Staking and Incentives
Staking Overview and General Attributes
In order to create the optimal alignment between the Network and its participants, a symbiotic relationship must exist between the value the network creates and its token. In a token-based ecosystem, a strong and scalable foundation contains a mechanism whereby token holders who are willing to stake their tokens to the network accrue a share of network transaction value. In Hxro, staking rewards will initially be derived from network transaction fees. As discussed in previous posts, 100% of network economic value (transaction fees generated by the network) will accrue back to staked tokens and to other participants within the Network who are providing critical functions, including:
- Network Treasury;
- Insurance Fund;
- Liquidity Pool Providers, and;
- Volatility (THEO) and Probability (SAMM) Surface Providers
At the outset, staked tokens will receive a pro-rata share of 50% of all network transaction fees. Fees will derive from transactions made within the network on all parimutuel, perpetual and expiring futures, and options markets. As mentioned above, the remaining 50% will be split between network treasury, insurance fund, LP rewards (for THEO and SAMM AMM pools) and THEO and SAMM Surface Provider rewards. Weightings for the remaining 50% have not yet been finalized.
Token Locking, Stake Weight, and Governance
Network staking requires a user to lock their tokens in the Hxro staking contract. Tokens can be locked at intervals between a minimum of 7 days (1 week) and a maximum of 1095 days (156 weeks or 3 years). The Network recognizes that there is a large disparity in the minimum and maximum staking periods. While all stakers will be rewarded for their participation in the staking protocol, the Network will give greater stake weight (via a stake weight multiplier) to wallets that are willing to lock tokens in the network for a longer term.This is for two reasons:
- 1.Long-term staking carries much greater market and network value risk (since tokens are locked and cannot be unlocked) and therefore should be compensated for this risk;
- 2.The Network encourages long-term staking for wallets who are willing to align with and participate in the long-term objectives of the Network with more stake weight.
In exchange for longer term staking commitments, the Network rewards staking in two ways:
Stake Weight Multiplier
First, the staking contract includes a stake weight multiplier. This will apply on a linear scale to all staked tokens that lock for greater than 1 year (1.x multiplier) out to the maximum staking period of 3 years (3x multiplier). An example of the effect of these multipliers can be shown below:
The simple example above shows the effect longer lock periods have on staking, governance weight and rewards. (Please note: This is not financial advice. This table is making assumptions on token price and Reward Pool values strictly for informational purposes. Values may not accurately reflect current or future value).