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With the Baseledger Whitepaper released back in February it is now getting closer to staking going live than ever before. And there are a lot of questions around how can there be staking when all the UBT are already circulating? Well it is simple - Staking rewards are basically a "Profit Share". Read on to find out why as a UBT Token Holder I am really happy about this...
Quick overview
Clients pay fees in Fiat, Fiat buys UBT from the exchanges, that UBT pays the Node operators and Stakers. Baseledger puts the UBT Token at the centre of everything and there is a constant buy pressure from clients looking to use Baseledger, and then also a reducing supply through Investors who want to stake and earn their share of the fees. Simple and effective, and a very nice loop that brings a few key benefits.
Point 1 - No Inflation
A key point about Baseledger Staking is that no new UBT will be minted. All 150m UBT are circulating. There are no big unlocks from seed investors – all the tokens have been released and are already circulating– The project is three years old now and there are no nasty surprises to come from that. But what this means is that there is NO INFLATION. ETH and BTC both have inflation, and people are getting really excited about ETH inflation decreasing, but their inflation is still not ZERO like UBT.
But how are Stakers paid if there is no inflation? Through the Profit share, it is basically a variation of the much loved “Buy Back and Burn” many DeFi projects use, but instead of Burn, the buy backs are used to pay the Stakers and node operators for signing transactions.
Above is the original tokenomics diagram from Baseledger.net, which includes how continued development and growth of the ecosystem is supported, but from a stakers point of view the simplified version covers the most important parts:
Point 2 - Market supply will decrease
As with any cryptocurrency that offers staking it means that users have to lock tokens up if they are to receive their rewards, which takes them off the market. Usually though, these rewards that are given are being made out of thin air and are in fact increasing the overall supply of the token - but this is NOT the case for UBT as explained earlier. The available supply of UBT on the market will decrease dramatically as more and more UBT is locked up in the nodes and staking – and yes some people will sell their rewards, but not all as many will look to grow and compound their UBT. The value of the UBT being sold by Stakers can only ever be the same or lower than what has been bought by the clients!
Point 3 - Clients are Users not Investors
A key advantage of this setup that REALLY REALLY REALLY needs to be highlighted is that the clients are not buyers looking to “buy the dip”, get a good entry, or sell the top. They are not Investors or Traders. They are just buying x dollars of UBT every single day. Price hits new ATH, clients are buying. We enter a bear market, clients are buying. The price of UBT drops? Clients are buying. They are always buying.
Summary
In theory this is how it should work to our benefit:
Increasing Demand (There are only ever going to be MORE clients, not less) + Decreasing Supply (The number of tokens being staked will likely increase over time) = Increasing Price. (Check Example IV on Economics 101).
Thanks for Reading
Hope you found this summary useful, and if you haven't already - take a look at the upcoming EthAtl.com Event *UBT related*.
And if you have any question, feel free to join and ask in t.me/unibrightio
Check Coingecko for information on the UBT Token
