Why dApp staking matters
dApp staking is a crucial incentive mechanism that unites users and developers with aligned interests. By allowing users to decide which dApps they want to support, they establish a decentralized growth flywheel where no centralized group and/or committee is needed to decide which applications receive the financial incentive to build. This is akin to a grants program, with the only difference being the users are in a lot more control.
Economic incentive is key to build out great applications. The most common economic incentive is a grant that allows a chain to incentivize the development of dApps. However, a grants mechanism is often dictated by the grants issuing committee, which can bias the growth of ecosystem dApps on the chain.
dApp staking decentralizes this mechanism by allowing users to decide which dApps are built on Astar Network. This also creates a democratic arrangement allowing dApps to market themselves to users followed by which users decide the most promising and capable dApps that should receive the economic incentive.
How does the process of dApp staking work on Astar Network?
As part of the v3 upgrade, users are required to lock their ASTR tokens on the network.
Users lock the minimum required ASTR needed to lock on the network. This reserves their tokens for dApp staking. However, simply locking doesn’t earn them any rewards.
Users select from a list of dApps those they wish to support. Once a dApp acquires enough support, it starts receiving ASTR tokens as rewards for building on Astar.
Users, in return, earn rewards for supporting their dApps.
Users earn two types of rewards in dApp staking:
Base Rewards: Rewards earned when a users keeps their minimum ASTR staked during the Build&Earn Subperiod. These rewards accrue based on the duration for which users keep their ASTR staked during the Build&Earn subperiod.
Bonus Rewards: Rewards earned when a user keeps their minimum ASTR staked for the entire Voting and Build&Earn Subperiod. **
Since users have to lock their tokens (sometimes for as long as a few months) to earn both the Base and Bonus rewards, it introduces significant opportunity costs for users. This limits the utility of their capital. Moreover, there are some significant hurdles associated with Bonus Rewards too.
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