Staking Rewards Explained

Staking PRIV tokens allows you to earn protocol fee distributions by participating in quality assurance. PRIVStakingV2 introduces the ve-PRIV model with five lock tiers, weighted reward distribution, and auto-compounding. This guide explains how rewards work, where they come from, and how to maximize your earnings.

How Staking Works

When you stake PRIV tokens:

1. Choose a lock tier (Flex, Bronze, Silver, Gold, or Diamond)
2. Lock tokens in the PRIVStakingV2 contract
3. Earn rewards proportional to your effective stake (amount multiplied by tier multiplier)
4. Claim anytime without unstaking, or auto-compound for a 15% bonus
5. Unstake after your lock period expires

Your Stake: 1,000 PRIV (Gold tier, 5.0x)
Effective Stake: 5,000 PRIV
Total Effective Staked: 50,000 PRIV
Your Share: 10%
                    ↓
Daily Rewards to Pool: 100 PRIV
Your Daily Reward: 10 PRIV

Where Rewards Come From

This is the key innovation: PRIV staking rewards come from real protocol revenue, not inflation.

The 40/35/25 Fee Split

Every marketplace transaction generates a 3% fee:

Revenue Sources

Staking rewards flow from:

Lock Tiers (ve-PRIV)

PRIVStakingV2 uses five lock tiers. Longer lock commitments earn a higher reward multiplier, meaning you receive a proportionally larger share of the reward pool.

Tier Upgrades

You can upgrade to a higher tier at any time to increase your reward multiplier:

• Upgrades allowed: Flex to Bronze, Bronze to Silver, etc.
• Downgrades blocked: You cannot move to a lower tier while you have an active position.
• Lock timer resets: Upgrading restarts your lock period based on the new tier's duration.
• Effective stake recalculated: Your entire staked amount is recalculated with the new multiplier.

Reward Calculation

The Formula

Rewards are distributed proportionally to each staker's effective stake (amount multiplied by tier multiplier):

rewardPerToken = rewardPerTokenStored +
                 (timeElapsed × rewardRate × PRECISION / totalEffectiveStake)

yourReward = (yourEffectiveStake × (rewardPerToken - yourLastRewardPerToken) / PRECISION)
             + pendingRewards

In Plain English

Your rewards depend on:

1. How much you stake - More tokens = more rewards
2. Which tier you choose - Higher tier = larger effective stake = bigger share of rewards
3. How long you stake - Rewards accumulate over time
4. Total effective stake by everyone - More total effective staked = smaller individual share
5. Protocol activity - More marketplace volume = more fees = more rewards

Auto-Compound

PRIVStakingV2 offers a built-in auto-compound function that re-stakes your pending rewards with a 15% bonus.

Pending rewards: 100 PRIV
Auto-compound bonus (15%): 15 PRIV
Total added to your stake: 115 PRIV

Key details:

• The 15% bonus comes from the rewards pool, not from minting new tokens
• Your lock timer resets when you auto-compound
• The compounded amount inherits your current tier's multiplier
• Auto-compounding is more capital-efficient than claiming and manually re-staking

APY Breakdown

What Determines APY?

APY is not fixed - it depends on protocol activity and your chosen tier:

Target APY Schedule

PRIV follows a quarterly burndown for sustainability:

Higher tiers earn proportionally more. For example, if Flex APY is 5%, Diamond APY would be approximately 40% (8x multiplier) at the same staking conditions.

Real APY Calculation

Example at $10M annual marketplace volume:

Annual marketplace volume:       $10,000,000
Protocol fees (3%):              $300,000
Staker share (35%):              $105,000

If total effective staked = $3.5M worth of PRIV:

Flex (1.0x) APY:    ~3.0%
Bronze (2.0x) APY:  ~6.0%
Silver (3.5x) APY:  ~10.5%
Gold (5.0x) APY:    ~15.0%
Diamond (8.0x) APY: ~24.0%

Staking Mechanics

Minimum Requirements

Step-by-Step: How to Stake

1. Connect Wallet

Navigate to the PRIV dashboard and connect your wallet (MetaMask, WalletConnect, etc.)

2. Approve PRIV

Allow the staking contract to access your tokens:

await privToken.approve(stakingAddress, amount);

3. Choose Tier and Stake

Select your lock tier and amount:

// Tier indexes: 0=Flex, 1=Bronze, 2=Silver, 3=Gold, 4=Diamond
await stakingContract.stake(parseEther("1000"), 4); // Diamond tier

4. Monitor Rewards

Check your earned rewards anytime:

const rewards = await stakingContract.earned(yourAddress);

5. Claim, Compound, or Upgrade

// Claim rewards to wallet
await stakingContract.claimRewards();

// Or auto-compound for 15% bonus
await stakingContract.autoCompound();

// Or upgrade tier for higher multiplier
await stakingContract.upgradeTier(3); // Upgrade to Gold

Rewards vs Inflation

Why Real Revenue Matters

PRIV uses revenue-based rewards:

• No new tokens created for staking
• Rewards = real economic activity
• Aligned incentives (protocol growth leads to higher rewards)

The Math

Inflationary model (bad):

Year 1: 100M supply, 10M staking rewards minted
Year 2: 110M supply, 10M staking rewards minted
Year 3: 120M supply, 10M staking rewards minted
→ Your % ownership decreases even while staking

Revenue model (PRIV):

Year 1: 100M supply, 500K rewards from fees, 400K burned
Year 2: 99.6M supply, 800K rewards from fees, 650K burned
Year 3: 98.95M supply, 1.2M rewards from fees, 1M burned
→ Supply decreases, rewards increase with activity

Risk Considerations

Lock Period

Your tokens are locked for the duration of your chosen tier. Higher tiers lock tokens longer but earn more. Plan accordingly and choose a tier that matches your time horizon.

Smart Contract Risk

While contracts are audited, smart contract risk always exists. Never stake more than you can afford to lose.

Variable APY

APY fluctuates based on:

• Total effective stake by all users across all tiers
• Marketplace transaction volume
• Protocol fee rates (governance can change)
• Distribution of stakers across tiers

Maximizing Rewards

Tips for Higher Earnings

1. Choose higher tiers - Diamond earns 8x the rewards of Flex for the same amount
2. Stake early - Fewer stakers = higher share of rewards
3. Auto-compound - The 15% bonus compounds over time for significantly higher returns
4. Upgrade tiers - If you decide to commit longer, upgrade to capture the higher multiplier immediately
5. Monitor APY - Adjust strategy based on current rates and tier distribution

Participate in Governance

Staked PRIV gives you voting power:

• Vote on protocol proposals
• Influence fee distribution
• Shape ecosystem development

Key Takeaways

1. 35% of all protocol fees go to stakers
2. Rewards are real revenue, not inflation
3. 5 lock tiers from Flex (7 days, 1.0x) to Diamond (365 days, 8.0x)
4. Higher tiers earn proportionally more due to weighted reward distribution
5. Auto-compound re-stakes rewards with a 15% bonus
6. Tier upgrades are allowed anytime; downgrades are blocked
7. APY varies based on marketplace activity, total effective stake, and your tier

Learn More

• Fee Distribution 101 - How the 40/35/25 split works
• Treasury & Protocol Health - Protocol stability mechanisms
• PRIVStakingV2 Contract - Technical documentation
• Tokenomics Overview - Full token economics