User Stories
Description of a stkd-SCRT user story
User Story (Mint & Withdraw)
In this user story, a user does not take advantage of the power of the stkd-SCRT liquid staking derivative because they chose to incur the 21 day unbonding period from withdrawing instead of selling it instantly on ShadeSwap.
User deposit 100 SCRT
User mints 93.12 stkd-SCRT at 1.073844 minting ratio
Minting ratio is always increasing due to staking rewards going to the rewards pool
stkd-SCRT begins autocompounding staking rewards
User waits 100 days
Minting ratio increases from 1.073 to 1.1 due to accumulated rewards
User burns 93.12 stkd-SCRT at 1.1 minting ratio
21 day unbonding period incurred
User claims 93.12 * 1.1 = 102.4 SCRT
User Story (Mint & Sell)
In this user story, a user takes advantage of the power of the stkd-SCRT liquid staking derivative by selling on a DEX instead of incurring the 21 day unbonding period from withdrawing.
User deposit 100 SCRT
User mints 93.12 stkd-SCRT at 1.073844 minting ratio
Minting ratio is always increasing due to staking rewards going to the rewards pool
stkd-SCRT begins autocompounding staking rewards
User waits 200 days
Minting ratio increases from 1.073 to 1.2 due to stkd-SCRT autocompounding rewards
User sells 93.12 stkd-SCRT on ShadeSwap at 1.2 exchange rate
Instant
Receive 93.12 * 1.2 = 111.74 - 0.33 slippage fee = 111.414 SCRT
Protocol Story
In this user story, we walk through how the minting ratio is impacted by deposits, withdraws, and rewards accrual. This protocol story starts at the inception of the protocol.
Initial Stake Pool = 100 SCRT
Initial stkd-SCRT Outstanding = 100
Minting Ratio = SCRT in Stake Pool / # of minted stkd-SCRT
Initial Minting Ratio = 100 / 100 = 1:1 SCRT per stkd-SCRT
(1) Mint stkd-SCRT
A user deposits 100 SCRT into the stkd-SCRT contract
Contract mints 100 stkd-SCRT using the 1:1 minting ratio
The deposited SCRT is staked by the contract — the SCRT stake is split between a list of performant validators
Stake Pool = 100 Initial Stake Pool + 100 Deposited SCRT = 200 SCRT
(2) Rewards Accrue In Stake Pool
10 days elapse
5 SCRT worth of staking rewards are accrued by the staked SCRT
Stake Pool = 200 + 5 (accrued rewards from staking) = 205 SCRT
Minting Ratio = (205 SCRT in stake pool / 200 stkd-SCRT minted) = 1.025 SCRT per stkd-SCRT
(3) Mint More stkd-SCRT
User deposits 105 SCRT into the stake pool using the 1.025 minting ratio
Contract mints out 102.43 stkd-SCRT (105 SCRT / 1.025 minting ratio)
Stake Pool = 205 + 105 deposited = 310 SCRT in the stake pool
stkd-SCRT outstanding = 200 outstanding + 102.43 minted = 302.43 stkd-SCRT
Minting Ratio = 310 SCRT in Staked Pool / 302.43 stkd-SCRT outstanding = 1.025
(4a) Claim Rewards By Withdrawing stkd-SCRT
Burn 100 stkd-SCRT using the withdraw functionality
100 stkd-SCRT * mint ratio = 100 * 1.025 = 102.50 SCRT being unbonding
21 day unbonding occurs
Claim 102.50 SCRT
Stake Pool = 310 SCRT - 102.50 SCRT = 207.50 SCRT
stkd-SCRT outstanding = 302.43 - 100 stkd-SCRT burned = 202.43 stkd-SCRT
Mint ratio = 207.50 SCRT in stake pool / 202.43 stkd-SCRT = 1.025 minting ratio
(4b) Claim Rewards By Selling stkd-SCRT
Sell 202.43 stkd-SCRT on a DEX
Instant
Receive 207.49 SCRT (assuming no slippage)
No change to the Stake Pool
No change to stkd-SCRT outstanding
No change to the mint ratio
Sell
User wants to sell their 100 stkd-SCRT for their proportion of SCRT and accumulated rewards to date. Instead of waiting redeeming their stkd-SCRT and waiting for the 21 day unbonding period, the user instead decides to sell their stkd-SCRT for SCRT on a DEX.
Appreciation Rate
With each additional minting of stkd-SCRT, more SCRT is deposited and staked. This generates more rewards that accrue towards the staked pool. Because each new stkd-SCRT minter deposits at the same linear rate, the price increases the same for everyone proportionally.
The price of stkd-SCRT continues to go up at the same rate of Secret Network proof-of-stake compounded rewards. All while users can buy, sell, transfer, and unbond with their stkd tokens.
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