Binance has stated that proof-of-work tokens, including Dogecoin DOGE/USD and Litecoin LTC/USD, that have been staked, will not be further lent out.
What Happened: Binance recently launched a staking program for proof-of-work tokens Dogecoin and Litecoin. The company clarified that these deposited tokens will not be further staked or lent out to create additional yields.
Following the initial announcement of the program, numerous investors and social media figures expressed a poor opinion of it. These critics stated that staking cryptocurrencies, such as Dogecoin and Litecoin, is unviable given that their parent blockchains are proof-of-work, and questioned how it was possible.
Binance’s spokesperson clarified the same with CoinDesk, stating, “There is no on-chain staking of LTC and DOGE for network validation since these are non-proof-of-stake tokens. The user funds remain with Binance and we have very strict risk management controls to ensure their security.”
Why It Matters: Given that these tokens exist on proof-of-work consensus mechanisms, holders of these tokens are unable to stake their assets on exchanges or miscellaneously to generate rewards.
The program is stated to have an annualized yield percentage of 10%. This generated fear across some investors due to the comparatively high return on investments.
As turbulent market conditions continue, Binance’s latest initiative is one of many as it continues to undertake new expansionary measures to grow its infrastructure.