# Staking

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**Overview**

Cryptocurrency staking means “locking up” a digital asset or being a validator in a decentralized crypto network.

Staking is the primary value-accrual strategy of many DeFi protocols. For LIFE, users would stake their LIFE through LIFE’s dApp website to earn rewards. These rewards derive from bond sales proceeds and may vary based on the number of LIFE staked within the protocol and the reward rate which is set by an algorithmic monetary policy.

**Staking**

When you stake, you:

**1.** Lock in LIFE and receive an equal amount of sLIFE.

**2.** Your sLIFE balance then rebases up at the end of every epoch automatically.

**3.** sLIFE can be eligible to be transferred so it is composable with other DeFi protocols.

To do it is easy!

**1.** Go to the LIFE website and select “stake.”

**2.** Send your LIFE to the staking contract and receive sLIFE at a 1:1 basis.

Remember that sLIFE is a transfer-restricted rebasing token so it’s not meant to be traded or used for anything except holding.

**Unstaking**

When you unstake, you:

**1.** Go to our website and select “unstake.” Send sLIFE back to the staking contract to receive LIFE at 1:1.

**2.** Burn your sLIFE and receive an equal amount of LIFE.

**3.** Unstaking also requires the user to forfeit the most recent rebase as an exit fee.

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**Rebasing**

In cryptocurrency, rebasing is the process of adjusting the value of a derivative (sLIFE) to its underlying base (LIFE).

Because LIFE’s protocol distributes LIFE by sending them to the staking contract without asking for sLIFE back, this increases the ratio of LIFE staked to sLIFE outstanding. Thus, resulting in a rebase to correct the difference.

For example: there are 100k LIFE staked and 100k sLIFE outstanding. The protocol produced $5k profit for the day, which it uses to mint and back 5k LIFE. It sends those LIFE to the staking contract; there are now 105k LIFE staked and 100k sLIFE outstanding. sLIFE supply needs to increase by 5k, or 5%, to return to balance. So, sLIFE is rebased up by 5%.

Rebases occur retroactively. For example, at the end of epoch 10 triggers a rebase of profits from epoch 9. This delay lets you see what you’re missing if you want to unstake or what you’ll get if you want to stake.

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**The reason to stake — Compound Interest**

Annual Percentage Yield (APY) is a measurement of compound interest. This is different from Annual Percentage Return (APR), which is a measurement of simple interest.

Staking on LIFE allows users to receive compounded returns automatically. When users stake LIFE, they receive sLIFE. sLIFE represents our staked LIFE. sLIFE can always be exchanged 1:1 for LIFE, but it rebases to reflect profits. This means we can compound; for example, every day of our first week we rebased \~0.45% per epoch. If you held 100 LIFE, your first rebase of the week was 0.45 LIFE and your last rebase of the week was 0.49 LIFE. This is a 10% increase in yield! If we had simple interest, every epoch would be 0.45 LIFE.

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**Conclusion**

Staking is how profits are distributed equitably to the participants. By way of sLIFE, everyone will get the same percentage profit for each epoch. Therefore, the act of rebasing also gives us the chance to compound yields without having to harvest or do anything apart from holding.

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