Staking Incentives

ESPN holders will benefit from the auto-compounding of the asset base, but a proportion of yield earnt from Derive is set aside for liquidity provision rewards. A target asset base growth rate of 12% is set. After deducting a fee (10%), the remaining yield will be allocated to liquidity provision rewards.

Staking

To stake, ESPN will need to be paired with USDS. The ratio of ESPN to USDS required will shift with the market price of ESPN.

Staked LP is tokenised as sESPN.

Rewards are paid out to LP stakers, in LP tokens.

Initially, Staked LP will be deposited into a concentrated Uniswap v3 pool with the range set to $10-$1000. This range can be dynamically adjusted depending on the price of ESPN or market conditions. Any adjustments will be announced in advance.

Buybacks

Yield from the options strategy is in stablecoins. To pay LP rewards, the ESPN manager buys ESPN from the pool on each yield payout to pair it with USDS, creating LP tokens.

In normal dynamics, we don’t expect every ESPN holder to also LP stake, as such, the effective yield for LP rewards will be boosted based on the ratio of ESPN holders to Stakers.