Staking is an integral part of the governance process of the bZxDAO. Staking can be thought of as very similar to delegating votes. When you stake your tokens, you are staking those tokens to an address and empowering them as a representative. Those representatives can then propose and vote on governance proposals. The new staking module is now live but the full bZxDAO will come at a later date. An interim governance portal utilising snapshots has been established in the interim which we will describe in a future post.

What can you stake?

There are three tokens that can be staked: BZRX, iBZRX, and LP/BPT tokens.

BZRX

When you stake BZRX, you receive a proportionate amount of the fee sharing. For example, if Alice stakes 500 BZRX when there are 1000 BZRX in the circulating supply, then she is entitled to half of the fees generated by the protocol.

The voting weight of BZRX is 1.

iBZRX

iBZRX is the iToken equivalent of BZRX that you recieve as a placeholder when lending BZRX to the protocol. This is also able to be staked and yields the staking rewards of BZRX - the pool utilisation %. They also recieve the additional interest earned from lending their BZRX.

The voting weight of iBZRX is the same as the staking reward yield, 1 - the pool utilistion %.

LP/BPT Tokens

It is proposed that users can also stake LP/BPT tokens by depositing their BZRX into the Balancer pool. The eligible pool address is 0xe26a220a341eaca116bda64cf9d5638a935ae629. Staking LP/BPT tokens can provide rewards in excess of simply staking BZRX. Not only will users earn fees from providing AMM liquidity, but LP/BPT tokens in most circumstances will receive a larger share of the fees than the same underlying BZRX would. This is because any LP/BPT tokens staked are assumed to represent the entire unstaked BZRX supply. This also means that as the staking participation rate approaches 100%, the rewards for staking LP/BPT tokens reaches parity with BZRX tokens.

The voting weight of LP/BPT tokens is equivalent to the underlying amount of BZRX in the Balancer pool, there is no bonus voting weight for using this pool for staking.

vBZRX

You cannot stake vBZRX itself. The token has no governance power, nor does it have the ability to participate in fee sharing. However, holding vBZRX does allow you to stake the underlying BZRX held inside the vesting contract. The fees generated by the BZRX in the vesting contract are not accessible until the BZRX which generated those fees vest. The vesting contract has a vesting period of 4 years with a 6 month cliff which occured on the 12th of January at 2am UTC. If Alice held vBZRX and staked the underlying BZRX from the time of platform launch until the cliff, then Alice would receive nothing in fees until that point, whereupon the fees earned would vest according to the same vesting schedule as the underlying BZRX. After the cliff, the BZRX and accompanying fees generated vest over 3.5 years. If vBZRX is sold, any fees generated by the underlying BZRX that was staked still vest according to the same schedule.

The voting weight of 1 vBZRX counts as the amount of underlying BZRX that’s unvested, and decreases each block as more BZRX vests.

As the underlying BZRX is claimed from inside the vesting contract, the value of vBZRX steadily decreases, since vBZRX is simply a wrapper for the vesting contract. This means that at the end of the vesting period, vBZRX should trade at $0.00.

Staking Incentives

It is proposed that fees be generated from user interaction with the protocol. These include origination fees, trading fees, and fees collected on interest. Half of these fees will initially go toward the insurance fund until the DAO decides otherwise.

Click to get started calculating

Fees collected by the protocol will be swept and consolidated into predetermined assets for distribution. These assets will be Stablecoins locked in Curve’s 3Pool, and BZRX. BZRX will be obtained through market purchases using the non-stablecoin fees collected by the protocol. This removes the burden of “dust” for our stakers and allows them another manner with which to accumulate BZRX.

BZRX token holders who stake using BZRX LP tokens will receive a larger proportion of protocol fees than holders who stake using BZRX tokens. This is because fees are distributed proportionally between the indirect BZRX LP staking pool and the direct BZRX staking pool. Staked BZRX LP tokens are assumed to represent the entire unstaked BZRX supply so will nearly always receive proportionally more fees per token. Only in the highly unlikely event that 100% of all BZRX tokens are staked will the reward shares be equal.

  Example 1 Example 2 Example 3 Example 4
Total Circulating BZRX Supply

400

400

400

400

Total Reward for given period (ETH)

1

1

1

1

BZRX Staked

100

200

200

300

BZRX LP Tokens Staked

100

200

100

50

Total BZRX Unstaked

200

0

100

50

Reward Share for Staked BZRX

0.25

0.5

0.5

0.75

Reward Share for Staked BZRX LP Token

0.75

0.5

0.5

0.25

Reward per 1 BZRX Token (ETH)

0.003

0.0025

0.0025

0.0025

Reward per 1 BZRX LP Token (ETH)

0.008

0.0025

0.0050

0.0050

Advantage BZRX LP Tokens None BZRX LP Tokens BZRX LP Tokens

Notice only when every single BZRX token is staked will the reward for staking BZRX tokens and BZRX LP tokens be the same. Otherwise, it will be more profitable to stake BZRX LP tokens.

The BZRX, vBZRX, 3CRV, and BZRX LP tokens all interact to create a dynamic system of incentives, governance mechanisms, and capital flows. Like everything else in the bZx ecosystem, we strive to maximize ease-of-use and design the best user experience for our community. Staking will be no different. With the bZx Staking Dashboard, you will be able to stake with one click. Unstake with one click. And claim rewards in one click. The dashboard will even let you exchange your vBZRX for BZRX tokens as they vest.

There are three ways to stake and all three ways can be accessed via the Staking Dashboard. All three methods will allow you to earn rewards and participate in governance. All three methods earn rewards in BZRX and stablecoins.

Method Step 1 Step 2 Step 3 Step 4 Step 5
BZRX Stake BZRX directly Vote Receive 3CRV + BZRX as reward
vBZRX Stake BZRX by proxy Vote with 50% power Receive vesting 3CRV + BZRX as reward
BZRX LP Token Deposit BZRX in Balancer Pool Receive BZRX LP tokens Stake BZRX LP tokens Vote Receive 3CRV + BZRX as reward

How to Stake

To be able to stake you will need to first approve the tokens for use on the staking dashboard. You will need to do this for each stakeable asset in your wallet. Connect your wallet to the dashboard and individually approve each asset you wish to stake via your web3 wallet.

After you have approved your tokens for staking you can select the amount with which you wish to stake and click “Stake” to push a transaction to your web3 wallet. As with all transactions ensure you are using appropriate settings for gas fees.

After the transaction has confirmed the balance will move from your wallet to the staking contract and this will reflect in the staking dashboard

Congratulations! You’re now staking!

Click over to the rewards tab so see your rewards and vested BZRX accruing. To claim available staking rewards simply click claim and approve the transaction in your wallet. This will withdraw the available 3CRV and BZRX tokens to your wallet. If you wish to restake your earned BZRX in the same transaction for a compounding effect simply select the checkbox below the claim button before proceeding.

Time locked rewards displayed below staking rewards are the rewards earned through the staking of vBZRX. These will vest to you over time and become available in your staking rewards balance.

User rewards are a part of the incentive program mentioned earlier in this article. Your accrued rewards from using the protocol will be accessible here until claimed.

This section will display the amount of BZRX that has vested from your wallets vBZRX holdings. They are claimable at any time.

About the author
Kyle J Kistner
CVO @ bZx. Product, Protocol Design, & Token Economics.