The Pika Token Rewards Program has been operational for nearly two months and has successfully incentivized vault depositors, traders, and PIKA stakers. Designed with flexibility in mind, the program allows for adjustments to improve platform adoption as needed. For the coming epoch we will be modifying the trading rewards formula for more equitable results, rebalancing the trading/vault rewards, and boosting the trading rewards by 2x! Read on for more details.
Adjustment 1: Refined Calculation of Trading Rewards to Benefit a Broader User Base
During the first epoch of the program, we observed that a single large token staker had secured over 80% of the trading rewards, despite contributing less than 10% to the trading fees. This imbalance occurred because our existing formula for trading rewards disproportionately benefits those who stake large amounts of tokens.
Current Trading Reward Formula:
With this formula, a trader staking 100,000 PIKA earns 31 times more rewards than a trader staking just 100 PIKA, assuming they both contribute equally to trading fees. While this model encourages users to stake larger amounts, it disproportionately favors large token holders at the expense of smaller ones.
Starting from epoch 3, we will lower the exponent in the formula from “0.5” to “0.1.” This adjustment will result in the 100,000 PIKA staker earning only twice as many rewards as a 100 PIKA staker — offering an attractive yet more equitable distribution of rewards.
Adjustment 2: Rebalancing Trading and Vault Rewards
In response to trader feedback, we are increasing trading rewards by 10% while reducing vault rewards by 10%. The rationale behind this is that vault rewards are primarily fueled by USDC trading fees, thus increasing trading rewards will likely lead to higher trading fees and, in turn, larger vault rewards. Consequently, the new esPIKA reward allocation will be 55% for traders(45% as trading fee rewards and 10% as trading contest rewards), 35% for vault depositors, and 10% for PIKA stakers.
Adjustment 3: Epoch 3 Reward Surge to Accelerate Platform Adoption
Although the reward allocation for PIKA is vested linearly over a three-year period which began in June 2023, the actual Rewards Program only startedin August. As a result, two months of PIKA rewards have remained unallocated. To galvanize the protocol’s adoption, we are reallocating a portion of these unused rewards to significantly boost the total rewards for epoch 3 by 2x. This will be a one-time change and will not impact future reward allocations.
These adjustments are part of our ongoing commitment to making the Pika Token Rewards Program more balanced and beneficial for all members of our community. Thank you for your continuous support and engagement.