Hakka Finance Token Staking Model Upgrade
Multi-chain, staking extension, long-term staking, and exponential model.
It has been over a year since the Hakka Finance token staking model has gone live in April 2021. The token staking model, as the cornerstone of community governance, gathers token holders and the protocol toward the same long-term benefits.
Although the old staking model worked fine, there was still room for improvement. According to the operation status in the past year and the feedback from the community, we are implementing a series of integrations and upgrades to the previous staking model.
As the Hakka Finance business has expanded from Ethereum mainnet to other blockchains such as Gnosis Chain(xDAI), BNB Chain, Polygon, Fantom, and so on, $HAKKA started to also be adopted in each chain as the liquidity incentive.
However, the former staking system was only deployed on Ethereum mainnet. Hakka users on other chains are needed to transfer the token to the mainnet to take part in the token governance, which causes a lot of additional friction cost. Fortunately, the new $HAKKA staking model is now deployed on various chains. Users no longer need to bridge their HAKKA cross chain to stake tokens. Eventually, we think the new staking model will enhance community participation in governance voting.
In the future, the Snapshot voting of Hakka Finance will adopt the sum voting power in each chain.
2. Staking Extension
All of this caused significant inconvenience for the former staking model because it needed to burn sHakka to claim HAKKA after the staking term expired first, then a new staking term would be opened afterward.
Nevertheless, the new staking model now allows users to expand the existing position directly, like deposit more $HAKKA and/or extend the locking period, to gain the difference of sHAKKA and voting power.
3. Long Term Staking
To get with the times, the longest term of staking HAKKA will be changed from one year to four years to meet the industry standard.
4. Exponential Model
The exponential model will be the most important part of the latest upgrade. In the past, the proportion of getting sHAKKA through staking HAKKA was decided by the staking rate and the locking period mutually. However, there were two different kinds of calculation logic in between: the staking rate grew exponentially by two times a year, but the impact on the locking period was linear. The old design caused some inconsistent behaviors and strange optimization/arbitrage opportunities, fortunately, the new staking model will unify the calculation between the two with the exponential model.
sHAKKA = HAKKA * stakingRate * 2^(lockPeriod) / 16
stakingRate from HAKKA to sHAKKA would be
1 initially, and it will double every year after June 2022.
lockPeriod is measured in years;
Users can decide the locking period on their own, minimum for 30 minutes, maximum for 4 years.
4 years locking period will get the complete conversion rate.
3 years locking period will get 50% of conversion rate.
2 years locking period will get 25% of conversion rate.
1 year locking period will get 12.5% of conversion rate.
Half a year locking period will get 8.8% of conversion rate.
30 minutes locking period as a minimum will get 6.25% of conversion rate.
The bridge between the old and the new staking system
After the new staking model goes live, there will be one overlapping year between the two systems. The voting power and the mining reward will be transferred from the old system to the latest staking model gradually in the overlapping year. The old sHAKKA can’t be staked to mint new tokens anymore at the moment, but only wait to be withdrawn after the original position expires.
In general, the transition of the mining and the voting power will be conducted linearly, but it still can be decided to postpone or bring forward the process by the community.
The conversion rate of voting power will be 0.25 at the first and down to 0 linearly after a year.
The mining reward allocation will be 75% / 25% in the beginning and transferred to 0% / 100% linearly after a year.
votingPower = 0.25 votingPower(old) + 0.75 votingPower(new)
6,000,000 HAKKA / month (old)
2,000,000 HAKKA / month (new)
The new staking model proposal will be delivered to the community for discussion and making decisions, and it will be implemented after the official vote.