Announcing Effect Staking Protocol
Staking Mechanism with Stake AGE
Within the world of blockchain and crypto, “staking” refers to the proof of holding tokens of a project to show confidence and support. When one decides to stake their tokens, the incentive to do so is always a type of reward. There are many ways in which staking can be implemented and the type of rewards also vary from project to project.
With Effect.AI, we’ve decided to implement staking in a brand new more technically fair process that includes a measurement feature to track how long your stake has been active. We call this feature Stake AGE. The age of your stake will determine a multiplier on the rewards you will receive. The longer the tokens are staked the more reward they will give. This will incentive users to keep their tokens staked for a longer time. It also rewards early users as compared to new users. To make sure the total supply will not keep growing exponentially and to also give new users a chance to catch up, the Stake AGE is limited. The incentive for staking will be a reward in the form of Network Tokens (NFX).
These Network Tokens will enable decentralized governance for The Effect Network and might eventually pay-out network fees to the people governing the network. You can read more about the Network Token NFX in the following blog post: https://medium.com/p/f02f94890c7e/
Stake AGE
Stake AGE has a number of benefits over regular staking:
- Users will be incentivized to keep their tokens staked for a longer time.
- Early users are rewarded. It will be harder for new users with a lot of tokens to immediately take big rewards.
- The penalty for unstaking will be bigger as users will lose their Stake AGE for their unstaked tokens, making sure users are incentivized to keep their tokens staked.
To limit this exponential growth of claimable tokens, but still keep the incentive to keep your tokens staked, we introduce a limit to the Stake AGE. This limit will make sure that users will still experience all the benefits of Stake AGE, but after a certain period the reward will be linear instead of exponential, making sure the total supply will be limited and new users will still have a chance to catch up.
Staking Example
When implementing the Effect Staking Protocol, there are various variables that determine the rules of the staking. The following is an example of 100 staked EFX tokens with the following variables:
Figure 1 shows that the claimable tokens grow exponentially in the beginning. This is due to Stake AGE. After 200 days the Stake AGE reached the limit and the grow will change from exponential to linear. This effect is even more clearly visible when looking at the delta of claimable NFX/day over time in Figure 2
The full technical paper can be found here:
https://effect.ai/download/effect_staking_protocol.pdf
Effect Dashboard
You will be able to manage staking with the Effect Dashboard. The Effect Dashboard will be released on the same day as the EFX Token Swap (Tuesday April 30th). The Effect Dashboard will have a few key features upon release. You will be able to manage staking with the Effect Dashboard. Here you can see your balance, send EFX tokens, stake or unstake EFX and claim your NFX reward. We aim to release the Effect Dashboard shortly after the Token Swap opens.
