Introduction to Bybit On-Chain Earn

What is Proof-of-Stake (PoS)?

Proof of Stake (PoS) is a consensus mechanism that determines who validates the next block based on the number of tokens they hold and are willing to "stake" as collateral. This process often requires a significant financial commitment, specialized hardware, and assets to cover node operation costs. Additionally, there are risks like slashing (penalties for improper validation) and liquidity issues due to unstaking delays.

Recognizing these challenges, Bybit introduced On-Chain Earn — a simplified staking solution that allows users to participate with minimal capital.

What Is Bybit On-Chain Earn?

Bybit On-Chain Earn allows users to access on-chain yield opportunities more conveniently without managing wallets, Gas fees, node operations, or complex on-chain actions.

Currently, it includes the following four product categories:

1. Hold to Earn: Hold to Earn allows users to use designated assets to acquire yield-bearing tokens through Minting, Staking, or swapping. Users earn yield from underlying staking, protocol strategies, or other on-chain mechanisms during the holding period. Yield-bearing tokens can also be used in certain scenarios, offering additional earning opportunities. Yield may come from blockchain staking, protocol strategies, trading, hedging strategies, or protocol incentives, with some products offering additional Bonus APR. The yield-bearing tokens can typically be traded, converted, transferred, or used in other scenarios while generating returns.
2. Stake to Earn: Stake to Earn allows users to stake supported PoS assets on the corresponding blockchain network and earn staking rewards generated by the network. Rewards primarily come from newly issued network tokens, on-chain transaction fees, and other network staking incentives. Bybit handles the node and on-chain operations.
3. Alpha Farm: Alpha Farm allows users to participate in designated on-chain liquidity strategies through Bybit. Rewards primarily come from trading fees generated by liquidity pools, liquidity incentives provided by the underlying protocols, and other on-chain rewards. APR may vary based on pool size, trading activity, asset prices, and protocol incentives.
4. Vault: Vault deploys user assets into designated on-chain protocols or strategies and generates returns based on the underlying strategy. Depending on the Vault, rewards may come from lending, staking, liquidity provision, or other on-chain strategies. Different Vaults may have different underlying strategies, APRs, terms, and redemption rules.

For specific mechanisms, yield methods, and risks of different products, please refer to the corresponding product page.

Benefits of On-Chain Earn

Simplifying crypto staking to provide steady returns on your assets while enhancing blockchain security and decentralization.

1. Hassle-free Staking: A streamlined process with no need for hardware or technical expertise — users can start staking with just a few clicks.
2. Accessibility and Reduced Entry Barriers: On-chain Earn allows users with minimal assets to join staking, encouraging broader network participation.
3. Diversification of Earnings: On-chain Earn empowers users to diversify their earnings by engaging in various DeFi strategies.
4. Incentives and Future Innovations: Regular airdrops, rewards, and innovative on-chain opportunities provide users with more ways to grow their returns.

How Do Different Forms of On-Chain Earn Work?

PoS networks have evolved, and staking comes in various forms, which can differ based on several factors. The structure of each staking project may vary depending on the network and the type of token you are staking. Below are some key aspects that differentiate these staking models:

Please note that Bybit's On-Chain Earn may not support all types of staking models listed above. We are constantly working to offer a diverse range of quality staking projects. For the latest information on supported tokens and networks, always visit the Bybit On-Chain Earn page.

Risks of On-Chain Earn

While On-Chain Earn offers the opportunity to earn rewards, there are some risks to consider.

1. Market and Liquidity Risk: The value of underlying assets or yield-bearing tokens may fluctuate. Redemptions may also be delayed due to on-chain processing requirements or insufficient protocol liquidity.
2. Blockchain and Protocol Risk: Network disruptions, validator performance issues, smart contract vulnerabilities, or protocol failures may affect returns, redemption processing, or asset security.
3. Strategy Risk: Products such as Alpha Farm and Vault may be exposed to additional risks arising from their underlying strategies.

Bybit helps minimize many risks like validator selection, slashing risk and gas fees, but Bybit does not assume any responsibility for potential asset losses due to contract vulnerabilities, hacking events, or any rug pull risk. Users are responsible for doing their due diligence before investing in any projects.