We’re thrilled to announce the Pika token rewards program, following the successful launch of v4. This program is designed to further encourage the adoption of the protocol.
Understanding PIKA Tokenomics
In our token launch post, we provided an overview of PIKA tokenomics. Here’s a recap:
Pika Protocol utilizes two tokens: PIKA and Escrow PIKA (esPIKA).
PIKA is Pika Protocol’s utility token, with the following functions:
- It can be staked to gain access to 30% of platform trading fees.
- It can also be staked to receive trading fee discounts.
- The staking process involves locking PIKA for a minimum of 14 days.
Meanwhile, Escrow PIKA (esPIKA) is a non-transferable token that can be vested over a year to unlock PIKA. The lock-up mechanism initiates with a 90% fee for vesting PIKA, which decays linearly to zero. Fees incurred from redeeming before the one-year period will go to the treasury growth fund. After a year, esPIKA is convertible to PIKA on a 1:1 ratio.
PIKA Rewards Program
PIKA’s token distribution has allocated 30% of the total PIKA supply for future platform rewards. These rewards incentivize liquidity providers, traders, and PIKA stakers. The rewards will be distributed as esPIKA over the next three years, starting in August 1st. The Pika rewards program will be reviewed monthly and the allocations can be adjusted. Any changes will be communicated at least seven days prior to implementation.
Approximately 0.75 million (0.75% of PIKA supply) esPIKA base rewards are distributed every 30 days:
- 45% goes to liquidity providers, distributed in real-time.
- 45% is allocated to traders: 35% as trader rewards, dispensed every epoch (30 days), and 10% as trading competition rewards, distributed per competition schedule.
- The remaining 10% goes to PIKA stakers, also distributed in real-time.
The Pika treasury growth fund receives penalties from early esPIKA redemptions. Half of the 30-day PIKA acquired is repurposed as a boosting reward for the next epoch (30 days). For instance, if a 0.2 million PIKA penalty is collected in a given epoch, 0.1 million is stored in the treasury, and the other 0.1 million is reallocated as a boosting reward for the next epoch. This reward is then distributed according to the same allocation percentage (45% to LPs, 45% to traders, and 10% to PIKA stakers).
In the coming months we will introduce a new referral program in which roughly 5% of esPIKA (out of the 0.75 million per epoch) will be set aside for referral rewards. This will lead to a revised distribution: 45% to liquidity providers, 42% to traders(35% as trader rewards and 7% as trading competition rewards), 8% to PIKA stakers, and 5% to the referral program. Details of the updated distribution plan will be communicated in advance.
Benefits of Staking PIKA
Staking PIKA brings a host of benefits:
- PIKA stakers receive 30% of trading fees in real-time.
- An additional 10% of monthly esPIKA rewards are also distributed to PIKA stakers in real-time.
- Monthly trader rewards for each trader are dependent on the previous month’s trading fees and the amount of PIKA staked:
Each trader’s rewards = total epoch trader rewards * trader score / (sum of all trader scores)
Trader score = epoch trading fees * PIKA staked ^ 0.5
- Trading discounts for PIKA stakers, see the schedule below for details
With the launch of our token rewards program, we eagerly anticipate a surge in user adoption for the Pika Protocol!