Staking
Governance token holders receive utility tokens from our unique staking program.
Last updated
Governance token holders receive utility tokens from our unique staking program.
Last updated
The Deep3 Labs staking program is a critical pillar of our token ecosystem, designed to seamlessly link our governance token (gD3L) with the utility token (uD3L). By staking gD3L tokens, users earn newly minted uD3L tokens, creating a powerful incentive to participate in our decentralized network. This program not only rewards long-term commitment but also stabilizes the utility token’s market value and reinforces overall platform growth. The staking process is governed by transparent, on-chain rules and is subject to ongoing adjustments through DAO oversight.
For our initial implementation, we have selected a linear approach to determine the staking yield. In this model, the yield—the number of uD3L tokens earned per staked gD3L—gradually increases over time. This time-varying yield creates a strong disincentive to unstake, as the longer your tokens remain staked, the more rewards you accumulate.
The linear formula is defined as follows:
Where:
t is the number of seconds since staking rewards began accruing.
Ymin is the initial issuance rate (e.g., 1 uD3L per gD3L per year).
Ymax is the target issuance rate to be reached after a predetermined period.
Tmin is the initial period during which no rewards are earned.
Tmax is the number of seconds until which the yield reaches Ymax.
For time periods between Tmin and Tmax, the yield increases linearly from Ymin to Ymax. After Tmax, the yield remains constant at Ymax. This design ensures that stakers are rewarded more as their staking duration increases, aligning individual incentives with the long-term health of the ecosystem.
In addition to the linear approach, we have developed non-linear staking models—such as a logistic S-curve or an exponential explosive curve—that could be deployed in future iterations. These models would provide a different reward dynamic, potentially offering steeper yield increases or more controlled emission growth under certain market conditions. Importantly, our design ensures that if a new staking contract is adopted, users who upgrade will not lose their accumulated staking maturity, preserving the rewards they’ve earned over time.
The non-linear formula is defined as follows:
Where:
t is the number of seconds since staking began.
Ymin is the initial issuance rate (e.g., 1 uD3L per gD3L per year).
Ymax is the target issuance rate to be reached after a predetermined period.
k is a steepness parameter the controls how quickly the curve transitions from Ymin to Ymax.
We ultimately chose the linear option due to its simplicity. However there are other disadvantages to such an algorithm, such as:
Increased Complexity: The mathematical complexity of non-linear models can make them harder for users to understand and predict, which may lead to uncertainty about expected yields.
Higher Implementation Costs: Non-linear functions can be more demanding in terms of smart contract computations, potentially resulting in higher gas fees and a greater risk of coding errors.
Calibration Risks: If not carefully tuned, non-linear models might introduce abrupt changes in yield rates, which could inadvertently incentivize early unstaking or destabilize the reward system.
That said, several key advantages exist, so it's possible that governance will choose to upgrade the staking contract in the future. These advantages are:
Dynamic Reward Scaling: A non-linear model, such as a logistic S-curve, allows for steeper yield increases during key periods. This means that stakers could see more dramatic rewards as their stake matures, which can be very motivating during early growth phases.
Market Alignment: By adjusting parameters like steepness and midpoints, a non-linear model can more precisely align token emissions with market transaction growth. This can help maintain stable token value and better match incentives with real market conditions.
Enhanced Incentive Flexibility: Non-linear formulas provide flexibility to reward stakers differently based on their maturity, potentially creating tiers of rewards that incentivize long-term commitment more effectively than a linear model.
The primary goals of our staking program are twofold:
Encourage Long-Term Commitment: By increasing yields over time, the program incentivizes holders to keep their gD3L staked, ensuring they benefit from a growing share of the ecosystem’s rewards. This structure fosters a Nash Equilibrium where de-staking is consistently less attractive than remaining staked.
Stabilize uD3L Value: uD3L tokens are minted exclusively through staking, and their issuance is tied directly to the maturity of staked gD3L. The emission rate is designed to mirror market growth, thereby providing a stable medium of exchange within the Deep3 ecosystem. This controlled, transparent issuance helps maintain uD3L’s value even as the network scales.
Our staking parameters, including the yield rates and timing thresholds, are fully adjustable via governance proposals. This means that the community—through the D3L DAO—can fine-tune the staking model in response to market conditions and technological advancements, ensuring that the system remains both competitive and sustainable.
The initial staking contract (v1) utilizes the linear model, which has been optimized for simplicity and gas efficiency on the Ethereum blockchain. However, our platform is designed with flexibility in mind. When the community and our research indicate that a non-linear model would better serve our objectives, the DAO can vote to deploy a new staking contract. Importantly, the upgrade process is designed to preserve each staker’s maturity—ensuring that users do not lose the rewards they have accumulated, even as the underlying formula evolves.
This upgrade path represents our commitment to continuous improvement and community-driven innovation, ensuring that our staking program remains at the forefront of decentralized finance while adapting to new challenges and opportunities.
The Deep3 Labs staking program is more than just a mechanism for earning tokens—it is the engine that aligns incentives across our ecosystem. By rewarding long-term staking and tying uD3L issuance directly to market growth and staking maturity, we create a self-regulating, value-enhancing system. This program not only secures the stability and growth of our utility token but also empowers the community to shape the evolution of our entire platform through decentralized governance.
