New Staking Pools
TL;DR - Yield farmers' assets are unlocked, but staking for longer periods of time results in higher yield. Everyone's earnings are tied to collected protocol fees.
Last updated
TL;DR - Yield farmers' assets are unlocked, but staking for longer periods of time results in higher yield. Everyone's earnings are tied to collected protocol fees.
Last updated
The ElasticSwap LP (ELP) Staking Pools work like a hybrid between a -ve and -x staking contract, with the added benefit of also growing protocol-owned liquidity. They are designed to allow stakers to accrue $TIC, the native token of the ElasticSwap protocol, every second, while receiving rewards in the form of an $ELP position as the platform accrues fees.
When eligible tokens are staked in the Staking Pools, they are not locked. Rewards start to accrue instantly, but in an unrealized way, meaning stakers are entitled to a reward distribution as fees are collected by the treasury. Those staking rewards come in the form of $TIC-$USDC.e $ELP tokens. ElasticSwap charges a 50 bps fee as swaps occur (25 bps to LPs, 20bps to public stakers, and 5 bps for protocol operations). The public staker fees (the 20 bps due to the stakers) are converted by the treasury into $USDC.e, and then deposited into the Staking Pools contract, creating $ELP which represents a liquidity position in the $TIC-USDC.e pool. Stakers can claim their $ELP tokens and then restake them, or they can exit the $ELP position for the underlying $TIC and $USDC.e tokens.
This yield farming approach is designed to align the incentives of staking liquidity providers and the protocol itself. By tying staking reward distribution to fee generation, we ensure that the community is rewarded for promoting the platform, double the rewards the staker receives, and eliminate the incentive to sell their rewards to enter a $TIC/$USDC.e LP position. Stakers can also choose to take profit in the form of $USDC.e without creating $TIC sell pressure.
With the -ve model, stakers are rewarded based on how long they are willing to lock their tokens. This prevents stakers from withdrawing and liquidating their original deposit in an emergency situation. It also encourages the forming of cartels who gather the token to be staked, stake it receiving the veToken in return, and then wrap that veToken to make it liquid again, defeating the entire purpose of the locking period.
Some newer iterations of the -ve token model include losing all -ve rewards if you unstake early, applying boosted APY to certain staking farms, and providing additional rewards the more -ve tokens you accumulate. Innovation around locking up tokens will likely continue, as projects look for creative ways to keep people locked into their ecosystem.
APR is the wrong metric to look at, but it will be effectively double what it was in the previous contracts. Instead, unrealized and claimable rewards should be considered. Unrealized rewards are $TIC waiting for protocol fees to be generated. These fees are realized when an LP in any ElasticSwap exchange exits their position. The treasury regularly pairs collected fees with unrealized $TIC, minting new claimable $ELP rewards.
There is no penalty for exiting the staking pool before the protocol generates fees, however, the staker will forfeit any unrealized rewards. Those rewards are then transferred to the DAO to be used as $TIC/$USDC.e LP in the future, guaranteeing protocol-owned liquidity, which benefits all token holders and the protocol itself.
The duration between when a staker stakes their tokens and can withdraw their rewards is dependent on how quickly the protocol is generating fees. The more fees ElasticSwap generates, the faster a staker will be able to claim their rewards. Rewarded $ELP will be claimable in a pro-rata fashion by stakers who had unclaimed reward balance at the time the fees were deposited.
A staker has 40 $TIC of unrealized rewards, and there are 4000 $TIC total unrealized rewards in the staking contract. The staker would be able to claim 40/4000 (or 1%) of any $ELP rewards generated at this exact moment.
Unrealized $TIC rewards are accrued every second in the staking contracts. Stakers begin to earn unrealized rewards instantly as soon as they deposit eligible tokens. If they deposit more, the rewards accrued per second increases. The total rewards generated by all staking contracts can be found here.
Claimable rewards are generated when the treasury deposits USDC.e into the staking pools contract. Due to the complexity of on-chain calculations, the treasury also generates a merkle tree, allowing for these rewards to be claimed. The full trees will be available to be inspected by the public on IPFS at any time. As it is updated, a new tree will be published and a new merkle root will be added to the staking pools contract. This hybrid solution will allow full transparency while also ensuring that gas costs remain reasonable.
At time t=0, we have 10 stakers who have 10 unclaimed $TIC each. For the sake of this example, they are all of equal stake size.
At time t=1, we generate 1000 $USDC in fees and the are deposited into the staking pools contract. Assuming 1 $TIC = 10 $USDC, 100 $TIC are minted and subtracted from the unrealized balances of each staker. $ELP is minted, the merkle tree is updated, and each staker is now able to claim $ELP worth 10 TIC and 100 USDC.
At time t=2, a new whale staker comes along, and doubles the amount of tokens staked.
At time t=3, whale staker 1 now has as much unclaimed $TIC as all of the other stakers combined, but is not able to claim any of the $ELP minted at t=1.
Step 1) Convert all fees on all chains to USDC to get a total amount of USDC.
Step 2) Look at the total unrealized $TIC across all chains to get a percentage of USDC due to each chain.
Step 3) Bridge the correct amount of USDC to the correct chains.
Step 4) Deposit USDC into the staking contracts, minting ELP.
Step 5) Everyone can withdraw a percentage of the ELP created based on their percentage of the unrealized TIC.
