Even though it may seem otherwise, the DeFi ecosystem is designed to facilitate long-term investments. Cream.finance illustrates this well through its long-term staking program. Users can lock up funds for up to four years, and receive CREAM rewards for doing so.
An Unexpected Twist by Cream.finance
It is commendable to see DeFi projects explore some rather unusual solutions these days. Cream.finance has been successful in many ways, and aims to keep the ball rolling. Introducing a new staking system that focuses on the long-term is rather unexpected, but it also makes sense. Offering this option ensures a certain part of the CREAM supply will be kept off the market for up to 4 years.
Long-term staking is not something cryptocurrency enthusiasts are accustomed to. In most cases, it is possible to stake coins and unstake at any time. This creates a relatively skewed picture. Stepping away from this aspect will be crucial to advance not just crypto, but DeFi as well.
As such, introducing long-term staking contracts will make a big impact. The minimum contract duration is 1 year. Those willing to take a bigger gamble can lock up tokens for 2,3, or 4 years accordingly. The longer one stakes, the bigger the pool of CREAM tokens to be distributed.
Staking CREAM into these contracts will generate rewards within the first hour. Stakers will receive rewards for every network block generated. However, these rewards cannot be withdrawn until the deposit is unlocked by the smart contract again. This may be a bit of a drawback, although the system isn’t entirely unfair either.
Potential Staking Drawbacks Can’t be Ignored
An ambitious plan of this scale raises a lot of questions. First of all, many people wonder if solutions like Cream.finance will still be around in four years. The cryptocurrency space has seen many ambitious projects come and go. DeFi remains a “new” industry with everything to prove.
Second, trusting a smart contract to not be exploited for four years may be a bit much. Although contracts are usually audited, that doesn’t make them secure. A lot can change between today and four years from now, after all.
All of this doesn’t mean this approach can’t be successful. If the Cream.finance team is genuine about sticking around for years to come, this may be a smart option for CREAM holders. How high the value of their tokens will be years from today, remains unclear. It may be much lower than the current value, or exponentially higher.