# Staking DHT and Governance

{% embed url="<https://app.dhedge.org/dht/staking-v2>" %}
Link to DHT Staking
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This is an overview of the DHT Staking Mechanism and how you can participate in the dHEDGE DAO governance. The design closely aligns DHT emissions with protocol revenue (fees) such that the overall sustainability of the DAO is supported.

**To receive DHT rewards,** **a user is required to stake a portion of DHT tokens and dHEDGE vault tokens (DHVT). These are ‘paired’ to form a ‘staked position’. This staked position is returned to the staker as a unique NFT.**&#x20;

**Key Terms**:

* DHT: The symbol of the dHEDGE DAO Token
* DHVT: Stands for "dHEDGE Vault Token" (acronym)
* vDHT: Voting Power received as rewards for staking&#x20;

In the example below, you see an NFT a user received for staking their dHEDGE DAO token (DHT) with dHEDGE vault tokens (DHVT). This user has not received any bonus DHT rewards yet because the underlying vault tokens have not performed positively since the start of staking.&#x20;

This user has received a total Voting Power of 98,862.31 vDHT that they can use to vote in proposals via [Snapshot](https://snapshot.org/#/gov.dhedge.eth). Users must be connected to [Snapshot ](https://snapshot.org/#/gov.dhedge.eth)with the wallet that contains the staked position NFT and any vDHT will automatically be applied as voting power.&#x20;

A user can create multiple staked positions with different vault tokens, and each one will be represented by an individual NFT (ERC721) - similar to the way UniV3 LP pairs are represented.

<figure><img src="https://2347102836-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Ff03kK69OTEEthfwi6VoC%2Fuploads%2FlE7iIl6GNKrbXHY3vVWQ%2Fimage.png?alt=media&#x26;token=6e7747f3-18a3-4a70-a05a-58f79e0fc60c" alt=""><figcaption></figcaption></figure>

These staked positions enable a user to amplify their returns through DHT rewards based upon the positive performance of the paired vault.

The amplification is achieved by a combination of factors:

* *Amount of DHT staked*
* *Time the DHT tokens are staked*
* *The amount of vault shares staked*
* *Time the vault shares are staked*
* *The performance of the vault tokens during time staked*

<figure><img src="https://2347102836-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Ff03kK69OTEEthfwi6VoC%2Fuploads%2F2tyz8mxF8KYd89IbU2tz%2Fimage.png?alt=media&#x26;token=0fb23906-0889-44ab-9853-c37a3bb77280" alt=""><figcaption><p>This a hypothetical staking calculation</p></figcaption></figure>

### Staking Rewards Formula

\
\&#xNAN;*DHT Staking Rewards* <mark style="color:blue;">=</mark> <mark style="color:green;">S</mark> \* <mark style="color:blue;">vDHT</mark> \* <mark style="color:red;">p</mark> \* <mark style="color:purple;">t</mark> \* <mark style="color:orange;">E</mark>

#### Where:

<mark style="color:green;">S</mark> = <mark style="color:green;">Staking Ratio</mark>\ <mark style="color:blue;">vDHT</mark> = <mark style="color:blue;">Accrued Voting Power</mark> \ <mark style="color:red;">p</mark> = <mark style="color:red;">Performance Bonus</mark>\ <mark style="color:purple;">t</mark> = <mark style="color:purple;">Duration Bonus</mark>\ <mark style="color:orange;">E</mark> = <mark style="color:orange;">Emissions Rate</mark>

### Formula Definitions

**Staking Ratio**

The <mark style="color:green;">Staking Ratio</mark>, or ratio of vDHT to DHVT is a key factor in DHT staking rewards. To optimize DHT rewards, a staked position must have accrued the maximum of 6X vDHT the initial dollar value of the staked dHEDGE Vault Tokens (DHVT). For instance, if staking $1,000 worth of Stablecoin Yield Vault tokens, maximum DHT rewards are realized once the staked position accrues 6000 vDHT or more.

The Staking Ratio is a linear scale from 0 to 1 which is the ratio of:

<mark style="color:green;">S = vDHT / (DHPT \* 6)</mark>

**vDHT Voting Power**

Once a user opens a staked position via staking DHT with some DHVT, the positioning begins accruing vDHT, or <mark style="color:blue;">Accrued</mark> <mark style="color:blue;">Voting Power</mark> over time. vDHT accrues linearly over a 9 month period until a maximum amount of vDHT is accrued, equivalent to the number of DHT staked initially.

Example: 100 DHT is staked and from then on, vDHT accrues from 0 to 100 vDHT after 9 months.

**Duration Bonus**

The <mark style="color:purple;">Duration Bonus</mark> is a linearly increasing factor from 0 to 1, which increases with time until maxing out at 9 months.

**Performance Bonus**

The <mark style="color:red;">Performance Bonus</mark> is a linearly increasing factor from 0 to 1, which increases with the returns of a pool performance(starting from the time it is staked). This maxes out if or when a pool achieves 50% returns.&#x20;

Example: 10% pool performance = a Performance Bonus of 0.2. Negative pool performance attracts a 0 Performance bonus, which multiplies out to 0 DHT rewards.

**Emmision Rate**

The <mark style="color:orange;">Emissions Rate</mark> is variable to control the flow of emissions over time. The default value is 1.0.

For the first $1M of locked dHEDGE pool tokens, the Emissions rate will be boosted 50% to 1.5. Once this $1M cap is reached, the Emissions rate will drop back to 1.0.

\
\&#xNAN;***To maximize DHT rewards, a staked position is fully optimized when it:***\
\
**1.** Has been staked for >= 9 months\
**2.** The DHVT performance from the start of staking is >= 50% \
**3.** Accrued Voting Power (vDHT) >= 6 times initial dollar value of the paired DHVT

The overall outcome of this staking program is designed to:

* *Benfit the utility of DHT token as a method of boosting returns*
* *Simplify and align the earning of governance power (vDHT)*
* *Increase the attractiveness of buying and holding DHT*&#x20;