during the pre-staking phase, they launched an additional 30% APY mining reward for APE tokens to incentivize early users to participate.

https://app.para.space/

ParaSpace's Ape Staking, like BendDAO, is based on NFT collateral lending as the foundational logic of the platform, combined with the Ape Staking mechanism, allowing NFT holders to obtain additional liquidity while participating in Ape Staking liquidity mining to earn continuous APE token mining rewards. However, ParaSpace adopts an innovative Peer-to-Pool model, greatly enhancing capital utilization efficiency.

First, Ape NFT holders can stake their NFTs on the ParaSpace platform and borrow the required paired APE tokens from the APE lending pool without needing to find specific APE token holders to stake their tokens with their NFTs, significantly reducing market friction. Meanwhile, APE token holders only need to deposit their APE tokens into the ParaSpace lending pool to earn APE Staking incentives in the form of lending interest.

ParaSpace Twitter

The APE Staking pairing mining mechanism, conducted in the form of NFT lending, does carry the risk of Ape NFTs being liquidated, but ParaSpace has cleverly addressed this issue. First, the price of APE tokens is strongly correlated with the floor price of Ape NFTs, so the liquidation risk is inherently lower than the ETH collateral lending model for NFTs. In extreme situations, when the liquidation process is triggered, ParaSpace will automatically redeem the staked Ape NFTs but will deduct the necessary portion from their Staking rewards to ensure the repayment of APE token loans, while the Ape NFTs themselves will not actually enter the liquidation auction process.

ParaSpace Twitter

Additionally, regarding the risk mentioned earlier about losing paired APE tokens if an Ape NFT is sold during the staking period, ParaSpace has also mitigated this risk through its developed smart contracts. Any Ape NFT that is staked for mining through ParaSpace will automatically un-stake and return all APE tokens before the transaction transfer occurs if a transaction happens during the staking period. This fundamentally eliminates the occurrence of this bug in the official mechanism and ensures the security of its APE lending pool.

Regarding user concerns about contract security, although ParaSpace is a brand new NFT lending platform and the new contract developed for Ape Staking will go live on the mainnet on December 10, its contracts have already undergone security audits by 0xQuit, Certik, trailofbits, and secure3io, while several other leading security audit firms are in the final stages of security review, including SlowMist, VeridiseInc, and Quantstamp.

For users who want to participate directly in Ape Staking but are restricted by geographic location on ApeStake.io, ParaSpace has developed a front-end interface that interacts directly with the official Staking contract (https://usape.para.space/) to facilitate usage for restricted users.

BendDAO

BendDAO is familiar to most NFT blue-chip players, having operated smoothly for nearly nine months. During this time, BendDAO has also faced issues of liquidation due to the drastic price fluctuations of blue-chip NFTs. Recently, it was questioned by the industry about whether it would become the culprit for the death spiral of blue-chip NFT prices and its ability to resolve bad debts. However, with continuous product iterations and efforts to modify important parameters through community proposals, BendDAO has proven its leading position in the NFTFi space with data and time. Therefore, BendDAO is also a very important third-party participation platform in the Ape Staking activities.

BendDAO's support for Ape Staking product planning began with a community proposal, and through a subsequent proposal vote, it was decided that BendDAO would charge a 4% protocol fee for APE Staking, making it a benchmark case for DAO governance in the NFTFi space.

https://www.benddao.xyz/en/apecoin-staking/explore-pairing-listings/

The product design approach for Ape Staking taken by BendDAO differs from ParaSpace's Peer-to-Pool logic, opting instead for a more user-friendly Peer-to-Peer model. When each BAYC/MAYC is deposited into the BendApe Staking platform, NFT holders can freely set several parameters: 1. The percentage of total APE token rewards distributed among the Ape NFT, APE token, and BAKC pairing stakers. 2. The quantity requirement for staking APE tokens.

For APE token holders, they can choose any Ape NFT to pair for staking, but the most important selection criterion is certainly the reward distribution ratio set by the Ape NFT holder in advance.

https://docs.benddao.xyz/portal/bendapestaking-intro-and-faq

This is BendDAO's Peer-to-Peer pairing mining model, which provides users with maximum freedom but also brings some issues with higher pairing friction, such as the setting of reward distribution ratios. If the profit share for staked APE tokens is set too high, it is likely to ensure sufficient APE tokens for pairing, but the profits received by the Ape NFT holder may not match the expected returns of other platforms; conversely, if the profit share for staked APE tokens is set too low, it may result in situations where no APE tokens are willing to pair with that Ape NFT for staking.

Therefore, it is highly likely that after the official start of the Ape Staking activities, Ape NFT holders will continuously redeem and readjust reward distribution ratios based on the expected returns of other platforms, leading to all user roles not achieving long-term stable returns.

Binance NFT

Centralized exchanges have also found their angle of entry in the Ape Staking activities. Binance NFT announced on December 6 that it would launch Ape NFT staking activities on December 12.

https://www.binance.com/en/support/announcement/binance-nft-marketplace-will-launch-ape-nft-staking-program-4352ac39da8640cc86435d981174a7e7

The rules of the activity are the simplest and most straightforward among these Ape Staking projects. Users only need to stake BAYC and MAYC NFTs on the Binance NFT platform to earn daily APE token mining rewards. This effectively provides Ape NFT holders with a centralized staking service, allowing users to earn returns in the Ape Staking activities without worrying about APE token pairing rules.

Users can choose to stake BAYC or MAYC NFTs in a flexible manner or for fixed terms of 30, 60, or 90 days. Although the official announcement does not mention the differences in yield rates for different staking terms, it can be expected that longer fixed-term staking should correspond to higher expected returns.

https://www.binance.com/en/support/faq/frequently-asked-questions-on-the-ape-nft-staking-program-91d69c6adfda491381f3b808f3652e09

It is worth noting that after staking begins, if users want to retrieve their staked Ape NFTs, the official announcement reminds that the redemption process for flexible staking will take 48 hours, while the early redemption process for fixed-term staking can take up to 7 days, during which users will lose the APE mining rewards for those 7 days. This is not a user-friendly staking redemption mechanism for the highly volatile NFT market.

Additionally, compared to the "DeFi" format of ParaSpace and BendDAO, where all processes are conducted through smart contracts with numerous audit reports for assurance, Binance NFT's centralized staking mechanism also carries certain centralized operational risks. However, Ape NFT holders can always check on-chain data through official channels to see if their BAYC/MAYC is participating in staking.

Binance NFT has not yet disclosed its specific profit model and expected returns, including how it will pair with APE tokens for participation in Ape Staking (the source of these APE tokens should be from Binance Earn's APE Staking activities) and how much profit it will share from this, all of which remain unknown. Therefore, the specific staking yield can only be directly compared after the activity officially launches on December 12, allowing users to make their own decisions. However, it is estimated that the yield at that time should be higher than the official pure NFT staking yield but lower than the yield from NFT + APE token pairing.

Conclusion

To facilitate a direct comparison of the four platforms participating in Ape Staking mentioned above, I have created the following table for your reference.

Although the design of the Ape Staking activities has received mixed reviews from NFT users and token holders in the APE ecosystem, as a DeFi researcher, I am pleased to see the design ideas of NFT native projects increasingly integrating with the DeFi track, including the recently popular Art Gobblers, which borrowed the (3,3) model from the DeFi project OlympusDAO.

The NFTFi track is no exception: trading as mining with LooksRare and X2Y2 has been upgraded to Listing + Bid for "mining" blind boxes with Blur.io, and the underlying logic of over-collateralized lending is seen in ParaSpace, BendDAO, and JPEG'd. These projects provide significant support for the underlying liquidity of the NFT track and enhance overall capital utilization efficiency.

I believe that with the continuous exploration of the entire NFT ecosystem regarding the integration of token economic models, as well as the ongoing efforts of builders in the NFTFi track and innovative mechanisms that incorporate the characteristics of NFTs, we will soon see more attractive PFP series, on-chain investment opportunities in RWA supported by NFTs, customized financial instruments, and more. NFTs will undoubtedly play a more important role in the future on-chain financial system.