# Staking Mechanism

### 1. Overview

When you stake `$WHALES`, you receive **$xWHALES**—a derivative token with two main uses:

* **Trading fee discounts**: Pay lower fees across Whales Market platforms.
* **Collateral**: Use $xWHALES as collateral in OTC trades.

<figure><img src="/files/RkJUl2ICAfbu4q5agFtg" alt=""><figcaption></figcaption></figure>

***

### **2. Staking mechanics & $xWHALES growth**

* The staking contract holds both `$WHALES` and `$xWHALES`.
* When you stake `$WHALES`, you receive `$xWHALES`. Holding `$xWHALES` increases your share of protocol-generated rewards over time.
* This gradual payout prevents large one-time selling (dumping) that could destabilize token value.

***

### **3. Withdrawal & liquidity**

* You may withdraw and convert your `$xWHALES` back into `$WHALES` at any time.
* `$xWHALES` is tradable, though not officially listed on Solana DEXs yet. Its conversion to `$WHALES` is only guaranteed through the staking mechanism.
* Rewards are paid in `$WHALES` but purchased on the open market, which means staking doesn’t inflate supply. `$WHALES` token distribution from incentive emissions follows a separate 4-year vesting schedule.

***

### FAQ

<details>

<summary>What is staking $WHALES?</summary>

Staking $WHALES is the process of locking up your $WHALES tokens to earn rewards generated from the protocol's revenue.

</details>

<details>

<summary>What is the reward token and what are its benefits?</summary>

When you stake $WHALES, you receive the derivative token $xWHALES. This token has two main uses:

* Trading Fee Discounts: Pay lower fees across Whales Market platforms.
* Collateral: Use $xWHALES as collateral in OTC trades.

</details>

<details>

<summary>Can I withdraw or convert my xWHALES at any time?</summary>

Yes, you can withdraw and convert your $xWHALES back into $WHALES at any time.

</details>


---

# Agent Instructions: Querying This Documentation

If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://docs.whales.market/staking-mechanism.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.