Staking Incentives

Stake ESPN LP tokens to earn boosted yield — rewarding longer lock periods with higher returns.

The Problem

ESPN's core strategy involves deploying capital into long-dated convertible note positions. These positions generate strong yield, but they require time to mature. If capital flows in and out unpredictably, the vault manager must keep more capital idle in short-term, lower-yielding strategies — reducing returns for everyone.

Staking incentives solve this by rewarding holders who commit liquidity for longer periods, aligning individual incentives with the vault's need for predictable capital.

Overview

ESPN holders earn yield just by holding the token — the redemption value of ESPN increases as option premiums flow into the vault. Staking ESPN LP tokens provides an additional layer of yield, with boosted rewards for longer lock durations.

How It Works

1. Provide liquidity to the ESPN/USDS pool via Arrakis to receive ESPN LP tokens

2. Stake your LP tokens in the sESPN LP staking contract

3. Choose a lock duration between 1 week (minimum) and 6 months (maximum)

4. Earn boosted rewards proportional to your lock duration

Lock Duration & Boost

The boost is tied to how long you lock:

• Minimum lock period: 1 week

• Maximum lock period: 6 months

• Boost decay: The increased reward rate decays linearly over time, reaching the base rate as the lock duration ends

Longer locks earn proportionally more rewards, incentivizing conviction and providing the vault with more predictable liquidity.

Staking ESPN LP tokens with longer lock periods earns boosted yield that decays linearly over the lock duration.

Why Lock?

The lock mechanism serves two purposes:

1. Predictable liquidity — locked capital gives the vault manager confidence to deploy into longer-dated, higher-yielding strategies (the convertible note trade)

2. Fair reward distribution — holders who commit capital for longer periods earn more, reflecting the genuine value they provide to the vault's operation

Contract Addresses

Contract	Address
sESPN LP (Staking)	0xcD65F0b6E31e44225330DB8622a9e5307DDC6c1C
Arrakis ESPN/USDS LP	0x2F63AE2184D876f156b9eF21f488d4E6B442FaD7

For all deployed contracts, see Contracts.

Failure Modes & Gotchas

Scenario	What Happens	Mitigation
Unlocking early	You cannot unstake before your lock period ends. Capital is committed for the full duration.	Choose a lock period you're comfortable with. Start with shorter locks if unsure.
Boost decay	Your boosted yield rate decreases linearly over the lock period, reaching base rate at expiry.	This is by design — it prevents a cliff where all locked capital exits simultaneously.
LP impermanent loss	As an LP, you're exposed to impermanent loss on the ESPN/USDS pair.	ESPN's value trends upward (yield accrues), so IL is partially offset by the underlying asset's appreciation.