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>If my coins are pegged to USD how do they appreciate? Staking rewards. It's marketed as a necessary feature of PoS cryptocurrencies, but it isn't really neces
by cowtools 4y ago
>If my coins are pegged to USD how do they appreciate?
Staking rewards. It's marketed as a necessary feature of PoS cryptocurrencies, but it isn't really necessary if the cryptocurrency is actually centralized anyways. Centralized cryptocurrencies like USDT just use it to entice buyers with rewards for just holding it, creating inflation at the cost of everyone else.
This is a major reason against Proof-of-Stake: if you don't reward stakers, then they will be incentivized to abuse their powers and double spend. If you do reward stakers, it creates a ponzi-like incentive structure like this.
- troon-lover 4y ago
- pcthrowaway 4y agoUST staking had nothing to do with PoS though. The Terra blockchain's native cryptocurrency was LUNA. There was a relationship to LUNA, in that $1 worth of luna burnt would mint $0.999 UST, and vice versa (1 UST burnt would mint $0.999 of LUNA). UST was appealing because you could supply it in Anchor protocol, which was a money market. Anchor advertised nearly 20% APY on your supply, so it was appealing to convert your fiat to UST and then supply it to Anchor like a high interest savings account.
- TheTeriyakiDon 4y agoUST was not able to be staked in a Proof-of-Stake system. UST was lent (to borrowers) via lending protocols, and in return the lenders earned interest. This interest was subsidized by Luna to encourage usage of the UST stablecoin. USDT also doesn't incentivize holders of the token. Centralized or decentralized platforms may offer incentives for depositing token though, but this isn't done by Tether itself.