Staking Mechanism

Users who hold BTCH can stake their BTCH to get rewards. Newly staked BTCH will start to get rewards from the Reward Pool from the next epoch. The rewards are claimable after each epoch. Stakers will get compounded rewards automatically.

Overview

Staking is the profit distribution mechanism of the Hodl DAO. It will provide extra yield for BTCH stakers, besides the 365-day moving average BTC exposure. The best thing for BTCH participants to do will likely be to just stake and earn passively. For a rational player participating in the Hodl DAO, Staking will be the optimal choice for you in the long run.

There is no time lock when staking. You can withdraw the staked BTCH anytime.

Why staking

1. Staking is the profit-sharing procedure in the Hodl DAO.

Stakers put their BTCH tokens in the staking pool to earn passive rewards. The rewards come from the profit from bonding, as well as in the process of rebalancing. The staking rewards are distributed at the Reward Rate, which is a parameter controlled by the DAO governance.

2. Staking is a passive, long-term strategy.

When you stake BTCH to earn rewards, the amount of the BTCH tokens staked is increasing at a compounded rate. This procedure will automatically lower your unit cost, at an increasing speed. The longer time you staked, the greater scale your BTCH cost will be decreased. This will give you some additional yield, besides the 365-day moving average BTC exposure.

Staking Rewards

There're two ways user can get rewards:

• Rebalancing

After Rebalancing, rewards will be generated and sent to Staking Reward Pool. Please refer to Rebalance in the Protocol Description section for detailed information.

• Bond Sale

When Bonds are sold, rewards will be generated and sent to Staking Reward Pool. Please refer to Bond in the Protocol Description section for detailed information.

Rewards to stakers are put into the Staking Reward Pool and vested by Epoch. At the end of epoch, rewards can be claimed by stakers.

Stakers get the rewards by using the formula:

Staker Reward = User Staked BTCH * Stake Return Rate.

Stakers get a predefined return (Stake Return Rate) based on the number of BTCH they stake, as long as there's enough rewards in the Staking Reward Pool.

Stake Return Rate

The Stake Return Rate determines how many returns stakers will get from the reward pool. At the end of each epoch, a number of BTCH (= all staking BTCH * Stake Return Rate) will be deducted from the reward pool for BTCH stakers to claim. However, even if the return number is set, if there are not enough rewards in the pool, the staker can not get the full rewards. There is a Reward Distribute Strategy contract used to control the Stake Return Rate.

The current strategy is:

When the runway time (= BTCH left in Reward Pool / last epoch issued Reward) is less than 15 days, the Stake Return Rate will be divided by 2.

The Stake Return Rate could also be adjusted by the Dao.

However, an adjustment of the Stake Return Rate should be longer than 45 epochs (Stake Return Adjustment Interval).

Unstaking

When the total unstaked BTCH does not reach the Un-Stake Limit, users can un-stake their staked BTCH.

When the user wants to un-stake their staked BTCH, the number of unstaked BTCH can only be claimed after the start of the next Epoch. They are still in the stake status in the current Epoch.