Miners! In this article, we'll dive deeper into Dividends.
As you know, protocol stakers receive a share of profits from Concave products and services. Rewards to stakers are paid out at different intervals.
Locked emissions in the native CNV token are paid out at 8-hour intervals and redeemable rewards in non-native tokens (DAI, Frax, etc.) are paid out in the quarterly dividend.
Rewards in the native CNV token are primarily generated through bonding activity whereas the quarterly dividend is generated through excess profits derived from other Concave products and services.
Bonding activity grows the Concave treasury and supply of the native CNV token. The Concave treasury is utilized to develop products and investment vehicles that generate yield back to CNV stakers.
Token Rewards, Concave Products, and Services
Each quarter (starting July 2022) the dividend will be allocated to Concave protocol stakers.
Any user in a staking position during the dividend payment will be able to immediately redeem their dividend allocation from the Concave protocol.
A user’s dividend allocation is based on two factors:
- the total accumulated CNV in the staking position
- the boost associated with the term length of the staking position
Users in longer-term staking positions will receive a boost in their dividend returns compared to those staked in shorter-term positions.
Boost & Staking Positions
The total dividend payment is generated through excess profits derived from Concave products and services.
This includes fees generated through swaps on Concave’s native AMM, purchases on the NFT Marketplace, and the yield on treasury investment strategies.
The total allocation per staked CNV can be compared to earnings per share (EPS) in traditional finance. The key difference is that the dividend is only allocated to stakers.
Dividends per Staked CNV
Here's an example of a Dividend Payout:
Profit: $1.5 Million in the quarter
Circulating Supply: 250,000 CNV
25,000 (45 Day Term)
25,000 (90 Day Term)
25,000 (180 Day Term)
25,000 (360 Day Term)
Base Dividend per CNV = $1500000 / [25,000 * 1.25 + 25,000 * 1.5 + 25,000 * 1.75 + 25,000 * 2 + 25,000 * 2.25] = $6.86
Dividend per CNV (45 Day Term) = 6.86 * 1.25 = $8.57
Dividend per CNV (90 Day Term) = 6.86 * 1.50 = $10.29
Dividend per CNV (180 Day Term) = 6.86 * 1.75 = $12.01
Dividend per CNV (360 Day Term) = 6.86 * 2.00 = $13.72
Dividend per CNV (pToken) = 6.86 * 2.25 = $14.44
Earnings Distribution Ratio
Over time a higher allocation of treasury profits will be distributed to stakers in the quarterly dividend.
This is controlled by the Earnings Distribution Ratio which grows over time and ranges between 20%-80%.
The first dividend will distribute 20% of profits to stakers. This figure will climb to a cap of 80% to ensure that stakers receive the majority of returns while the Concave treasury grows.