Staking APY
Fixed vs. Variable APYs
As mentioned in the Overview, stakers receive APY from 2 sources:
Premiums from protocol customers
Incentive rewards paid in MIKA (MikaLock’s governance token)
The premiums from protocol customers are generally a fixed amount (unless the protocol's TVL is lower than their coverage amount). But anytime the USDC amount provided by stakers changes, the APY to any individual staker changes.
The incentive rewards are variable in $ terms, but fixed in MIKA token terms. Any staker will be able to see exactly how many MIKA tokens they will receive for staking. If a staker doubles the length of the stake (from 6 months to 12 months), the amount of MIKA tokens to be received will double as well. In this way, stakers will have a good sense of the value they're guaranteed to receive by locking up their USDC. Of course, the APY from MIKA tokens will fluctuate as the price of MIKA fluctuates.
How are the MIKA tokens for each stake calculated?
In short, the amount of MIKA tokens disbursed for a stake depends on 3 factors:
The amount of USDC already staked
The amount of staked USDC targeted by MikaLock governance
The size of the stake
All stakes that end before point A are paid the maximum amount of MIKA per USDC staked.
All stakes that start before point B receive some amount of MIKA per USDC staked. Any USDC staked beyond point B receives no MIKA tokens.
Points A and B will be set by MikaLock governance to strategically maintain the desired level of staked USDC over time in order for MikaLock to meet its potential obligations (i.e. payouts) to covered protocols.
Points A and B may not be visible in the UI, but any staker will know exactly how many MIKA tokens they will receive before they stake.
Last updated