How Will Staking Work on Radix Babylon – Liquid Staking and Tax Implications Explained

A recent article on the RadixDLT website explains the upcoming staking features on the Radix network, which will be available in the Babylon version. Staking is a way to secure the network and also earn rewards. The new staking system makes it easier for investors to participate.

To stake Radix (XRD), investors will visit a web page specifically designed for staking. They can also use third-party staking sites. Staking is as simple as sending XRD to a validator, like RadixRadar.de. In return, investors receive tokens called Liquid Stake Units (LSU) that represent their stake. These tokens can be freely transferred or used as desired.

If investors want to retrieve their staked XRD, they can unstake by sending their LSU back to the validator. The validator calculates the amount of XRD to be returned and moves it to a separate pool. A special NFT token called a claim token is given to the investor, specifying when and how much XRD they can claim. Once the waiting period is over, investors can exchange the claim token for their XRD.

The value of the stake and the rewards earned by stakers depend on the overall staked amount and the network’s performance. The Radix Wallet will provide information on the value of stakes and when rewards can be claimed.

Overall, the new staking system makes it simpler and more accessible for investors to stake their Radix tokens and participate in securing the network while earning potential rewards.

Tax Implications

Since the number of LSU tokens does not change during the staking period, and you don’t have immediate access to the staked XRD, one could argue that the reward emmissions in each epoch may not be considered taxable income. Only unstaking would be taxable, since only then is the gain or loss realized. However, both the IRS (US) and the HMRC (UK) don’t provide clear guidance on how liquid staking will be taxed.

For information see this blog post.

We are working on a tool that will provide stakers on RadixRadar exports of the staking rewards per epoch, in case these will be needed for tax purposes.

This article is for discussion purposes only and does not constitute tax or legal advice.

Why you should diversify your Stake

When it comes to staking your cryptocurrency, diversification is key. Instead of putting all your stake into a single validator node, consider spreading it across multiple validator nodes to enhance network security. Distributing your stake among several validators helps to safeguard against potential downtime, attacks, or other technical issues that may affect individual nodes. By supporting multiple validators, you contribute to a more resilient and decentralized network, increasing its overall security and stability.

By diversifying your stake, you reduce the risk of relying on a single validator, as any issues or vulnerabilities specific to that validator could potentially impact your investment. If a validator performs badly, it can be affected by “slashing”: The validator will lose some staked XRD (the tokens are burned as penalty). This means when unstaking, you could get back less XRD than you put into the validator. This is another good reason to spread your stake over multiple validators – don’t put all of your eggs into one basket!

RadixRadar.de is a long-running Radix validator node that has been around since the betanet launched in April 2021. So please consider staking with us! Our validator address is rv1qw6m5nrwnjx2estgkv8zsvp77es6yea0p99zkregud6dqad8q5wg7yvr4na. See our article Learn how to stake for more information.

Radix Public Network upgrade from Olympia to Babylon

The upgrade of the public Radix network from Olympia to Babylon is coming soon, promising to enable the transition of global Web3 and DeFi from “tech demo” to mainstream-capable user and developer experience. The upgrade will take place around July 31st, 2023. The date is tentative, as it is subject to the approval of the Olympia validator set to activate the protocol update. The decision to extend the deadline was made after the team assessed the state of development following the RCnet network release and realized that everything had to go according to plan to make the June deadline.

A follow-up test network release, RCnet 2, will accompany the Babylon upgrade, with updates to the developer preview mobile wallets, Radix Dashboard, Gateway, and other developer tools planned for mid-June. Radix Off-Ledger Authentication (ROLA), which enables developers to access the tools needed to let users prove their ownership of an account or identity without submitting a transaction, will be released with RCnet 2. Additionally, a blog post outlining the Babylon Wallet’s feature set will be released so that developers can anticipate their customers’ user experience.

Although there has been a month’s delay in the Babylon upgrade, Radix’s sentiment has never been better, with team morale still pegged at 11 since the RCnet release. The project’s sticky appeal is a constant, as it offers a better user experience, Scrypto, scalability without breaking composability, RadFi, and more. The project’s momentum is building, with exciting ecosystem partnership announcements on the horizon.

See this announcement post for more details.

Ociswap Airdrop

Starting today, July 21st, at 19 UTC, https://ociswap.com is holding an airdrop which will will run for exactly two days until July 23rd 19 UTC. Don’t miss out! To participate and get a load of free $OCI all you need to do is register your Radix wallet with @ocicatbot on Telegram (/wallet rdx...) and then stake some of your Radix with our RadixRadar validator (address: rv1qw6m5nrwnjx2estgkv8zsvp77es6yea0p99zkregud6dqad8q5wg7yvr4na).

For more details see https://airdrop.ociswap.com

There’s a total of 300,000 $OCI to be had. The sum is proportionally distributed. So the more you stake, the more you’ll get!

Instabridge now live: swap eXRD to XRD

Instabridge.io is now online and can be used to exchange Ethereum-based eXRD tokens for native XRD tokens. The service promises inexpensive and fast swaps and should also support other tokens such as Bitcoin, Litecoin or Doge in the future.

Tokens can be exchanged 1: 1 and in both directions. All details can be found in the Instabridge User Guide from Radix. To use the service you need a valid Instapass ID.

The first epoch starts on August 11th – from this point on, staking rewards can be earned. In order not to miss any rewards, you should stake before August 11th. Read ours Instructions for staking Radix to learn how. RadixRadar is of course already available as a validator node: You can also find us in RadixExplorer at the address rv1qw6m5nrwnjx2estgkv8zsvp77es6yea0p99zkregud6dqad8q5wg7yvr4na .

Hello Radix! Validator proposal

The servers are running, the website has been created. Now it’s time to wait for the betanet!
We applied as a Betanet validator with the Proposal # 302 .

Should we be so lucky and be selected as one of the 100 validators, we can gain some experience
with the operation of a validator before the launch of the mainnet. Either way, we will operate our Radix Nodes. But of course we hope to get the chance to validate too!

It is also our goal to be a contact point for the German-speaking Radix community.
If you feel like it, feel free to contact us reddit join and us on Twitter consequences!

Mathias
RadixRadar team