Policies
Coverage
V2
Claiming rewards and the inflation mitigation mechanism
Bridge Mutual utilizes a fair launch approach and rewards users with a substantial amount of tokens in the early-stage development of the network in exchange for providing liquidity for the coverage pools. This allows us to build a self-sustainable and community-managed protocol.
The rewards distribution plan incentivizes and rewards users to stay long-term with the protocol and penalizes those that are prioritizing fast and easy gains. It also helps to mitigate the inflation shock caused by the Coverage Mining Event (09.07.2021 - 23.07.2021) rewards distribution, as BMI will distribute a fixed amount of tokens every block. The number of tokens released will be decreased gradually, based on the protocol's demand for liquidity.
The below rules of claiming rewards and inflation mitigation mechanisms start applying from the Coverage Mining Event (09.07.2021) and are valid until the Rewards Pool, with 76M of BMIs, is empty (which we anticipate happening around 4 years after the date of the launch).
Be advised that the inflation mitigation rules below apply ONLY to the BMI staking and BMI rewards, and not to the USDT earned from premiums (in exchange for providing coverage liquidity for projects).
Coverage Liquidity (USDT) is only subject to 8 days cooldown (necessary to keep the platform capital efficient). During the Coverage Mining Event only, Coverage Liquidity provided on behalf of teams, cannot be withdrawn until the event is over, plus an additional 8 days cooldown.
The chart below represents an estimated 4 years distribution plan. (please bear in mind that the chart shape might change).
Inflation mitigation mechanism for rewards:
Rewards distributed to the (1) Coverage Mining USDT stakers (bmixCover staking) and the (2) Liquidity Pools staking (ETH/BMI LP and USDT/BMI LP staking), will be subject to a slashing logic: the earlier the user leaves the staking contract, the more tokens entitled to that particular user will be redistributed to those who stake for a longer period of time.
The slashed tokens are redistributed to the native BMI staking pool proportionately.
Users will be always able to re-stake their BMI reward tokens to the native BMI staking contract to avoid slashing however they will need to consider a lockup period (90 days). The above "inflation-mitigation" solution is broadly used by industry leaders and it's proven to work and stabilize the initially volatile token action. Incentivising long-term players through compensated lockups is vital to building a community-managed protocol and a well-functioning DAO.
You can find the details of the inflation mitigation mechanisms below:
Claiming BMI rewards from the (1) Coverage Mining USDT staking (bmixCover staking) and the (2) Liquidity Pools staking (ETH/BMI LP and USDT/BMI LP staking):
- is subject to decrease linearly on a daily basis redistribution formula
- The user will be able to withdraw the rewards earlier, but the % of the rewards will be redistributed to the other Coverage providers' pro-rata.
- The redistribution will start from 90% on the 1st day of the Coverage Mining Event (08.07.2021) and decrease 0.7% a day over 100 days until achieving 20%.
- For example, if the user wants to withdraw 100 BMI on day 20 after the start of the Coverage Mining Event, then 76% of rewards are going to be redistributed to other stakers. So the user is going to get 24 BMI, 76 will be added to other stakers claimable amounts.
- The User is always able to restake all the 100 BMI entitled to him however these BMI will be subject to the below logic.
BMI Staking Rewards inflation mitigation logic:
- For the first 90 days (starting July 9th 2021), withdrawing tokens and re-staked rewards from the BMI Staking protocol will have a 90 days lockup, decreasing linearly on a daily basis (if you stake in the first day - 90 days lockup, if you stake on the 5th day, it is locked for 85 days etc).
- The lockup period (90 days) is hardset and is not individual - first day of the lockup is the 9th of July 2021, the last day is the 7th of October.
- Users will be able to restake BMI rewards from the (1) Coverage Mining USDT staking (bmixCover staking) and the (2) Liquidity Pools staking (ETH/BMI LP and USDT/BMI LP staking) immediately, adding 100% of claimable rewards to the BMI staking contract. They can do it to avoid the slashing logic.
- After the applied lockup is over, users are able to click "unstake" which triggers an 8 days cooldown logic applied.
- After the 8 days cool-down period is over there the user has 48 h to withdraw the tokens.