WOO X Staking Base Rate, how does it work?

Building on the tokenomics article I wrote recently, I wanted to explain how the maths behind the staking returns works. Let’s get one thing straight up front, I am British so its “Maths” not “Math”, got it? Excellent!

For those of us that stake on WOO X, all will be aware that the base rate of return varies slightly daily, and it is based upon the % or circulating WOO that is staked specifically on WOO X at that point in time. A calculation is performed each day to work out the payout amount and that is split proportionally between all stakers.

The first thing to understand is that staking returns are not weighted to those with the fattest wallets. The % rate of return is the same whether you are staking 1800 WOO or 3m WOO.

Staking inflation is set at 1% of circulating supply but that 1% is split across those only staking on WOO X. The easiest way to think about this is that if every single WOO in circulation was staked on WOO X then everyone would get a daily base rate of 1%.

If half of all WOO was staked on WOO X then the 1% would be split between only those holders so they would get twice as much as above, so a base rate of 2%

If a quarter of WOO was staked on WOOX, twice as much again = 4% base rate and so on.

So, the more circulating WOO that is staked on WOO X the lower the base rate goes. As a staker, I am happy watching the base rate gradually reduce as it means that the “actual” circulating supply is reducing and more and more users are learning about WOO X.

The base rate at the moment is 4.4%.

Realistically, there will be a limit to how low the base rate can go. As I covered in the tokenomics article there is a lot of WOO that is in the circulating supply that isn’t really “circulating” in terms of being in the hands of individual holders. 300M with the DAO and recently 50M as a liquidity vault, so already there is 1/3 of circulating supply that can’t be staked. There is also another 158m staked on WOOFi. People will have their own reasons for staking on WOOFi rather than WOO X but I suspect it is mainly holders from unsupported countries (I know they are working on supporting more where possible). This takes about 40% of circulating WOO out of the equation, leaving just over 640m WOO available to be staked.

At the time of writing, approximately 263m is already staked on the exchange (which you can work out by the amount of the base rate), so that leaves approx. 375m more that could be staked. A lot of that will be held on other exchanges or staked elsewhere in CEFI or DEFI but of course we hope to see more and more of this move over to be staked on WOO X as time goes on — but it is hard to imagine that — as things stand currently, we will see much more than another 150m staked on WOO X.

If we therefore assume a medium-term maximum of ~ 400m staked out of a circulating supply of 1.16bn that would be roughly 35% of circulating supply staked on the exchange which would give a base rate of 2.85%

The base rate is supplemented with two bonuses. A 30% uplift for simply holding tokens in staking beyond 180 days. This would take your actual rate to 3.72%

The second bonus is for active traders who trade regularly, and this increases the rate on a sliding scale by up to an additional 11% (stacking on the first bonus). This would turn that base rate of 2.85% into an actual rate of 4.12%. The two bonuses stack.

The base rate today is 4.4%. With max bonuses, which are easy to achieve, this turns into approx. 6.37% APR.

It may seem counterintuitive, but it should be our goal to see this rate come down towards the levels mentioned above as it shows the growth in exchange user numbers.

Longer term, as the WOO token price increases, we will start to see people un-stake and sell as their personal targets are reached but this becomes a good thing as well for those still holding as the base rate will then start to rise again.

I have added a table below to show the base rate and bonus returns which you can refer to if you want to estimate the trajectory of staking quantities.

I hope this explanation of the maths and likely projection of the staking rate was useful to some.