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This community-inspired initiative is designed to strengthen the Bitocracy governance model, incentivizing long-term thinking and commitment to build a strong and educated voter base that will coordinate the future of DeFi on Bitcoin. Responsible, fair and smart governance decisions do not come easily; the Bitocracy model is tailored to create a decentralized cohort of diverse individuals, entities and groups who will all consider and vote in the direction that favors the Sovryn Protocol first and foremost.
How is this achieved? By incentivising decision making that supports the endurance of the Sovryn Protocol and ecosystem. Until now, stakers received voting power and a share of fees collected by the protocol based on that voting power. Therefore, stakers are incentivized to stake more SOV for longer to increase their voting power. This model, while efficient on paper, only works if there are meaningful rewards in practice - incentivization must be lucrative in comparison to other income opportunities. SIP-24 is the answer, and future, of staking incentivization. Starting on August 27th, stakers will receive an additional return on their stake in the form of liquid SOV, allowing earnings of up to 29.75%APR.
Ok, ok, here’s the juicy medium-rare deliciousness, the seasoning to your stake. Stakers can earn anywhere between 3.57%% and 29.75%APR depending on the length of the stake, up to the maximum length of 3 years. Staking for 3 years would see an initial return of 29.75%, which would decrease with the length of the stake to return an average of 20.84% over the whole staking period.
SIP 24 specified that the minimum APR would be set to 3.66% and the average APR over a 3-year term would be 21%. These are the APRs that have been set on the smart contract. However, the actual minimum and average APR given by the smart contract differs from that specified in the SIP because the figures given in the SIP did not take into account the mathematical rounding used by the smart contract. These are minute differences, causing the minimum APR to decrease by 0.07% and the average return over 3-years to decrease by 0.16%, but it is important that these deviations from the original SIP be communicated clearly.
To calculate the actual average APRs provided by the smart contract, use the calculator below.
So you know what SIP 24 is, you know how much SOV you could earn from staking, and you know you want to stake before the 24th August to be included in the first ever liquid SOV staking payout… but how do you join the party?
To be included in this program’s payouts, one needs to stake liquid SOV in the Sovryn Bitocracy voluntarily, meaning vesting SOV does not earn from the SIP 24 program. By staking, you will receive voting power to influence the direction of the protocol, a share of fees generated by the protocol based on your voting power, and liquid SOV from this initiative based on the length of your stake.
There are now a variety of methods to acquire liquid SOV. There are guides to each method on the Wiki here.
Voluntary, fully vested Stakers are eligible to receive liquid SOV as part of the SIP-24 program. You may be wondering what exactly voluntary and fully vested stakers are so let’s clear up the definitions:
New and existing stakes are eligible.
The implementation will occur on 24th August, meaning the first payments of SOV will begin on Friday 27th August 2021. These payments will continue to be paid once every two weeks on Fridays (every staking period). This SOV will be liquid, meaning it can be sold or used on the platform by providing to the AMM, yield-farming, creating a new stake or adding to existing stakes. Because of this, the SOV received from these payments can be re-staked to compound the gains from SIP 24 payments. Stakers also have the option to extend their stake every 2 weeks. If you were to stake for 3 years and extend your stake every 2 weeks, you could remain on 29.75%APR indefinitely (until the program ends)!
It is important to note that whilst the program may end after 3 months, the payment of SOV earned by participating in the program would continue. For example, if you had staked for 3 years but the program ended in 3 months, you would still receive the deserved payments for the remaining 2 years and 9 months of your stake. the program ending simply means that new stakes and extensions of existing stakes after that point would not earn additional SOV.
The first payment of SIP-24 SOV will begin on Friday 27th August. Staking before the 24th will ensure your eligibility for the first of many payments. Secure your place in the first liquid SOV payouts for stakers and add that spicy seasoning to your stake. Remember, the longer the stake, the higher the APR.