# Staking

We’re at \~125k connections live and adding more every day. As the network grows, each hotspot owner's reward gets diluted. To give owners exposure to network growth, we’re introducing a staking mechanism that turns idle unclaimed owner‑share into sustainable staking rewards.

#### How it works

* Collect idle owner‑share from unclaimed hotspots (the 60% that would normally go to an owner)
* Route 30% as staking incentive (remaining 70% funds community growth).
* Distribute pool rewards pro‑rata to stakers , bigger stake = bigger rewards.

With zero net new emissions, this creates sustainable rewards that flow back to long‑term supporters.

***

### Staking Reward Flow Diagram

This diagram explains how DBT flows from hotspot emissions into staking rewards.

```
                      +----------------------+
                      |   Active Hotspots    |
                      +----------+-----------+
                                 |
                                 v
             +----------------------------------------+
             |  DBT emitted per hotspot per day (E_t) |
             +-------------+--------------------------+
                                 |
                     +-----------+------------+
                     |                        |
                     v                        v
    +--------------------------+   +------------------------------+
    |Claimed & Active Hotspots |   | Unclaimed & Active Hotspots  | 
    |                          |   |                              |
    | Rewards distributed      |   | Owner Share (60%)            |
    | as per UBI model         |   | Redirected to Incentive Pool |
    +--------------------------+   +-----------+------------------+
                                                 |
                                                 v
                                     +------------------------+
                                     |    Network Incentive   |
                                     +-----------+------------+
                                                 |
                       +-------------------------+----------------------+
                       |                                                |
                       v                                                v

             +----------------------+                       +---------------------+
             |  Staking Incentives  |                       |  Growth Incentives  |
             |        (30%)         |                       |        (70%)        |
             +-----------+----------+                       +----------+----------+
                         |                                             |
                         v                                             v
            +------------------------+                   +----------------------+
            |   Reward DBT staking   |                   | Hotspot Sales        |
            |     (weight based)     |                   | Marketing            |
            +------------------------+                   | Hackathons           |
                                                         | Network expansion    |
                                                         +----------------------+
```

**Staking rewards are funded by network  expansion rather than arbitrary token inflation.**

***

## APY Simulation Model

Because staking rewards depend on both network state and staking demand, APY must be modeled dynamically.

The effective APY can be estimated using the following framework.

***

{% stepper %}
{% step %}

### Step 1: Calculate Daily Staking Reward Pool

Let:

* `U_t` = active but unclaimed hotspots
* `E_t` = DBT emitted per hotspot per day

Owner share parameters:

```
owner_share (of unclaimed hotspot)= 60%
staking incentive = 30% of owner_share
```

Daily staking pool:

```
StakePool_t = U_t * E_t * 0.60 * 0.30
```

{% endstep %}

{% step %}

### Step 2: Calculate Total Weighted Stake

Let:

* `T` = total DBT tokens staked
* `W` = weighted stake after applying lock multipliers

<table><thead><tr><th width="343">Lock Duration</th><th width="344">Multiplier</th><th data-hidden></th></tr></thead><tbody><tr><td>6 Months</td><td>1.5x</td><td></td></tr><tr><td>12 Months</td><td>2.2x</td><td></td></tr></tbody></table>

Example distribution:

```
6 Month stake = 40M DBT
12 Month stake = 60M DBT
```

Weighted stake:

```
40M * 1.5 = 60M
40M * 2.2 = 88M

Total weighted stake = 148M
```

{% endstep %}

{% step %}

### Step 3: Daily Reward Per Weight Unit

```
RewardPerWeight = StakePool_t / WeightedStake
```

{% endstep %}

{% step %}

### Step 4: Calculate Individual Rewards

Example user staking:

```
Amount = 10,000 DBT
Lock Duration = 12 months
Multiplier = 2.2x
User weight+ = 10,000 * 2.2 = 22,000 DBT
```

Daily reward:

```
user_daily_reward = weight * RewardPerWeight
```

{% endstep %}

{% step %}

### Step 5: Convert to Annualized APY

Approximate APY:

```
APY ≈ (DailyReward / StakedAmount) * 365
```

{% endstep %}
{% endstepper %}

***

## Example Scenario

Assume:

```
Sold & Active hotspots = 25,000 
Unclaimed & Active hotspots = 100,000
```

Daily emissions for unclaimed locations:&#x20;

```
Daily Mainnet Rewards = 1,643,835 DBT
Daily H.O Rewards = 60% x Daily Mainnet Rewards = 986,301 DBT
Daily H.O Rewards per hotspot = 7.890408 DBT/hotspot
Daily H.O Rewards from Unclaimed Locations = 100,000 x 7.890408 = 789040.8 DBT
```

Staking Incentives:

```
Staking Incentive Pool = 30% of Daily H.O Rewards from Unclaimed Locations
                       = 0.3 x 789040.8
                       = 236,712.24 DBT/day 
```

If total weighted stake: 148M&#x20;

```
reward_per_weight = 236,712.24 / 148,000,000
                  = 0.0015994 DBT
```

Calculating APY for a user:

```
If user has staked 10,000 DBT at 12 month lock
User weight: 10,000 × 2.2 = 22,000
Daily Reward = 22,000 * 0.0015994 = 35.1868 DBT/day
Annualized = 34.716 x 365 = 12843.182 DBT

Effective APY ~ 128.4%
```

***

## Sensitivity Analysis (What Moves APY)

APY increases when:

* more hotspots are deployed but not yet claimed
* fewer DBT tokens are staked
* longer lock durations dominate

APY decreases when:

* more DBT tokens enter staking
* hotspot inventory gets sold to owners
* emission schedule declines

***

## Growth Phase vs Mature Network

This design naturally produces two phases.

### Early Network Phase

* large unclaimed hotspot inventory
* high staking rewards
* strong bootstrap incentives

### Mature Network Phase

* most hotspots claimed
* smaller incentive pool
* staking yield decreases

This mirrors the natural growth cycle of infrastructure networks.