Many presales advertise unusually high staking rewards. You’ll see numbers like 200%, 500%, or even over 1000% APY. At first, these figures look like a major advantage. They suggest that long-term holders will earn a steady stream of additional tokens, even before the project launches a real product. But in most cases, high APY in presales is more of a warning sign than a benefit.
Read also: How to recognize a crypto presale scam? Full guide
Rewards Created Out of Thin Air
Staking rewards must come from somewhere. In established networks, they usually come from inflation built into the protocol. In presales, there is no active network producing rewards. All the tokens used for “staking APY” are simply minted or allocated from the supply the team controls.
This means the yield isn’t a sign of success or growth. It’s just the team giving out more tokens, which increases the supply and makes each token worth less once trading begins.
Read also: How Does Crypto Staking Work? All You Need to Know
Locked Tokens and Delayed Access
Presale staking often requires locking tokens for long periods. Some projects freeze staked tokens for months or even years. Investors who choose to stake are unable to sell during the first and most important phase of a token’s life – the listing.
When the token launches and the price drops, stakers can’t react. Their extra tokens won’t offset the loss if the market collapses early, and by the time they can unlock their tokens, the price is often far below the presale level.
Read also: Another Presale Crossed Big Funding Milestone? Don’t Be Fooled.
APY Designed to Distract
High APY is often used as a distraction. Instead of addressing concerns about token supply, team allocations, or the roadmap, the project highlights the returns investors could make by locking their tokens. This encourages buyers to focus on rewards rather than on the fundamentals.
Projects rely on this because staking locks up a large portion of the supply. This helps reduce the selling pressure at launch, giving the illusion of a more stable price. But the stability is temporary. Once unlocks begin, the supply increases rapidly and the price almost always reacts.
Read also: Are You Really Getting In Early in Crypto Presales?
A Signal to Slow Down, Not to Buy More
High staking APY can give investors the confidence to commit more money, believing they will accumulate enough extra tokens to cover any future risk. But the numbers lose meaning once the token reaches the market. Inflation, unlocks, and selling pressure quickly outweigh any staking bonus.
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It covers how these schemes work, how they trap investors – and how to spot the red flags. Check it out here!
