# 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="https://640655427-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FIZ0DIaAx9IWoM4I1YGdV%2Fuploads%2FmYvsCAQJagJov0uSx9S8%2Fimage.png?alt=media&#x26;token=5ad77c32-f1a9-40ae-9d29-1a35ae43de2f" alt=""><figcaption></figcaption></figure>

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### **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.

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### **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.

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### 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>