Understanding the Mechanics and Benefits of Staking xSTEP Tokens in the Step Finance Ecosystem

Gm Frens,

I get tons of dms asking what is the importance of holding xSTEP?, we’d just get straight to it below is a little write-up to bring about a more illuminated understanding of the Mechanics of xSTEP for persons who are yet to know

> xSTEP is what you get for staking STEP on the StepFinance dashboard; When a user stakes their STEP they receive the xSTEP token representing their stake in the staking vault.

> Over time, the Step Finance protocol generates fees from people using Step products, and these fees are sent to the vault.

> STEP fee revenue that is sent to the vault is owned proportionally by stakers. xSTEP has a ‘price’ which represents the total STEP over and above the staked amount. This will grow as more fee revenue is deposited into the vault.

> When a user unstakes their xSTEP they are paid (in STEP) according to the current xSTEP: STEP price and the xSTEP is burned.

xSTEP will always be > the value of 1 STEP.

> The APY associated with xSTEP is a representation of the price of xSTEP over a 365-day period.

For example in the first funding period 6000 STEP was sent to the vault and 10155788 STEP was already staked, the APY is calculated as (6,000/10,155,788) * 365 * 100 = 21.56% APY.

Pro Tip: Staking STEP token is a way for token-holders to earn yield on their STEP from revenue generated by the Step Finance protocol and if you hold more than $250 worth of xSTEP your Step fees are reduced to 0.1%