$SHARK Staking
Last updated
Last updated
$SHARK staking is what makes Shark Protocol a very unique product. It was designed to make sure no prediction games are ever cancelled due to not having players on both side of a prediction game. Additionally, it was also made to be as user friendly as possible and this is why it uses a native liquid staking approach.
When a player initiates a prediction in a game by making a prediction, $SHARK staking automatically places bets on both sides (bulls and bears), guaranteeing game continuity without any user involvement. This feature not only prevents game cancellations but also boosts the amount of $SHARK tokens in play.
$SHARK staking employs a native liquid staking approach, wherein stakers receive $lsdSHARK tokens in exchange for their $SHARK holdings at a predefined rate.
It means when you stake $SHARK, you automatically receive $lsdSHARK in exchange. For example, if there is 1,000,000 $SHARK in the staking contract and 1,000,000 $lsdSHARK in circulation, you can stake $SHARK or exchange $lsdSHARK at a 1 for 1 ratio from the staking contract.
When $SHARK tokens are distributed to the staking contract, the ratio of $SHARK/$lsdSHARK will change which will increase $lsdSHARK's value as there are more $SHARK in the staking contract to exchange for the number of $lsdSHARK in circulation.
For example, if there were 100,000 $SHARK staking rewards that were distributed over the past weeks and nothing else changed (from the previous example), then the ratio of $SHARK - $lsdSHARK would be 1.1 $SHARK for 1.0 $lsdSHARK. So you could exchange your $lsdSHARK at a higher rate of $SHARK.
$SHARK stakers play a crucial role in the operation of the protocol, taking on risk by committing their $SHARK tokens to ensure the protocol's smooth functioning. In return for their contribution, $SHARK stakers receive:
Long-Term Incentive: In addition to protocol fee rewards, $SHARK stakers are eligible to receive a total of 15,000,000 $SHARK tokens over a span of 5 years. This incentive is designed to encourage continuous staking and support the protocol's stability. The distribution of these tokens occurs daily at 9 PM UTC.
Protocol Fee Distribution: $SHARK stakers are entitled to 80% of the protocol fees generated from game plays, which accounts for 2% of all games played on Shark Protocol. These fees are distributed as staking rewards each time a bet is placed on the protocol, rewarding stakers for their active participation.
Below is an overview of the entities that interact with $SHARK staking and their respective functions:
To ensure the effectiveness of our staking mechanism, we meticulously conducted billions of price prediction game simulations under various scenarios. The aggregated outcomes were instrumental in validating the viability and profitability of $SHARK staking as a product. Through these Monte Carlo simulations, we arrived at the conclusion that implementing a 2% protocol fee, with 80% distributed to $SHARK stakers alongside regular staking rewards, would guarantee profitability for stakers across short, medium, and long-term horizons.
Moreover, the determination of the amount of $SHARK utilized for predictions by the staking mechanism followed a dynamic methodology derived from the aforementioned simulations. Here's a breakdown of how much $SHARK is employed during price predictions:
When stakers maintain a win rate exceeding 50%, the staking mechanism initiates predictions at a rate of 0.0001 times the total $SHARK staked.
If the stakers' win rate falls below 50%, positions are opened at a rate of 0.00002 times the total $SHARK staked.
For instance, assuming there are 10,000,000 $SHARK staked and the stakers' win rate stands at 51%, predictions would be opened on both sides of a game with 1,000 $SHARK (500 $SHARK on each side). Conversely, with a win rate of 48%, predictions would be made with 200 $SHARK (100 $SHARK on each side).
This approach was carefully designed to safeguard stakers from bankruptcy and ensure sustained profitability.