Staking Rewards

veSPA holders or stakers get SPA token rewards in proportion to their veSPA balance. Users have an option to stake their SPA rewards directly into the staking protocol instead of claiming, thereby compounding their veSPA balances.

veSPA holders or stakers will receive 3 kinds of rewards. All the three kinds of rewards are distributed with the same mechanism and in the form of SPA tokens.

  1. 100% of the USDs Fees generated by USDs protocol

  2. 25% of yield generated by USDs deployed collateral

  3. Incentives sponsored by Treasury to bootstrap the Staking protocol - This emission has been set to 0 through governance

1. USDs Fee Rewards

The USDs protocol fees collected will be distributed across all veSPA holders on a pro rata basis. With the fees collected by the USDs protocol the Staking protocol will purchase SPA tokens from the market and distribute the SPA tokens amongst all veSPA holders.

2. USDs Yield Share Rewards

50% of the yield generated by the USDs protocol will be swapped for SPA tokens. 50% of the SPA bought back will be burnt and remaining 50% will be distributed to veSPA holder. So the fraction of yield that is shared with the veSPA holders is 25% (50% x 50%). These parameters can be changed by the community through governance proposal.

3. Incentive Rewards

A separate SPA reward budget was set aside from Treasury to bootstrap staking protocol. Incentive rewards for staking was initially set at a fixed daily distribution number of 54.794 K SPA. This number was later changed through governance and set to 0 to reduce SPA inflation.

The yield and fee income is swapped for SPA tokens before distribution. The SPA that is bought back from the open markets using 50% of the auto-yield and 100% of the fees is stored in : 0xA61a0719e9714c95345e89a2f1C83Fae6f5745ef (Arbitrum One)

Distribution of Staking Rewards

Staking reward distribution happens on a weekly basis. New weeks start on Thursdays at 00:00:00 UTC. Rewards are distributed at the end of each week.

‘Stake-Reward-Claim-Repeat’ is a four-step cycle:

  1. Stake SPA - In Week 1, you stake SPA and obtain veSPA. Reward accumulation starts from Week 2.

  2. Reward distribution for Week 2 occurs at the end of the Week 2

    • Total staking reward available for distribution in Week 2 is based on USDs fee income that was collected, the yield that was generated by the USDs protocol and the daily distribution rate of the SPA staking incentives for Week 2

    • User’s share of staking rewards for Week 2 is calculated based on their veSPA balance at the starting of Week 2 relative to the total veSPA supply at the starting of week 2

  3. Rewards for Week 2 can be claimed by users from Week 3 onwards. Users can also stake their SPA rewards and increase their veSPA balance and future rewards.

  4. Step 2 and 3 repeat every week till expiry

    • Reward distribution for Week X occurs at the end of the Week X

    • Rewards for Week X can be claimed by users from Week X+1 onwards.

Calculation of Staking Rewards

Total SPA Rewards for the week = Staking Incentive Rewards + USDs Fees Rewards + USDs Yield Share Rewards

where Staking Incentive Rewards = Daily Incentive Rewards*7

USDs Fees Rewards = USDs Fee earned*USDs Price / SPA price

USDs Yield Share Rewards = 50%*USDs yield earned in the week * USDs price/ SPA price

The above formula is an assumption, actual SPA rewards from USDs fees and yield would differ based on the asset prices in the open market

Total SPA Rewards for the week = R

Total veSPA balance of the protocol at the start of the week = V

User’s veSPA balance at the start of the week = v

User’s SPA staked at the start of the week = s

User's staking duration in years = d = v/s

Weekly Reward Earned by a user = r = (R/V)*v

Staking APR

= (Weekly Reward Earned by a user /SPA staked by user)*(365/7)*100%

= (r/s)*(365/7)*100%

= (R/V)*(v/s)*(365/7)*100%

= (R/V)*d *(365/7)*100%

Staking APY

= [{1+ (Weekly Reward Earned by a user /SPA staked by user)}^(365/7) -1] * 100%

= [{1+ (r/s)}^(365/7) -1] * 100%

= [{1+ (R/V)*(v/s)}^(365/7) -1] * 100%

= [{1+ (R/V)*d}^(365/7) -1] * 100%

Calculation of APY assumes that the weekly rewards are re-staked in the protocol

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