DVS Rewards

Overview

DVS Rewards are incentives provided to both stakers and operators within the Pell Network, designed to encourage participation and maintain the network’s security and integrity.

  • Stakers: Individuals or entities that contribute assets (such as BTC or LSTs) to the network. In return, they earn rewards based on the amount they stake and the specific DVS strategies they participate in.

  • Operators: These are responsible for validating DVS services. They earn a portion of the rewards, typically a fixed commission, with the remainder distributed to the stakers who have delegated their assets to them.

Reward Distribution Process:

  1. Rewards Submission: DVSs submit rewards through the RewardsCoordinator contract, specifying the time period, strategies, and tokens involved.

  2. Reward Calculation: Rewards are calculated off-chain daily and reflect in the system two days later. For example, a reward submission on August 10th would appear in the August 12th calculation.

  3. Merkle Root Posting: A merkle root representing the cumulative rewards for all recipients is posted weekly on the mainnet and daily on the testnet. There’s a 7-day activation delay on the mainnet and a 2-hour delay on the testnet before rewards can be claimed.

  4. Operator Participation: Rewards are only distributed to operators who are actively opted into the DVS on the specific days rewards are active. If no operators are opted in, the rewards for those days are not carried over.

  5. Security Measures: Keys used by operators should be securely managed, and the rewards process should follow best practices to prevent vulnerabilities.

This streamlined process ensures that both stakers and operators are fairly compensated for their contributions to the network, while also maintaining the overall security and efficiency of the DVS ecosystem.

The deterministic calculation method for reward distribution will be detailed in our upcoming technical documentation.

Integration

The rewards protocol is now live on the soon-to-be-public testnet, allowing DVSs to submit rewards by calling createDVSRewardsSubmission on the RewardsCoordinator contract. Each rewards submission includes the following details:

  1. A time range specifying the validity period of the rewards submission.

  2. A list of strategies and corresponding multipliers, enabling the DVS to allocate relative payouts to each strategy within a single rewards submission.

  3. The ERC20 token in which the rewards will be denominated. Rewards MUST originate from an DVS's ServiceManager contract. A sample integration guide will be provided soon.

Steps for Integration:

  1. Submitting Rewards: DVSs initiate the rewards process by calling the createDVSRewardsSubmission function on the RewardsCoordinator contract. This submission includes key details such as the time period for reward distribution, the strategies involved, and the ERC20 tokens used for the rewards.

  2. Rewards Calculation: Rewards are calculated off-chain on a daily basis. Submissions made will reflect in the reward calculations after a two-day delay. For instance, a submission made on August 10th will be included in the August 12th calculation.

  3. Merkle Root Posting: The cumulative rewards for all eligible participants are recorded in a merkle root, which is posted weekly on the mainnet and daily on the testnet. There is a 7-day activation delay on the mainnet and a 2-hour delay on the testnet before these rewards can be claimed.

  4. Operator Participation: Rewards are distributed only to operators who are actively opted into the DVS on the days rewards are active. If no operators are opted in on a given day, the rewards for that day will not be carried over to future days.

  5. Security Considerations: To ensure the security of the rewards process, it is recommended to follow best practices such as securely managing keys, minimizing attack surfaces by using minimal base images, and signing all images for any software releases.

Integration Notes:

  • Rewards cannot be reclaimed by DVSs once distributed. They are calculated daily and take 2 days to appear in the daily calculation. For example, a reward submission made on August 10th will reflect in the August 12th calculation. Reward roots are posted weekly on the mainnet and daily on the testnet, with a 7-day activation delay on the mainnet and a 2-hour delay on the testnet before they can be claimed.

  • If no operators are opted into the DVS on a day when rewards are active, those tokens will not be distributed to future days. Operators will only receive rewards for the entire days they are opted into the DVS.

  • Due to rounding in the off-chain process, it is recommended not to submit token amounts with more than 15 significant digits of precision, as any extra precision will be truncated. Additionally, rewards can be distributed in multiple ERC-20 tokens by calling createDVSRewardsSubmission separately for each token.

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