Update: Ape Staking AIPs Explained

With voting for ApeCoin DAO officially open, I’d like to provide a brief overview of AIP-4 and AIP-5, which were proposed by Animoca Brands. These AIPs will be open for voting until 9pm ET on Wednesday, March 30th.

Additionally, I would like to highlight a proposed amendment to the staking mechanism, which I will be referring to as the Staking Amendment Proposal. Provided that AIPs 1, 2, 4, and 5 pass, the Staking Amendment Proposal will propose that the quantity of ApeCoin staked is capped per NFT rather than per wallet for holders of BAYC ecosystem NFTs. This allows for holders of multiple BAYC ecosystem NFTs to stake more ApeCoin, which I believe will benefit the APE ecosystem and community.

The Staking Amendment Proposal incorporates feedback we have gotten from the community. As AIP-4 and AIP-5 require 16–20 weeks to implement, there is ample time for this subsequent proposal to be incorporated. In accordance with the ApeCoin DAO governance process, Animoca will initiate the Staking Proposal Amendment as an AIP Idea in Discourse (Phase 1) in the coming days, where the community will be able to discuss what should be the cap for staked ApeCoin per NFT. After the 7-day AIP Idea discussion window, it will move on to the other proposal process phases before eventually becoming a Live AIP on which the community can vote either “in favor” or “against.”

Animoca Brands will abstain from voting on AIPs 4 and 5 and the Staking Proposal Amendment.

Below, I outline how AIP-4 and 5 work in detail. I add what effect the Staking Amendment Proposal would have each step of the way.

Staking Overview

Staking incentivizes long-term growth of an ecosystem by enabling token holders to add tokens to a “pool” and receive additional tokens based on the amount of time the tokens remain in the pool. AIP-4 and AIP-5 propose staking for ApeCoin holders, with 4 separate staking pools, each with different access rules and rewards.

Individual ApeCoin holders would have the option to stake or unstake at any time, and voting in favor of AIP-4 and/or AIP-5 does not obligate individual ApeCoin holders to stake their tokens.

The Four Staking Pools

ApeCoin can be staked in one of 4 different staking pools, but not all staking pools are open to all ApeCoin holders:

Pool 1: Open to any holder of Apecoin. ApeCoin holders who also have any combination of BAYC, MAYC, and/or BAKC NFTs can choose to access this pool.

Pool 2: ApeCoin holders who have a BAYC NFT can access this pool.

Pool 3: ApeCoin holders who have a MAYC NFT can access this pool.

Pool 4: ApeCoin holders who have a BAKC NFT as well as either a BAYC or MAYC NFT can access this pool.

Having four separate pools helps incentivize BAYC ecosystem NFT holders to support the main focus of the staking protocol, which is to support the long-term development and growth of the APE ecosystem. In other words, we believe the focus should be on benefiting the APE ecosystem by encouraging NFT holders to support the utility within and sustainability of the ApeCoin DAO.

How the Staking Amendment Proposal would affect this:

If the Staking Amendment Proposal passes, the quantity of ApeCoin a holder could stake would be capped per NFT. This would allow for holders of multiple BAYC ecosystem NFTs to stake more ApeCoin. The exact cap on ApeCoin staked per NFT will be decided based on the community discussion when the Staking Amendment Proposal is posted as an AIP Idea in Discourse.

What the Staking Proposal Amendment would mean in practice:

It would mean that if you hold a single BAYC NFT and ApeCoin, you can access Pool 2. The amount of ApeCoin that you can stake in this pool would be capped at a quantity to be decided during Discourse feedback.

If you own two BAYC NFTs, the amount of ApeCoin that you can stake in Pool 2 would be double that of the cap for one NFT.

There would be no incentive for splitting up BAYC NFTs to different wallets, and no way for a user with a huge amount of ApeCoin but only 1 BAYC NFT to have outsized weight in the pool.

How Staking Works for NFT Holders

If a BAYC ecosystem NFT holder wants to stake in pool 2, 3, or 4 (depending on the NFT), they will pair the NFT with their ApeCoin to access the relevant staking pool. The NFT itself isn’t staked — it acts as the key to the “vault” holding the staked ApeCoin. The NFT holder retains the ability to sell the NFT. By default, if you sell an NFT that is actively staking ApeCoin, you are also selling the key to access the associated staked ApeCoin.

To sell the NFT only, without the associated staked ApeCoin, the NFT seller would unstake the ApeCoin prior to listing the NFT.

How the Staking Amendment Proposal would affect this:

The Staking Amendment Proposal would not affect this because AIP-4 and AIP-5 lay out the basic foundation for the staking mechanism and pools. The Staking Amendment Proposal only proposes to add in a cap on ApeCoin staked per NFT on top of this foundation.

Here’s an Example

You own a BAYC NFT and 10,000 ApeCoin. You pair your BAYC NFT to access Staking Pool 2 and decide to stake 7,000 ApeCoin to it. The next day, you want to sell your BAYC NFT.

If you DON’T unstake your ApeCoin before selling the associated NFT: The buyer of your NFT now owns the BAYC NFT and the rights to unstake the 7,000 staked ApeCoin and receive its rewards. The 3,000 ApeCoin you did not stake with this NFT remain yours.

If you DO unstake your ApeCoin before selling the associated NFT: The buyer owns only the NFT. You retain the 3,000 ApeCoin that were never staked, the 7,000 staked ApeCoin you unstaked before the sale, and any ApeCoin you earned while the 7,000 ApeCoin were staked.

How the Staking Amendment Proposal would affect this:

The Staking Amendment Proposal would not affect this because this is the mechanic currently described in AIP-4, which the Staking Amendment Proposal would not propose to amend.

FAQs:

Why does Animoca believe in staking?

Staking incentivizes and rewards early adopters of ApeCoin and encourages long-term participation in the ApeCoin DAO.

Will there be a cap of ApeCoin staked when pairing an NFT to a staking pool?

There will be a max ApeCoin cap per paired NFT proposed in the forthcoming Staking Amendment Proposal that Animoca will launch as an AIP. The quantity will be discussed amongst the community on Discourse for 7 days, in accordance with the ApeCoin DAO governance, and then proposed under a new AIP.

How will staking work?

All ApeCoin holders will be able to stake their ApeCoin on its own. ApeCoin holders with BAYC, MAYC, and/or BAKC NFTs will also have different levels of access to separate staking pools in which they can stake their ApeCoin and pair their NFTs to receive staking rewards.

Where do the staking rewards come from?

For the first three years, staking rewards will be funded by the Ecosystem Fund (the DAO treasury).

Why can’t I just stake a BAYC ecosystem NFT?

We believe that everyone in web3 should have control of their assets. In order to provide NFT owners this right, the NFTs themselves will not be staked into the staking pools. Furthermore, by staking ApeCoin rather than the NFTs, the ApeCoin DAO incentivizes and fosters the long-term growth of the ApeCoin holder community.

Can I vote with my staked ApeCoin?

Yes, your staked ApeCoin will retain full governance rights.

How many ApeCoin am I going to get if I stake?

In total, 100 million ApeCoin tokens will be distributed as staking rewards during the first year, starting the day staking opens. The amount you receive will depend on several factors, including:

  • The amount of ApeCoin you are staking
  • The staking pool you are using
  • The aggregate amount of ApeCoin being staked in the pool you are using
  • The duration of your stake
  • The period in which you are staking.

What happens at the end of the three-year period of staking?

A new AIP will need to be drafted and voted on to determine the future staking mechanism, putting this decision in the hands of the community. Ideally, by the end of the total staking period of 3 years, the DAO will have sustained revenue to keep incentivizing staking and rewarding ecosystem participants.

What happens if I do not stake my ApeCoin?

Staking is optional. Your unstaked ApeCoin will be available to be used in the APE ecosystem as normal.

Will the NFT remain in my wallet if I commit it to the staking pool?

Yes, your NFT will never leave your wallet when committing it to a staking pool. This makes it possible to continue trading your NFT(s) .

What happens if I sell my NFT while having staked ApeCoin attributed to it?

The NFT acts as the key to your staked ApeCoin. If you sell your NFT without unstaking the associated ApeCoin first, you are also selling the staked ApeCoin and its associated rewards.

Where can I check if a BAYC, MAYC, or BAKC NFT is currently staked?

Upon the launch of staking, a website UI integration will be made available to check whether the NFT has been committed, the amount of ApeCoin staked along with the NFT, as well as if it has been paired with a BAKC in the case of BAYC and MAYC.

Can locked tokens be staked?

No, locked tokens cannot be staked. Tokens allocated to contributors are not eligible for staking until they are unlocked in accordance with their respective unlock schedule.

Wen stake?
Once AIP-4, AIP-5, and the Staking Amendment Proposal are voted on, provided that they all receive majority “in favor” votes, the ApeCoin DAO’s Foundation will be responsible for implementing the proposal. The current time estimate is between 16 and 20 weeks after the AIPs are voted in favor.

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Yat Siu

Entrepreneur and Founder of Outblaze, Animoca Brands, Dalton Learning Lab and others. Tech guy, Investor, geek and Father of 3 Fun Kids