Hodl Finance DAO - Staking Treasury Lifecycle
The staking mechanism in HFD is designed for dedicated Hodlers who are invested in the ecosystem's success. To reward their commitment, greater returns are provided for those staking their tokens over extended periods.
Various staking options grant full control, including flexible staking and lock-up durations from one to five years. The staker receives higher rewards for longer staking periods. Staking rewards' sustainability is maintained through a logarithmically decreasing distribution each year. The staking system encourages long-term staking, as rewards are determined by the lock-up period length. Moreover, staking is essential for securing voting power within the DAO.
Daily 0.05% of all tokens within the Staking Treasury are distributed amongst the stakers.
Individuals can stake their tokens in their preferred time slots and through two different methods:
- Single Side Staking (SSS) -> $HFD
- Liquidity Pool Staking (LPS) -> $ETH/$HFD
If you decide to participate in SSS, your $HFD tokens will be swapped for $eHFD, which represents your locked $HFD. This allows you to earn staking rewards and grants you voting rights within the HFD ecosystem. We prioritize dedicated individuals to vote, hence the requirement of staking. Furthermore, any staking rewards will also be disbursed in $eHFD.
70% of the daily reward pool is allocated to stakers in the SSS pool, factoring in their proportional holdings and lock-up duration. The SSS option enables $HFD Hodlers to engage in the staking process by directly locking their tokens in the staking contract via the dashboard. When locking in the SSS pool users will receive $eHFD in return.
Participants determine the lock-up period, and rewards are calculated based on the staking weight system below:
- Flexible staking = weight 1 for each $HFD
- 1-year lock = weight 1.5 for each $HFD
- 2-year lock = weight 2 for each $HFD
- 3-year lock = weight 2.5 for each $HFD
- 4-year lock = weight 3.5 for each $HFD
- 5-year lock = weight 5 for each $HFD
30% of the total rewards allocated from the staking contract is allocated to the LPS pool. The LPS pool is created to garner more liquidity for the $ETH/$HFD pair in a decentralized way. LPS staking will always be flexible since there are no options for locking.
You can claim your staking rewards at any time, but they will always be subject to a one-year lock. Every time you make a claim, $eHFD will be transferred to your wallet, resulting in an increase in your token balance and consequently, your voting power in HFD.
Long-term staking is recommended for those seeking higher APRs as a reward for their commitment. However, this commitment carries the risk of immobilizing your tokens and reducing market flexibility. As a Market Making and Investment DAO, we understand the significance of staying liquid, which is why the Force Unstake feature was developed.
If you wish to capitalize on rising prices and avoid missing out on profits, you can activate the Force Unstake feature. By paying a fee, your tokens will be instantly liberated and the paid fee will be distributed back to the DAO's Bonding Treasury. The longer your stake duration, the higher the fees due to increased discounts in the Bonding Treasury and elevated APRs from staking. The fees are as followed:
- 1-year lock = 50% fee
- 2-year lock = 57% fee
- 3-year lock = 64% fee
- 4-year lock = 70% fee
- 5-year lock = 76% fee
Staking rewards are subject to a one-year lock-up period before being distributed to the staker's wallet. Nevertheless, similar to the Force Unstake feature, token Hodlers can opt to claim rewards earlier by utilizing the Force Unlock feature. Fees paid for this feature will be contributed to the DAO's Bonding Treasury. The fee calculation for the Force Unlock feature can be illustrated with the following examples:
Example 1: If a token Hodler initiates a Forced Claim after 12 days, he/she will receive 12/365 of the rewards and the remaining will be donated to the Bonding Contract.
Example 2: If a token Hodler initiates a Forced Claim after 165 days, he/she will receive 165/365 of the rewards and the remaining will be donated to the Bonding Contract.