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NuCypher WorkLock: Staking Scenarios

The NuCypher network has launched. If you participated in the WorkLock, you may be trying to wrap your head around the staking options. We can help. Here are some simple strategies & ways to optimize.

nucypher staking

Terminology

Wind down – this begins the unlock countdown–as your stake gets closer to being liquid, your maximum potential rewards decrease. Until “wind down” is turned on, the clock that you set for unlocking your stake will not begin.

Restaking – this causes new rewards to automatically be added to your locked up stake. Your rewards will now compound, and they won’t be liquid until 1) you “wind down” your stake and 2) the unlock period of eg. 180 days passes. This will increase the rate that your ETH is unlocked marginally.

Substake dividing – you can portion your stake to prolong parts of it to have longer unlock periods, earning you more rewards and speeding up the release of your ETH.

Have other questions about NuCypher staking? Check out our FAQs.

Options and Strategies

Your ETH is unlocked at a rate proportional to your earnings. Your earnings depend upon two things, primarily: 1) the proportion of the token supply staked (less of the supply staked –> greater rewards) and 2) the length of your lockup.

WorkLock participants must stake their NU for at least 180 days in order to get their ETH deposit and NU tokens unlocked. There are a few ways to do this–let’s take a look.


Scenario 1(a): Stake 100% of NU for 180 days

Use this strategy to get liquid rewards and to unlock your staked NU tokens ASAP.

Wind down: on
Restaking: off

What happens?

Day 1: You will be earning 50% of your maximum potential NU rewards and the rewards will be liquid.
Note: if you set restaking to on, your rewards will be locked into your stake.

Day 90: you will be earning 25% of your maximum potential NU rewards.

Day 180:

  • 100% of your NU tokens will be unlocked
    • you will be receiving 0% of your maximum potential NU rewards
  • 100% of your ETH will be unlocked

Note: in this scenario your reward rate will decrease every day that your staked NU approaches unlock. This is because “Wind down” is on.


Scenario 1(b): Stake 100% of NU for 180 days

Use this strategy to balance maximizing rewards with minimizing the unlock time for your staked NU.

Wind down: off
Restaking: off

What happens?

  • Day 1: You will begin by earning 50% of your maximum potential NU rewards and the rewards will be liquid.
    Note: if you set restaking to on, your rewards will be locked into your stake.

By day 90: you will be earning 50% of your maximum potential NU rewards.

By day 180:

  • 100% of your NU tokens will still be locked
    • you will be receiving 50% of your maximum potential NU rewards
  • 100% of your ETH will be unlocked

Note: in this scenario your reward rate will remain fixed because your staked NU are not set to begin unlocking. At any time you can switch “Wind down” on and your staked NU tokens will gradually unlock over the next 180 days.


Scenario 2: Stake 100% of NU for 360 days

Use this strategy to get your locked ETH back quicker.

Wind down: on
Restaking: off

What happens?

Day 1: You will be earning 100% of your maximum potential NU rewards and the rewards will be liquid.
Note: if you set restaking to on, your rewards will be locked into your stake.

Day 120: 100% of your ETH will be unlocked

Day 180: you will be earning 50% of your maximum potential NU rewards

Day 360: 100% of your NU tokens will be unlocked

  • you will be receiving 0% of your maximum potential rewards

Note: in this scenario your ETH will be unlocked two months faster because you set a 1-year unlock period for your NU stake. Since “wind down” is on, your NU stake will gradually unlock, so your reward rate will decrease every day that your staked NU approaches unlock.


Scenario 3: Divide and stake 50% of NU for 180 days and 50% of NU for 360 days

Use this strategy to balance getting your locked ETH back quickly with unlocking half of your staked NU tokens ASAP.

Wind down: on
Restaking: off

What happens?

Day 1: You will be earning 75% of your maximum potential NU rewards and the rewards will be liquid.
Note: if you set restaking to on, your rewards will be locked into your stake

Day 150: 100% of your ETH will be unlocked

Day 180: 

  • 50% of your NU will be unlocked and not earning rewards
  • your remaining NU be earning 50% of your maximum potential NU rewards

Day 360: 100% of your NU tokens will be unlocked

  • you will be receiving 0% of your maximum potential rewards

Note: in this scenario your ETH will be unlocked one month faster because you set a 1-year unlock period for half of your NU stake. Since “wind down” is on, your NU stake will gradually unlock, so your reward rate will decrease every day that your staked NU approaches unlock.

Some strategic details

What it comes down to is how long you are comfortable having your NU locked for. Longer lockup commitments (via prolonging and having wind down off) mean substantially more NU rewards and thus substantially faster ETH unlock. The faster you earn NU rewards, the faster your ETH unlocks. Once you have earned 12.5% on your principle WorkLocked NU, 100% of your ETH will be released. Having wind-down off is great for those who plan to stake for the foreseeable future anyway.

“Restaking off” should only be for those who wish to have liquid NU rewards. While this will unlock your ETH faster and compound your earnings, it will only marginally affect both. There’s no reason not to restake if you’re not concerned about having liquid NU prior to your stake unlocking.

“Wind down off” and a prolonged lockup is the best way to both maximize NU rewards and to unlock ETH quickly, but at the expense of NU liquidity. With “wind down on,” your reward rate decreases linearly each day eg. with a 180-day term beginning with a reward rate coefficient of 0.5 and eg. a 360-day term being a 1.0 reward rate coefficient that decreases to 0 by the end of the term.

Remember

The relationship between stakers and staking service providers is unique: you will need a dedicated node for each allocation. If you’re looking for a staking service provider, contact us.

If you would like to learn more about NuCypher, we have published additional resources here.

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