Abstract
Adoption of a power-law based APY formula to strengthen sustainability, adapt to market volatility, and better incentivize long-term stakers.
Summary
We propose an update to the WCT staking APY formula to improve competitiveness and ensure sustainability across market cycles. This includes:
- Replacing the existing linear decay formula with a power-law function that dynamically adapts rewards to stakeweight.
- Increasing the maximum APY to ~30% at current levels, making staking more attractive during volatile conditions.
- Preserving long-term sustainability by maintaining a similar overall reward schedule, while enhancing incentives for long-term stakers.
This change complements the P3 staking redesign (Perpetual Staking & Discrete Durations) by combining a simpler staking experience with a reward structure that is both competitive and resilient.
Background
The current APY model presents challenges:
- Uncompetitive Yield: Many comparable programs offer higher APYs, reducing WCT’s relative attractiveness.
- Flat Incentives: The linear decay formula does not sufficiently reward long-term alignment, nor does it create strong incentives during periods of low staking demand.
- Limited Adaptability: Rewards remain relatively stable regardless of market conditions, limiting flexibility across bull and bear cycles.
Proposal
1. New APY Formula
Replace the current linear function:
\text{APY} = A \cdot \text{TotalStakeWeight} + B
\\
\text{}
\\
A = -6.46 \times 10^{-8}\quad, \quad B = 12.0808
with a power-law function:
\text{APY} = A \cdot \text{TotalStakeWeight} ^ B
\\
\text{}
\\
A = 45,000 \quad, \quad B = -0.5
2. Key Properties
- Market Responsiveness: Higher APYs when stakeweight is low attracting stakers during volatile or uncertain periods.
- Long-Term Alignment: Sustained rewards for those who continue staking over longer durations, even as market conditions shift.
- Sustainability: At higher stakeweights the APY decays more aggressively ensuring a balanced distribution over time.
3. Resilience Across Market Cycles
- In bear markets, the formula increases APYs when stakeweight is low, incentivizing users to hold and support the network.
- In bull markets, as demand rises, the formula naturally adjusts downward, aligning rewards with higher participation.
- This dual responsiveness ensures that rewards remain attractive, sustainable, and long-term aligned regardless of volatility.
Redesign Benefits
- Adaptive Incentives: Dynamically adjusts to staking demand and market conditions.
- Long-Term Sustainability: Preserves the same overall rewards schedule, ensuring the project remains on track for multi-year sustainability.
- Better Alignment: Long-term stakers earn more for their commitment, while short-term participants are encouraged to extend their staking horizon.
Formula Comparison
| Total StakeWeight (stWCT) | BEFORE (APY @ 24M unlock) | AFTER (APY @ 24M unlock) |
|---|---|---|
| 1,250,000 | 24.00% | 80.50% |
| 2,500,000 | 23.84% | 56.92% |
| 5,000,000 | 23.52% | 40.24% |
| 7,500,000 | 23.20% | 32.86% |
| 8,750,000 | 23.04% | 30.42% |
| 10,000,000 | 22.86% | 28.46% |
| 15,000,000 | 22.22% | 23.24% |
| 25,000,000 | 20.93% | 18.00% |
| 50,000,000 | 17.70% | 12.72% |
| 75,000,000 | 14.46% | 10.40% |
| 100,000,000 | 11.24% | 9.00% |
| 125,000,000 | 8.00% | 8.04% |
Implementation Considerations
- Network:
- New Staking Rewards Calculator smart contract can be upgraded with the new formula
- Frontend:
- Update the staking interface to show new APY curves and highlight long-term rewards.
Call to Action
We invite the community to review this proposed formula update and provide feedback. Your input will help ensure we balance competitiveness, sustainability, and long-term alignment in the staking program.
Next Steps
- Network team to finalize formula upgrade path in smart contracts.
- Frontend team to update staking interface with new APY visualizations.
- Treasury to begin applying the updated formula in rewards calculations.
References
- WalletConnect Whitepaper: https://whitepaper.walletconnect.network/
- Staking Dashboard: https://dune.com/walletconnect/wct
- Token Upgrades: Network & Token Upgrades
that is good changing in Good Time. Now start rebuying $WCT. I already staked my all reward. We need to make more secure that system.