Restaking Incentives for Restakers

Overview

Tangle Network incentivizes restakers through TNT rewards for depositing specific assets as well as with service revenue and fee rewards. Deposit rewards are distributed in an ongoing manner and are immediately claimable. Service revenue is distributed in fixed time intervals according to governance.

The protocol determines which assets are incentivized for deposits and their maximum deposit capacities through governance decisions. Non-incentivized assets are still valid for deposits and can be leveraged to instance Tangle Blueprints.

Score vs Points

For the purposes of avoiding confusion we use the terms points and score independently. Points refer to any future airdrop and scores refer to onchain values that we leverage for distributing onchain rewards, whether from deposits or services. Points are NOT equal to score values! Hopefully we don't mistake them in the docs.

Deposit Mechanics

Depositing incentivized assets on Tangle earns your TNT tokens and points in upcoming airdrops. There are a list of assets onchain that are incentivized. For these assets, there exists a vault for them specifying the capacity and APY for deposits.

Deposit Capacity

The restaking system implements maximum deposit capacities for each incentivized asset to ensure secure and controlled TVL growth. Key aspects:

• Fixed maximum amount per asset
• APY distributed proportionally to deposits/capacity ratio
• Unallocated APY is never minted
• APY defines reward allocation at full capacity

Protocol Implementation

The pallet-multi-asset-delegation system manages:

• Deposit and withdrawal logic
• Delegation to operators
• Asset staking mechanisms
• APY and capacity configurations
• System upgrades via governance

Users can view available assets and their parameters through the Tangle Restaking dApp.

Withdrawal Process

• Standard withdrawal delay: ~7 days (W sessions)
• Deposits continue earning incentives during withdrawal period
• Assets must be unstaked before withdrawal

Scoring and Rewards

When Tangle Blueprints are instanced, a new service is created. Customers instance Tangle Blueprints by selecting the operators and types of restaked assets they desire for security. They pay for the service in advance and throughout operation for task based services.

The payments and fees are distributed according to a scoring mechanism that is normalized against the USD value of the service instance's assets.

TNT is the default restaking asset and must be included as restaked security collateral for all service instances. We treat TNT as a special asset when scoring. TNT earns a score of 1 value per 1 TNT allocated to secure the service, whereas other assets earn a score of 1 value per $1 allocated to secure the service.

Lock Multipliers

Users can enhance their score through time-locks. This locks their deposited assets for additional months, preventing any withdrawals or unstaking until the lock has ended:

• Longer locks lead to higher score multipliers
• Locked tokens cannot be withdrawn until expiry
• Multiplier directly impacts deposit reward share

Reward Calculation for Deposits

The reward formula $R$ for a user at any point is:

$R = APY \times \frac{S_u}{S_t} \times \frac{D_t}{C}$

Where:

• $APY$ = Asset's annual percentage yield
• $S_u$ = User's score (including lock multipliers)
• $S_t$ = Total score across all users
• $D_t$ = Total deposits for the asset
• $C$ = Maximum deposit capacity

Reward Calculation for Service Rewards

The protocol allocates service revenue and fee rewards using a dual-tier scoring mechanism:

For TNT (Native Token):

• Each TNT restaked earns 1 base point

For Other Approved Assets:

• Each $1 USD value restaked earns 1 base point

The reward formula $R$ for a restaker securing a service instance is calculated as:

$R = Rewards \times \frac{S_u}{S_t}$

Where:

• $Rewards$ = Rewards and fees of the service instance
• $A_u$ = User's restaking score for the exposed assets
• $A_t$ = Total score across all exposed assets of the service instance

Example Scenario: Calculating Restaking Rewards

Let's walk through practical examples to understand how both deposit rewards and service revenue rewards are calculated.

Deposit Rewards Example

Let's say Alice deposits 1000 TNT with a 12-month lock:

Initial Parameters:

• Base APY: 5%
• Lock multiplier: 2x for 2 months
• Total deposits: 100,000 TNT
• Maximum capacity: 1,000,000 TNT

Her rewards calculation:

1. Score calculation:

   • Base score: 1000 (from 1000 TNT)
   • With 2x multiplier: 2000 score
   • Total system score: 150,000

2. Annual deposit rewards:

   5% × (2000/150,000) × (100,000/1,000,000) × 1000 TNT = 0.67 TNT

Service Revenue Example

Now let's calculate Alice's service revenue rewards:

Initial Parameters:

• Service instance monthly fees: 1000 USDC
• Service revenue allocation: 30% to restakers
• Alice's restaked assets:
  • 1000 TNT (1000 points)
  • 2000 USDC (2000 points)
• Total service restaking points: 10000 (5000 TNT + 5000 USDC worth)

Her service revenue calculation:

1. Monthly revenue share:

   1000 USDC × 30% = 300 USDC to restakers

2. Alice's share:

   300 USDC × (3000/10000) = 90 USDC per month

Alice would earn approximately 90 USDC per month from service revenue, in addition to her deposit rewards of 0.67 TNT annually. Her service revenue share is calculated based on her total restaking score (3000 points from 1000 TNT + 2000 USDC) divided by the total service restaking score of 10000 points. Note that while lock period multipliers affect deposit rewards, they do not impact service revenue calculations. The service revenue is paid out in whatever token the customers use to pay for the service - in this example USDC.