Rewards

Understand how staking rewards work across DI Network, including calculation methods, distribution mechanisms, and optimization strategies.

Reward Sources

Protocol Fee Revenue

Primary Source: 60% of all protocol fees distributed to stakers

• Trading fees from DSwap and DPerp

• Bridge fees from cross-chain transactions

• Liquidation fees from DUSD positions

• Interest payments from borrowers

Fee Distribution:

Total Protocol Fees: 100%
├── Stakers: 60%
├── Treasury: 25%
├── Insurance Fund: 10%
└── Development: 5%

Liquidation Bonuses (DUSD Staking)

Mechanism: Stability pool absorbs bad debt, receives collateral

• Liquidation premium: 5-8% bonus on collateral

• Variable based on liquidation frequency

• Higher during volatile market conditions

Example Liquidation Reward:

Pool Size: 1,000,000 DUSD
Your Stake: 10,000 DUSD (1%)
Liquidation: 50,000 DUSD debt, 55,000 DUSD collateral value
Your Share: 550 DUSD collateral (1% of 55,000)
Your Cost: 500 DUSD absorbed debt
Net Gain: 50 DUSD (10% return on absorbed debt)

Governance Participation Bonuses

Voting Rewards: Additional APY for active governance participation

• 80%+ participation: +10% APY bonus

• 50-80% participation: +5% APY bonus

• <50% participation: No bonus

Proposal Rewards:

• Successful proposals: 1,000 DI bonus

• Proposals reaching quorum: 500 DI bonus

• Community recognition and influence

Reward Calculation

Base APY Calculation

function calculateBaseAPY() public view returns (uint256) {
    uint256 totalFees = getProtocolFees(); // Last 30 days
    uint256 stakerShare = totalFees * 60 / 100; // 60% to stakers
    uint256 totalStaked = getTotalStakedTokens();
    
    // Annualized APY
    return (stakerShare * 365 * 100) / (30 * totalStaked);
}

Lock Period Multipliers

Applied to base APY based on commitment:

Base APY: 8%
Lock Multipliers:
- No lock: 1.0x = 8%
- 3 months: 1.2x = 9.6%
- 6 months: 1.5x = 12%
- 12 months: 2.0x = 16%
- 24 months: 2.5x = 20%

Governance Multipliers

Additional multipliers for active participation:

Voting Participation Multiplier:
- 80%+ votes: 1.1x
- 50-80% votes: 1.05x
- <50% votes: 1.0x

Delegation Multiplier:
- Active delegate: 1.05x
- Delegating to active participant: 1.02x

Final APY Formula

Final APY = Base APY × Lock Multiplier × Governance Multiplier × Protocol Performance

Example:
Base APY: 8%
Lock Multiplier: 2.0x (12 months)
Governance Multiplier: 1.1x (active voter)
Protocol Performance: 1.2x (high fee revenue)
Final APY: 8% × 2.0 × 1.1 × 1.2 = 21.12%

Reward Distribution

Daily Accrual

Rewards accrue continuously and compound daily:

function calculateDailyReward(userStake, annualAPY) {
    const dailyRate = annualAPY / 365;
    return userStake * dailyRate;
}

// Example:
// Stake: 10,000 DI
// APY: 20%
// Daily Reward: 10,000 × 0.20 / 365 = 5.48 DI

Compound Interest

Auto-compounding maximizes returns:

Without Compounding (Simple Interest):
Year 1: 10,000 + (10,000 × 0.20) = 12,000 DI
Year 2: 12,000 + (10,000 × 0.20) = 14,000 DI

With Compounding:
Year 1: 10,000 × 1.20 = 12,000 DI
Year 2: 12,000 × 1.20 = 14,400 DI
Difference: 400 DI extra (2.86% more)

Reward Claiming Options

Auto-Compound (Recommended):

• Rewards automatically restaked

• Maximizes compound growth

• No gas costs for reinvestment

• Higher long-term returns

Manual Claiming:

• Claim rewards to wallet

• Flexibility to use elsewhere

• Requires gas for each claim

• Lower compound growth

Hybrid Approach:

• Claim portion for expenses

• Compound remainder for growth

• Balance liquidity and growth

Reward Optimization

Timing Strategies

Lock Period Optimization:

Scenario Analysis:
Market Bullish: Shorter locks (3-6 months) for flexibility
Market Bearish: Longer locks (12-24 months) for higher yields
Market Uncertain: Ladder approach with multiple lock periods

Claim Timing:

• Claim during low gas periods

• Consider tax implications

• Time claims with other DeFi activities

• Batch operations to save gas

Governance Participation

Maximize Voting Rewards:

1. Vote on every proposal (aim for 100% participation)

2. Research proposals thoroughly

3. Engage in community discussions

4. Consider becoming a delegate

Proposal Strategy:

• Create valuable proposals for 1,000 DI bonus

• Focus on protocol improvements

• Build community support

• Follow governance processes

Multi-Asset Strategy

Diversified Staking:

Portfolio Allocation:
- DI Governance Staking: 40% (stable, high governance power)
- DUSD Stability Pool: 35% (liquidation bonuses, lower risk)
- LP Token Staking: 25% (highest yields, higher risk)

Reward Tracking

Performance Metrics

Monitor key performance indicators:

Staking Performance Dashboard:
┌─────────────────────────────────────┐
│ Total Staked Value: $25,000         │
│ Current APY: 18.5%                  │
│ Daily Rewards: $12.67               │
│ Monthly Rewards: $380               │
│ Total Earned (YTD): $3,420          │
│ Effective APY: 19.2% (w/ compounds) │
│ Governance Participation: 92%       │
└─────────────────────────────────────┘

Historical Analysis

Track performance over time:

const calculateHistoricalAPY = (rewards, timeframe) => {
    const totalReturn = rewards.reduce((sum, reward) => sum + reward.amount, 0);
    const initialStake = getInitialStake();
    const days = timeframe;
    
    return ((totalReturn / initialStake) * (365 / days)) * 100;
};

Benchmark Comparison

Compare against alternatives:

Investment Type	APY Range	Risk Level	Liquidity
DI Staking	15-25%	Medium	Locked
DUSD Staking	8-26%	Low-Medium	Flexible
Traditional Savings	2-3%	Very Low	High
Government Bonds	3-5%	Low	Medium
Stock Market	7-10%	High	High
Other DeFi	5-30%	High	Varies

Tax Implications

Reward Taxation

General Principles (consult tax professional):

• Staking rewards typically taxed as ordinary income

• Taxable at fair market value when earned

• Different rules in different jurisdictions

Record Keeping

Essential records for tax compliance:

Tax Record Template:
Date: 2024-01-15
Reward Amount: 5.48 DI
USD Value: $27.40 (at $5.00/DI)
Staking Pool: DI Governance
Transaction Hash: 0x123...
Cumulative Rewards: 156.8 DI

Tax Optimization

Strategies to consider:

• Time reward claims for optimal tax years

• Consider tax-loss harvesting

• Understand local staking tax rules

• Use crypto tax software for tracking

Advanced Reward Strategies

Yield Farming Rotation

Strategy: Move between highest-yielding opportunities

Decision Framework:
1. Monitor APY changes across pools
2. Calculate switching costs (gas, penalties)
3. Estimate net benefit of moving
4. Execute if benefit > 2% APY improvement

Delegation Optimization

For Large Holders:

• Become active delegate to earn delegation fees

• Build reputation through consistent participation

• Attract delegators through transparency

• Earn 5% of delegator rewards

For Smaller Holders:

• Delegate to active, aligned participants

• Earn portion of their governance bonuses

• Maintain some direct voting power

• Monitor delegate performance

Cross-Chain Arbitrage

Opportunity: Different yields across chains

Example Arbitrage:
Ethereum DI Staking: 15% APY
Polygon DI Staking: 22% APY
Bridge Cost: 0.5%
Net Benefit: 6.5% APY improvement

Risk-Adjusted Returns

Sharpe Ratio Calculation

Measure risk-adjusted performance:

Sharpe Ratio = (Return - Risk-Free Rate) / Standard Deviation

Example:
Staking Return: 20%
Risk-Free Rate: 3%
Volatility: 25%
Sharpe Ratio: (20% - 3%) / 25% = 0.68

Risk Factors

Smart Contract Risk:

• Protocol bugs or exploits

• Mitigation: Start small, diversify

Market Risk:

• Token price volatility

• Mitigation: Dollar-cost averaging

Liquidity Risk:

• Lock periods prevent exits

• Mitigation: Ladder lock periods

Regulatory Risk:

• Changing regulations

• Mitigation: Stay informed, diversify

Future Reward Enhancements

Planned Improvements

Liquid Staking:

• Tradeable staking derivatives

• Maintain liquidity while staking

• Unlock additional yield opportunities

Cross-Chain Rewards:

• Stake from multiple chains

• Aggregate rewards across networks

• Simplified management interface

Enhanced Governance:

• More sophisticated voting mechanisms

• Quadratic voting for better representation

• Specialized governance committees

Staying Updated

• Follow protocol development updates

• Participate in governance discussions

• Join community calls and AMAs

• Monitor reward mechanism changes

Troubleshooting Rewards

Common Issues

Rewards Not Accruing:

• Verify staking transaction confirmed

• Check if you're in correct pool

• Ensure lock period hasn't expired

Lower Than Expected APY:

• APY is variable based on protocol performance

• Check governance participation rate

• Verify lock period multipliers applied

Cannot Claim Rewards:

• Ensure sufficient ETH for gas

• Check minimum claim thresholds

• Verify rewards have vested

Getting Help

• Documentation: Comprehensive reward guides

• Discord: Real-time community support

• Support Tickets: Technical reward issues

• Community Forums: Strategy discussions