Last week we launched the xbe.finance website, rebranded our socials to XBE Finance, and took the official XBE UI app live on Friday 3rd September 2021 – giving 72 hour notice in our telegram that protocol rewards will start Monday 6th September 2021. It truly is exciting times!!! As of this writing there is less than 24 hours left before rewards start – and there are two main things you can do to earn XBE rewards from tomorrow morning:
- Single Sided XBE Staking (Stake without Lockup, Stake & Lockup for Max term, and Stake & Lockup for less than Max term)
- Provide Liquidity to the XBE/ETH Sushi pool and stake your LP tokens
In this article we are going to unpack exactly what each of the above does, why you might want to do any variation of the above, and how much rewards are being generated towards each.
First, let’s understand what the protocol’s objectives are during the soft launch phase and how that will change (and will impact rewards distribution) for Phase 2.
XBE is the core reward mechanic that will incentivise DeFi, FIAT and Traditional Securities liquidity to enter the protocol, and therefore it is important to ensure that the XBE token is highly liquid to provide users with confidence that they can enter and exit on demand. XBE is an Ethereum network based protocol and therefore it is fitting that XBE is paired to ETH in it’s primary liquidity pool and not a FIAT priced stablecoin, and by only incentivising the XBE/ETH Sushiswap pool the protocol is making it lucrative for all LPs (old and new) to participate in this pool so that the protocol rewards’ value is predominantly correlated to crypto market movements.
While it is important to attract sufficient XBE/ETH liquidity, it is also important to attend to the risk of mercenary farmers coming in early and stripping the protocol of value – while balancing such restrictions by ensuring loyal token hodlers get fair access to rewards for their patience! The protocol addresses this by treating the claim function on rewards differently for those staking their XBE/ETH LP tokens, and those staking their XBE in the single sided XBE staking contract. As a rule, when your XBE tokens are staked in the single sided staking contract the protocol considers you a “citizen”, and all rewards claimed from this contract will be immediately withdrawn to your wallet without delay.
However, any rewards generated to attract liquidity (be that for XBE/ETH, or for the upcoming pools in the XBE Hive launch which is now only a couple of weeks away!) are considered to be at risk of those only seeking short term profits who might try to exploit the protocol. The protocol considers these as “civilian” claims, and in order to ensure that such claims do not trigger immediate dump cycles the protocol automatically stakes these rewards for the user, and sets an unbonding period on ALL currently bonded rewards for 5 days. This means that liquidity providers farming on the protocol are converted automatically to XBE single sided stakers when they claim their LP rewards, and instantly start to earn single sided staking rewards on their claimed XBE. If however the user wants to immediately unstake their bonded XBE, they can do so at a 50% penalty and get instant access to their rewards – BUT the penalty is distributed as a bonus to all users who have XBE staked for single sided staking rewards.
This gives these new users the opportunity to experience staking rewards firsthand prior to them being able to unstake their XBE – and remember they, like any other user, can claim their single sided staking rewards instantly during an unbonding period to their wallet. It also means that if such a user was to claim MORE LP rewards within the unbonding period of a previous LP claim action, the unbonding period would reset for the previous claim – ensuring that all bonded staked XBE can only be unstaked 5 days from the most recent claim date. Naturally, once the unbonding period of 5 days has expired, the staked XBE is considered free and clear from any bonding, and a new LP reward claim would not bond those free tokens. This structure really starts to shine in our coming phase 2 launch where the protocol introduces protocol revenues that are generated at the moment that the user claims, allowing the protocol to put that revenue to work immediately, creating a 5 day window within which the protocol is able to grow before the claimer is able to unstake their XBE, ensuring overall positive protocol momentum.
Just how much XBE rewards are being allocated to the Sushi XBE/ETH pool during soft launch?
In short – a massive amount – approximately 20.55 XBE per day (75% of daily emissions). This majority allocation is for a fixed time only leading up to Phase 2 launch – so you can think of it as a 2 – 3 week special promotion campaign! The balance of around 6.85 XBE per day (25% of daily emissions) will go directly to single sided staking rewards.
This brings us to the all important discussion about boost! The principal you should think of when it comes to understanding boost is that your boost increases your proportional share of the staking rewards. Let’s say you have 10 XBE staked. If you don’t lock up any of your 10 staked XBE, you get 0% boost. If you lock 5 of your staked XBE for 1 week you get 4% boost on the 5 locked up XBE and 0% boost on the 5 XBE that is just staked, and your total boost will be averaged out to 2% overall. If you then lockup another 3 of your staked XBE, so you have 8 XBE locked up for 1 week and 2 XBE just staked, your overall boost will average to 3.2%. If you then increase your lockup date from 1 week to 2 weeks you will earn 8% boost on your 8 locked XBE and 0% on your 2 staked XBE for an averaged overall boost of 6.4%.
Boost “decays” with time however, as it is generated from the time remaining in your lockup. This means that after 1 week in our example your averaged boost will be back to 3.2%, because the 8% boost on your 8 locked XBE will have decreased little by little at every block from when you locked up down to 4% by the time 1 week has gone by – because at that time your lock will only have 1 week left. To get 100% overall boost you would need to lockup all of your staked XBE for a 100 weeks, but then naturally as time goes by that boost will also slowly decrease from 100% as each block passes there would be less and less than the required 100 weeks remaining on the lock required for the 100% boost figure.
Boost Calculations Breakdown [section added 6 September 2021]
If all staked XBE were equal they would each earn at 100% capacity – let’s call that the generic XBE earning rate. Boost changes this by reducing the earning rate of a “basic” unboosted XBE to only 40% of that generic capacity, and then adding back anywhere between 0% and 60% additional earning rate depending on the XBE’s boost. This means that at 50% boost, an XBE is earning at 40% of the generic rate plus an additional 30% boosted capacity (50% of the additional 60% boosted rate possible) for a total of 70% of generic capacity, and at 100% boost an XBE is earning at 40% of the generic rate plus the full 60% of the additional boosted rate possible for a total of 100% of generic capacity.
Translating this into practice, a 100% boosted XBE is earning 2.5x more rewards than an unboosted XBE. The system distributes all of the generic rate in rewards due to 100% boosted XBE’s, but only distributes 40% of the generic rate to the unboosted XBEs. This is how you only get a 28.02% APR on staked XBE vs a 70.10% APR on 100% boosted XBE right now – and remember that 70.10% APR excludes your share of the 5,000 bonus XBE coming to all those who have locked up for maximum term before 30 days after launch!
veXBE (which is how voting power is calculated) works in the same way to boost, allocating you up to 1 veXBE per XBE if you have locked up that staked XBE for 100 weeks, and if you only locked for 50 weeks you would get 0.5 veXBE per locked XBE, and so on. Just like boost, veXBE also decays over time, so there is an on-going incentive to re-lock your XBE for maximum boost and for maximum veXBE.
There is very special exception on decaying boost when it comes to the XBE long term lockup bonus campaign however. At 30 days after launch, the protocol will kick off the bonus campaign and allocate the bonus boost reward to any wallet that has XBE locked up for 100 weeks from that date by fixing the boost at 100% for the duration of the 100 weeks. This means that anybody who has locked up for 100 weeks from that date will have their boost calculated on those XBE as if 100 weeks is remaining in the lockup, even if only 1 day remained after 99 weeks and 6 days! This is a huge advantage, as anybody who locked up for 100 weeks after that day would still have their boost decay block per block. Over and above this amazing earning bonus, the protocol will also reward those early long term lock-up users with their proportional share of 5,000 additional XBE that will be accruing to them block per block and can be claimed proportionally between month 18 and 23.
(Please do note that the bonus long term lockup reward is not applicable to your veXBE, and that users who participate in the bonus lockup campaign will have to extend the lock on their tokens to maintain maximum veXBE over time.)
What does this mean in practice? Depending on your objectives and sentiment towards the protocol you will have some varying mix of two mindsets:
- a) committing to the long term prosperity for the protocol and all XBE holders, and
- b) personal profit in the short term.
To be clear – neither is right or wrong – and most users will share a mix of those two!
Let’s consider how that would work for normal real-world users:
- If you are committing long term to the protocol, then the unbonding period on rewards claimed from participating in the XBE/ETH LP rewards (and the upcoming Phase 2 XBE HIVE LP Rewards) unbonding doesn’t really worry you because your claimed XBE can be immediately locked up to get you back to the best boost %, and you will earn the most possible single sided staking rewards over the 23 month period for your locked XBE possible which you can claim at any time and will immediately withdraw to your wallet.
- If you are in two minds, you can stake some XBE and lock those up anywhere from 100 weeks to no lockup at all, depending on how long a commitment you are happy to make to the protocol. But that does not prevent you from participating in the LP farming pools and claiming those rewards as well, and from time to time unbonding at the 50% penalty to get some tokens to unstake quickly, or at other times waiting for the unbonding to complete before unstaking – or even locking up the unbonding tokens! It all depends on what you think is the right strategy for you at the time!
- If you are looking to maximise your farming rewards in the short term, you can stake your XBE/ETH pool LP and claim in 5 day intervals while you wait for unbonding to complete. Once unbonded you can unstake your XBE and do with it as you choose, but during the 5 days of unbonding you will be earning single sided staking rewards on your claimed LP rewards! And you can claim those single sided staking rewards at any time, as often as you like, directly to your wallet. You could also choose to rush through the unbonding period and immediately unstake your claimed LP rewards at a 50% penalty – which will be distributed to all the single sided XBE stakers as a bonus.
This means that if you are an LP that claimed rewards but haven’t yet unstaked them – you will receive your share of the bonus rewards deducted from another user’s early unstaking penalty, even if your own tokens are still unbonding! And the same goes for those users committed to the platform who staked or locked up their XBE tokens earning their share of the early claiming penalty deduction – which means that the protocol will in essence be diverting some of that massive 75% LP reward allocation during the soft launch phase back to staking rewards as an addition on top of the 25% of new XBE allocated to single sided staking rewards.
This is an important point, because single sided staking doesn’t just reward stakers with the new XBE generated by the protocol, but will also top up those rewards with the proceeds of protocol revenue as it comes into play in Phase 2, 3 and 4 (and in the future after!). Also note that the initial split of new XBE is there to serve a very important Phase 1 purpose – to ensure that we create deep liquidity that supports the XBE token as an attractive one for users to be able to enter and exit whenever they choose to – as the protocol will be using it as the incentive to attract liquidity from all users in the future phases – whether they come from the DeFi, FIAT, or Traditional Securities worlds alike!
We are really excited for tomorrow when rewards start generating, and want to thank all the loyal community members who have already started locking up XBE (more than 17.5% of circulating supply already locked at the time this article goes out) and for those who have contributed liquidity to the XBE/ETH Sushiswap pool (about $175,000 in liquidity already!). From tomorrow as Phase 1 kicks off, we set our sights on the coming Phase 2 launch and will be announcing details of this exciting product at the same time!
To all our loyal “X BEE Keepers”, thank you again for all your support – we look forward to amazing time ahead together!