FAQ

This page provides a guide for users to understand general concepts of the sBTC Incentive Protocol.

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1. What is the sBTC Yield Protocol?

• The sBTC Yield Protocol distributes rewards to enrolled wallet addresses holding sBTC. Users must meet specific conditions to participate and earn rewards.

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2. Enrollment Process

2.1. How Do I Enroll?

• Users must enroll their wallet address in the Yield Protocol before the cycle starts to become eligible for rewards. Enrollment ensures eligibility for all subsequent cycles unless the user opts out.

2.2. What Happens If I Miss Enrollment?

• If you fail to enroll before a cycle begins, you are ineligible for rewards during that cycle, even if you hold sBTC. You can still enroll during a cycle and start receiving rewards from the next cycle.

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3. Reward Eligibility

3.1. How Are Rewards Calculated?

• Rewards are distributed based on the average sBTC balance held by each enrolled wallet during a cycle. Multiple snapshots are taken throughout the cycle to determine the average balance.

3.2. How Long Does a Cycle Last?

• A cycle lasts approximately as long as a PoX (Proof-of-Transfer) cycle, with 14 daily on-chain snapshots taken to record sBTC balances.

3.3. What If I Transfer sBTC Between Wallets?

• If sBTC is moved between wallets:

  • The sending wallet’s average balance decreases based on the snapshots.

  • The receiving wallet’s average balance increases, provided it is also enrolled.

Example:

• Wallet A holds 100k sats for the first 7 snapshots and 0 sats for the remaining 7 snapshots in a cycle of 14 snapshots. The average balance for Wallet A will be 50k sats.

3.4. Can Multiple Wallets Be Enrolled?

• Yes, each enrolled wallet earns rewards based on its share of the total rewards pool. This share is calculated by comparing the wallet's average sBTC balance to the total average sBTC balance of all enrolled wallets.

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4. Key Considerations

4.1. Address-Based Tracking

• Rewards are tied to the enrolled wallet address. The protocol only calculates the average balance of the sBTC held by the wallet during the snapshots.

• Moving sBTC out of an enrolled wallet reduces its average balance.

• Transferred funds are considered for the receiving wallet if it is also enrolled.

4.2. User Rewards Formula

N is the number of snapshots in the cycle

Sᵢ is the amount the user held at snapshot i

$$userAverageHeld=(S_1 + S_2 +...+ S_N) / N$$

$$userShare = userAverageHeld / allEnrolledUsersAverageHeld$$

$$userRewards=userShare * rewardsForCycleX$$