Bringing more utility to NFTs and crypto assets can have some unexpected consequences. Users who stake their Yuga assets – NFTs of BAYC, MAYC, and BAKC – can earn ApeCoin yield. However, if they sell the staked NFT, they will also lose the associated ApeCoin if they aren’t careful.
Unstake Your Yuga NFTs Before Selling
Seeing Yuga Labs bring staking functionality to its flagship NFT collections is commendable. Holders of Bored Ape Yacht Club, Mutant Ape Yacht Club, and Bored Ape Kennel Club have the option to stake their non-fungible tokens through dedicated smart contracts. In exchange for doing so, they will earn ApeCoin tokens, which are still considered valuable. Moreover, $APE is crucial in Yuga Labs’ metaverse plans.
Many users engage in staking these NFTs today. There is a good reason to do so, as these collections tend to retain their value well. Moreover, some people expect even higher prices for these non-fungible tokens. Earning some $APE on the side without much effort will always appeal to speculators. Passive income is certainly possible in cryptocurrency, but it also comes with new responsibilities.
As pointed out by OKHotShot, some people will lose their ApeCoin. Not due to smart contract bugs but because they sell their Yuga NFTs without claiming $APE first. Transferring ownership of these NFTs enables the new owner to claim the ApeCoin balance and resell the NFT quickly. The example below shows how one person earned $27,000 in $APE and then repaid their loan to buy the BAYC NFT. It is a healthy profit and a solid NFT to hold.
Here you can see a buyer taking advantage of this
• borrows 82E
• buys BAYC 1633
• claims $27k in ApeCoin
• swaps ApeCoin for 19.9 wETH
• pays back 82E loan pic.twitter.com/22Rl3CouzO
— OKHotshot (@NFTherder) December 6, 2022
What is remarkable is how transparency may be a downfall for this venture. More specifically, the ApeStake website lists all addresses and their current earnings. Matching those NFTs with available listings makes it easy to identify a new “mark” and take their ApeCoin from them. Moreover, the users who stake their NFT are not informed of losing their $APE claim when they sell. That is a big oversight by Yuga Labs, but one that should be easy to fix.
Pay More Attention
One can argue the issue is native to Yuga Labs and how their smart contracts are created. Additionally, the ease with which one can look up Yuga NFTs and their associated staked value makes this “arbitrage” rather accessible. However, users also play a role in these proceedings. If assets are staked – NFTs or otherwise – the logical thing to do is to cash in on all earnings before a sale. It could be pointed out much better, though.
Unfortunately, those who already lost their $APE due to this “arb” will be out of luck. It seems unlikely Yuga Labs will reimburse them as that would inflate the ApeCoin supply even further. However, there needs to be some recourse before things get out of hand further.
The post Yuga NFT Stakers Can Lose All ApeCoin Rewards if They Sell Their BAYC, MAYC, or BAKC appeared first on CryptoMode.
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