Earlier this month, we launched the Iskra Governance Staking, which is essentially the first major step in Iskra’s platform decentralization plan to eventually become a community-led DAO.
By staking your ISK tokens, you will receive sISK, which represents the governance rights that you can leverage once governance participation is opened.
You will also receive a corresponding number of contribution points (CP) based on the sISK that you hold, as well as ISK token rewards based on the ISK tokens that you staked.
In this article, we will break down all you need to know about how much sISK you’ll get for staking ISK plus the corresponding CPs you’ll receive, as well as the amount of ISK rewards you can get for staking.
All About sISK
When you stake your ISK tokens, you will get a corresponding number of sISK based on the ISK:sISK ratio applicable at the time that you staked. The exchange rate between ISK and sISK is calculated based on the ratio of total staked ISK and total sISK in circulation.
Total staked ISK means the total amount of ISK staked in the staking contract, while the total sISK in circulation refers to the total amount of sISK being held by users who staked and excludes the burned sISK amount. Total staked ISK is always more than total sISK in circulation because staking reward ISKs are compounding to staking pool every seconds.
To recap, you will get sISK when you stake and your sISK will be burned once you un-stake. Here are some other important things you need to keep in mind when you stake:
- The earlier you stake, the better because you’ll get more ISK rewards for your staked ISK.
- The exchange rate between ISK and sISK is designed to continuously decrease over time, which is another reason why the earlier you stake, the better.
- The contribution points you’ll receive for staking is dependent on the sISK that you hold. Once you un-stake and your sISK is burned, the corresponding number of contribution points will also be removed from your account. Thus if you want to leverage the advantage of having more CPs (such as boosting your rank in the Community Tier System), hold on to your sISK.
ISK:sISK Exchange Rate
Users who staked during the pre-staking received 1 sISK for every ISK that they staked as the exchange rate during that time was 1:1.
Once the pre-staking period was done, the ISK rewards distribution sets in and starts to be compounded into the staking pool. As a result, the ratio between ISK and sISK starts to continuously decrease from that point onwards, going from 1:0.9 to 1:0.8 and so on.
The ISK to sISK exchange rate changes in real time, thus even if you staked the same number of ISK but staked them at different times, you’ll receive a different amount of sISK each time as the exchange rate changes depending on when the staking was done.
For example: Let’s say that Sam staked his ISK during the pre-staking period when the exchange rate was 1:1, while John staked a few days after Sam when the rate was 1:0.8. Both of them staked 100 ISK each. Sam would receive 100 sISKs whereas John would only receive 80 sISKs despite both staking the same amount of ISK because of the applicable exchange rate at the time that they staked.
As the exchange rate continues to decrease over time, you’ll get lesser and lesser sISK for every ISK that you stake the longer you wait before doing so.
The same exchange rate concept applies to un-staking – the number of ISKs you’ll get back once you un-stake will be determined by the exchange rate applicable at the time you un-staked.
Let’s continue with the example we have above – Sam and Jon both un-staked 80 sISK at the same time when the applicable exchange rate is 1:0.5. To recap, Sam holds 100 sISKs for staking 100 ISK because he staked earlier while John only holds 80 sISKs for staking 100 ISK because he staked at a later time.
Since they un-stake 80 sISK at the same time, both John and Sam will receive the same amount of 160 ISKs (80 / 0.5 = 160) each. However, Sam still has 20 sISK in his holdings while John has no more sISK after they un-staked.
Here’s a side-by-side comparison between Sam and John showing why THE EARLIER YOU STAKE, THE BETTER (the more ISK rewards you’ll get!):
The ISK token has a max supply of 1 billion and out of this, 200 million ISK or 20% is allocated as staking rewards to be distributed to everyone who participates in the Governance Staking.
From this 200 million ISK allocation, 10 million ISK will be distributed every year for 20 years, starting from when the Governance Staking was launched.
The rewards to be distributed is calculated by the second in real time, thus the reward that each user who staked can receive is calculated based on the percentage of his sISK holdings against the total sISK in circulation.
While every ISK that you stake will let you earn ISK rewards, you can maximize it by staking earlier in light of the ISK:sISK exchange rate that will continuously decrease over time.
- The earlier and the longer you stake, the more staking rewards you’ll get.
- Your sISK is not only a proof of staking, but also plays an important role in determining your voting power in Iskra’s governance in the future.
- By staking ISK and participating in Iskra’s Governance Staking, you have the power to impact proposals and voting and help shape the future of Iskra. The sISK that you hold represents the governance rights that you’ll have once Iskra enables governance participation as part of its platform decentralization plan.
Iskra offers a premier destination for players and game developers to explore the thrill and opportunity of Web3 gaming alongside a vibrant community.
As part of its mission, Iskra aims to mold a Web3 future by creating a forward-thinking dedicated home for Web3 gaming and giving every user a stake in the company’s success. It is committed to becoming a leading platform for blockchain gaming.