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 24-hour intervals and redeemable rewards in non-native tokens (DAI, Frax, etc.) are paid out quarterly. 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.
Each quarter (commencing 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 and 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 when compared to those in shorter term positions.
Figure 2 Boosts, 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 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.
Over time a higher allocation of treasury profits will be distributed to stakers in the quarterly dividend. This is controlled by the Earning 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.