3.4. Smart-Staking
Last updated
Last updated
Emotions have a significant impact on market traders. Fear, greed, euphoria, or panic can distort the perception of market situations, leading to deviations from pre-planned trading strategies and impulsive decision-making. As a result, traders often experience behavioral biases, such as the "herd effect" or "confirmation bias", which significantly reduce their effectiveness in the market.
Due to the destructive influence of emotions on decision-making, many institutional market participants, including hedge funds, prefer algorithmic trading. Automating trading operations increases the accuracy of trade execution and reduces the likelihood of errors caused by psycho-emotional reactions, making trading more predictable and systematic.
Automating trading operations improves execution accuracy and reduces the likelihood of errors caused by emotional reactions, making trading more predictable and systematic.
During the early stages of Bitcoin’s promotion, it was extremely difficult to assess its potential. Many investors bought the asset at $10 and sold it at $20, satisfied with doubling their profit. However, only a few managed to hold the asset long-term and achieve returns in the hundreds of thousands of percent. For most, emotions played a decisive role: fear of losses and the desire to lock in quick profits led them to sell too early, missing out on enormous growth opportunities. Looking back, many became victims of a cognitive bias known as hindsight bias: Bitcoin’s rapid growth seems obvious only in retrospect, though predicting its potential at the time was highly challenging.
Smart-Staking is an advanced version of traditional staking, designed to eliminate emotional factors. The core idea of staking is to lock funds to support blockchain operations, where users assist in verifying transactions and creating new blocks. The longer funds remain locked, the higher the reward. Unlike mining, which requires significant computational power, staking is a more energy-efficient process.
The key difference between smart-staking and traditional staking lies in removing the human factor. It operates as an "emotionless mechanism", encouraging long-term holding. Additionally, smart-staking serves as a reliable source of passive income, ensuring the growth of coins.
Transferring funds to smart-staking locks, the possibility of selling them until the process is completed, which prevents premature sell-offs under the influence of emotions. This safeguards against premature sales driven by emotions. Unlike bonds that offer only minimal returns, smart-staking provides stable income with the potential for substantial asset appreciation. This makes it possible to increase profits tens or even hundreds of times, ahead of those who prematurely exit positions under the influence of emotions.
Warren Buffett once remarked, "The Stock Market is Designed to Transfer Money from the Active to the Patient".
Empirical data supports this statement. Research conducted by financial firms such as Fidelity revealed that the most profitable accounts in the long term were those where investors made no changes to their portfolios or had no ability to interfere—including accounts belonging to deceased clients. The statistical pattern here is clear: active asset management and the pursuit of short-term market gains often lead to errors and losses, whereas a passive approach and long-term strategy allow for maximizing profits through the natural growth in market asset values.
This is why the investment lock-in periods in Smart-Staking are designed for long-term intervals: ranging from 1 year to 12 years. Compared to the average human lifespan, these durations may seem relatively short but are optimal for building significant wealth. Through long-term staking, DeflationCoin can compete with pension funds worldwide, whose efficiency and transparency have increasingly been called into question over the past decades.
Details of the Smart-Staking parameters are presented in the following table.
Table №2: Smart-Staking Parameters.
The “Smart-Dividends” mechanism, which includes monthly payouts, is activated for staking durations of 2 years or more. When Wallet A stakes coins for 2 years, its initial multiplier is x2. After one year, this multiplier decreases to x1 and continues to decline annually. The same principle applies to the PoD decision-making mechanism, but with different multipliers.
Important!
Participants in Smart-Staking can increase the multiplier (X) for coins already staked at any time by extending the staking duration.
Since the inception of the S&P 500 index in 1957, economic crises have occurred, on average, every 8.5 years. For this reason, access to the PoD (Proof of Decision) mechanism is granted only to participants who have staked their coins for a minimum of 8 years.
A participant making decisions about the project’s development must recognize that, during their staking period, they are highly likely to encounter an economic crisis. This is crucial because macroeconomic shocks often lead to the collapse of many companies. As the famous market saying goes, “Only when the tide goes out do you discover who’s been swimming naked.”
The longer a participant’s funds remain locked in staking, the greater the weight of their tokens in decision-making. Participants who take greater risks have greater influence.
Historically, all economic crises have ultimately been accompanied by increased money supply and rising inflation. This is because governments and central banks frequently implement monetary and fiscal stimuli to stabilize economies. These measures, ranging from lowering interest rates to large-scale quantitative easing programs and direct payments to the population, inject additional money into the economy.
As a result, any crises in different countries of the world will only become a catalyst for the growth of “DeflationCoin”. These events should be considered as opportunities for further development.
Smart-Staking helps participants avoid impulsive decisions caused by short-term emotional reactions. By locking their funds for a specified period, investors lose the ability to sell assets during moments of panic or euphoria. This allows them to stay committed to the project for the long term, significantly increasing their chances of achieving multifold returns (10x, 100x, 1000x). Moreover, stabilization of the behavior of individual participants has a positive effect on the overall success of the project, ensuring sustainable growth and reducing the risk of sudden price drops.
(Details provided in Section 3.5)
The longer an investor holds their assets in staking, the more engaged they become with the project, which contributes to its further promotion. Investors naturally become active participants in spreading information, enhancing the word-of-mouth effect. An important aspect is habit formation: according to neuroscientific research, forming a lasting habit takes anywhere from 18 to 254 days.
Accordingly, long staking periods facilitate deeper integration of the project into participants’ lives, positively influencing its promotion.
Long-term investors become more interested in the development of the project, since their investments are linked to its future success. This strengthens their connection with the project and also stimulates their active participation in key decisions whether it’s voting on project changes, developing marketing strategies, or selecting new growth directions. Such involvement enhances the project’s technical support and strategic planning.
One of the key issues for most exchange-traded assets is their high correlation, particularly during economic crises. Under global market stress, most assets tend to move in the same direction, making capital protection through diversification nearly impossible. With its Smart-Staking, DeflationCoin provides a solution to this problem: the long-term locking of assets minimizes the impact of short-term speculation and reduces correlation with global markets. As a result, DeflationCoin remains stable even during periods of economic instability, when traditional assets decline simultaneously.
The story of Laszlo Hanyecz, who bought two pizzas for 10,000 bitcoinsin 2010 , serves as a vivid example of how impulsive decisions can lead to missing out on huge opportunities. At the time, those bitcoins were worth just $41, but years later, their value could have reached hundreds of millions of dollars.
If Laszlo had used the Smart-Staking mechanism, his bitcoins would have been locked for a long period, preventing premature sale and allowing him to realize multifold profits.
Smart-Staking addresses one of the primary challenges investors face: the impact of emotions on decision-making. This mechanism not only prevents impulsive actions but also creates conditions for long-term sustainable growth, maximizing profits by locking assets and minimizing speculative risks.
For investors focused on stable outcomes, Smart-Staking is a reliable tool for achieving long-term financial goals.
