Looking at the staking rewards currently on offer at BitcoinVN certainly deserves some raised eyebrows.

As of the writing of this article, two specific coins (Tron and Monero) are advertising rates of over 100% APR.

Could it be real?

How does it work?

Is it just another scam to steal your coins?

Well, if you are a remotely functioning human being your eye-brows SHOULD be raised upon seeing such numbers.

The cryptocurrency world is fraught with scams and alarmingly good sounding offers generally end up in tears.

So what’s happening here? Why the high APR?

First you got to understand where these numbers are coming from.

Allocators to the BitcoinVN staking scheme are – functionally – liquidity providers for certain relatively popular swap pairs on the exchange.

In reward for this service of liquidity provision, the staking participants are paid a certain cut of the exchange fees.

Each swap in the corresponding cryptocurrency results in a payment to the liquidity providers.

Now – why the high numbers?

Well, BitcoinVN has seen decent usage growth over the past year resulting in increasing turnover in various swap pairs, while at the same time the growth in provided liquidity has not kept up pace.

We are generally relatively defensive about advertising the staking program, since our general recommendation remains to self-custody your coins (get your hardware wallet from BitcoinVN Shop – official supplier for Ledger, Trezor, Coinkite and Blockstream devices in Vietnam) – which certainly plays a role that the staking program remains more of an “insider tip” for the time being, resulting in pretty outsized earning opportunities.

The general formula is:

  • Higher swap turnover volume = higher APR for liquidity providers (staking vault participants)
  • Lower staked amount = higher APR for existing liquidity providers 

The general expectation remains that a higher APR (indicating a need for more liquidity) will ultimately attract more liquidity providers, thereby bringing the offered APR more in line with general market going rates.

For the time being however, due to the relatively unknown nature of this feature, the APR on various swap pairs remains curiously high.

Further reading on the topic:

How can I trust BitcoinVN?

How does staking on BitcoinVN work?

Why is there no BTC staking option?

Survey: Majority of experienced crypto investors in Vietnam refuse shitcoins or giving up custody of their coins