Staking allows users to lock up their BLU tokens, in exchange for the staked BLU (sBLU), to earn rewards. The rewards come from proceeds of bond sales and liquidity provider fees.
The staking reward is accrued and compounded every second to encourage and reward long-term stakers.
The continuous accrual mechanism means that:
- stakers do not have to waste gas claiming rewards, or
- be vulnerable to reward churning when malicious actors stakes during the ending period of an epoch to claim the reward, or
- miss out on an entire epoch of rewards when the protocol implements measures against the churning
In addition, the compounding mechanism encourages stakers to remain staked for the long term as short-term rewards are significantly lower.
Once the BLU tokens are staked, the protocol will swap them for the staked BLU token (sBLU) which increases in amount each second. The sBLU token has a one-to-one exchange to the BLU token.
When you unstake, the sBLU token is swapped for an equal amount of BLU which does not accrue any rewards.
The reward rate for BLU is determined by the monetary policy set by the DAO. The level is dependent on the proceed from the bond sale, fees collected from the liquidity pool on the various stablecoins as well as the projected runway for sustaining the reward rate.
The initial staking rate will be set to 35% APY until further action initiated by the DAO.