Allocation
1. System Overview
All fees will be distributed between LP and the protocol itself in a ratio of 8:2.
The system aims to fairly allocate protocol fees earned during fixed periods based on users' contributions using a proof of stake mechanism. The TWAH-based work-stake model ensures that users who hold assets for longer periods earn proportionally higher rewards.
2. Period Definition (Epoch)
A period, referred to as an epoch, is defined as follows:
Initial Stage: Each 14-day cycle (e.g., February 1st, 00:00 to February 14th, 23:59).
This stage lasts for the first few weeks after system deployment.
Optimization Stage: Once the system operates smoothly, the period is shortened to 7 days.
This stage ensures higher frequency and more accurate work-stake calculations.
3. Work-Stake Calculation Rules
The total work-stake accumulated by a user during each epoch is calculated using the following rules:
User Work-Stake (Wu):
Wu = ∑ (Qu,i × ΔTu,i)
Wu: Total work-stake accumulated by user u
Qu,i: Quantity of asset purchased by user u in the ith transaction
ΔTu,i: Time held for the ith transaction, calculated as the difference between the purchase time (
t_buy) and the epoch end time (t_end), measured in seconds.
Time Held (ΔTu,i):
The time held is computed from the moment of purchase to the end of the current epoch.
4. Fee Distribution Logic
The protocol fees earned during each epoch are distributed based on users' work-stakes as follows:
Total Fee Pool:
During each epoch, the full amount of protocol fees generated will be distributed (e.g., 5,000 USDC).
User Fee Allocation (Ru):
Ru = (Wu / ∑W) × TotalReward
Ru: User u's share of the protocol fee
Wu: Work-stake accumulated by user u during the epoch
∑W: Sum of work-stakes of all users in the epoch
TotalReward: Total protocol fees generated during the epoch.
5. Example Scenarios
The following examples illustrate how the system operates under different scenarios.
Example 1: Initial Stage (14-Day Epoch)
Epoch: February 1st, 00:00 to February 14th, 23:59
Protocol Fee: 5,000 USDC
User A
Quantity Purchased: 1 BTC
Time Held: 14 days (1,209,600 seconds)
Work-Stake Calculation: Wu = 1 BTC × 1,209,600 seconds = 1,209,600 TWAH
User B
Quantity Purchased: 2 BTC
Time Held: 7 days (604,800 seconds)
Work-Stake Calculation: Wu = 2 BTC × 604,800 seconds = 1,209,600 TWAH
Total Work-Stakes (∑W): 1,209,600 + 1,209,600 = 2,419,200 TWAH
Fee Allocation:
User A: (1,209,600 / 2,419,200) × 5,000 ≈ 2,500 USDC
User B: (1,209,600 / 2,419,200) × 5,000 ≈ 2,500 USDC
Example 2: Optimization Stage (7-Day Epoch)
Epoch: February 8th, 00:00 to February 15th, 23:59
Protocol Fee: 5,000 USDC
User A
Quantity Purchased: 1 BTC
Time Held: 7 days (604,800 seconds)
Work-Stake Calculation: Wu = 1 BTC × 604,800 seconds = 604,800 TWAH
User B
Quantity Purchased: 2 BTC
Time Held: 3 days (259,200 seconds)
Work-Stake Calculation: Wu = 2 BTC × 259,200 seconds = 518,400 TWAH
Total Work-Stakes (∑W): 604,800 + 518,400 = 1,123,200 TWAH
Fee Allocation:
User A: (604,800 / 1,123,200) × 5,000 ≈ 2,700.91 USDC
User B: (518,400 / 1,123,200) × 5,000 ≈ 2,299.09 USDC
6. Conclusion
The TWAH-based work-stake system ensures that users who hold assets for longer periods earn proportionally higher rewards during each epoch. This approach promotes fair distribution of protocol fees and incentivizes long-term holding strategies among users.
This document provides a comprehensive guide to implementing the TWAH-based work-stake mechanism, ensuring accuracy, clarity, and alignment with intended functionality. If you need further adjustments or additional details, feel free to request them!
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