Staking on Binance vs Leasing

Binance propose 30 days Locked Staking of LTO tokens with an APY of 10.00%, which is an incredible level. Leasing on our node on the other hand is currently bringing you an APY of 4.04%.
So not as great that announced.

Yet there is a few things to consider when staking on Binance:

The real APY

First thing, each time you lock up your LTO for 30 days, this means that at the end of the period, they are released. You'll then have to stake them again manually. If you don't do it right away, you could miss staking time and this will eat in your earnings.

When you lock up for 30 days, you will then earn rewards during 30 days. A thing to note is that this duration will only start at the start of the next day, not right away. There will then be a downtime of at least a day between each locking period. Also, after those 30 days, Binance does a 3 days redemption period during which you aren't earning rewards either.
With all those downtimes between each periods, this means if you don't miss a day to re-stake each time, the effective APY of Binance is actually 8.3% (if you do not miss a day of re-staking).

For a full breakdown by the exemple, here's a timeline of a staking on Binance:

Staking period Dates Rewards for staking on Binance Comparison with leasing with our node
 
Period 1 Stake Date 2021 Sep 25
Value Date 2021 Sep 26
Interest End Date 2021 Oct 26
Redemption Date 2021 Oct 30 100.82 LTO 100.39 LTO
 
Period 2 Stake Date 2021 Oct 30
Value Date 2021 Oct 31
Interest End Date 2021 Nov 30
Redemption Date 2021 Dec 04 101.65 LTO 100.79 LTO
 
Period 3 Stake Date 2021 Dec 04
Value Date 2021 Dec 05
Interest End Date 2022 Jan 04
Redemption Date 2022 Jan 08 102.49 LTO 101.18 LTO
 
Period 4 Stake Date 2022 Jan 08
Value Date 2022 Jan 09
Interest End Date 2022 Feb 08
Redemption Date 2022 Feb 12 103.33 LTO 101.58 LTO
 
Period 5 Stake Date 2022 Feb 12
Value Date 2022 Feb 13
Interest End Date 2022 Mar 15
Redemption Date 2022 Mar 19 104.18 LTO 101.97 LTO
 
Period 6 Stake Date 2022 Mar 19
Value Date 2022 Mar 20
Interest End Date 2022 Apr 19
Redemption Date 2022 Apr 23 105.03 LTO 102.37 LTO
 
Period 7 Stake Date 2022 Apr 23
Value Date 2022 Apr 24
Interest End Date 2022 May 24
Redemption Date 2022 May 28 105.90 LTO 102.77 LTO
 
Period 8 Stake Date 2022 May 28
Value Date 2022 May 29
Interest End Date 2022 Jun 28
Redemption Date 2022 Jul 02 106.77 LTO 103.18 LTO
 
Period 9 Stake Date 2022 Jul 02
Value Date 2022 Jul 03
Interest End Date 2022 Aug 02
Redemption Date 2022 Aug 06 107.65 LTO 103.58 LTO
 
Period 10 Stake Date 2022 Aug 06
Value Date 2022 Aug 07
Interest End Date 2022 Sep 06
Redemption Date 2022 Sep 10 108.53 LTO 103.99 LTO
 
Period 11 Stake Date 2022 Sep 10
Value Date 2022 Sep 11
Interest End Date 2022 Oct 11
Redemption Date 2022 Oct 15 109.42 LTO 104.39 LTO

Oh, also the amount of LTO that can be locked in the staking product on Binance is limited. Don't be surprised one day when you want to lock them again after the end of a staking to see the message Sold out, preventing you to stake until place is freed up by someone else, forcing you to regulary check if you can stake again. Starting to sound tiring right ?

The true reason behind Binance higher APY

Obviously, Binance run their own validator nodes with the coins you stake, which provide a good chunk of the rewards your earnings there. But to provide a higher APY, this means they also do something else with them. By staking, you provide coins that they can lend to margin traders, this provides liquidity. It's not really bad, but the opposite is better, reducing liquidity brings coin scarcity, which make buying a coin more of a premium and brings price up !
By not staking on Binance, you're helping yourself and everyone else.

Leasing is helping

Leasing on a node is also helping securing the network by bringing decentralization. Binance validator node represent more than 8% of the network, giving them huge power over the network and giving them decision weight on the future.
By leasing to a node you're a giving the power back to everyone.

Security

When staking on Binance, your coins are on Binance, a huge target of potential hacking. If they ever get hacked and their coins are stolen, you will lose yours. While it's probable Binance have an insurance and would use it to repay its user, it may not be able to cover your funds at 100%.

On the other hand, when you lease to a node, your coins are in your wallet, and never leaves it. You are in full control at any moment. Even if a node happened to be hacked, you will only be able to lose unclaimed rewards, severely limiting the risks. Also, a node will not hold a big amount of coins at any moment, making it a less desirable target of hackers.

Conclusion

A little summary on the pro and cons of staking on Binance:

Pros Cons
  • Slightly higher APY
    (8.3% against 4.04%)
  • You have to not forget to manually stake again every 30 days
  • It often happens you cannot stake again right away due to the product being sold out
  • You bring liquidity, reducing upside price potential
  • It centralizes the network, giving Binance huge power over it
  • Expose to hacking risks

If you are interested, you can follow our guides on how to choose a node to lease to and how to lease.