> For the complete documentation index, see [llms.txt](https://docs.btcd.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.btcd.fi/feature-overviews/protocol-design/sbtcd-rewards.md).

# sBTCD Rewards

sBTCD is the liquid receipt token representing a staked position in the BTCD protocol’s yield-generating vault. As you hold sBTCD, **its exchange rate against BTCD steadily increases** to reflect earned yield—no additional reward tokens are sent to your wallet. At launch, **75% of net protocol yield** accrues to users (subject to governance over time). A **7-day unstaking period** dampens liquidity surges.

### Yield Accrual Tracking

Each day, the protocol’s yield engine measures **net** returns generated by the combined strategies on BTCD collateral:

* Delta-neutral funding & basis spread
* BTC lending & liquid-staking returns
* Short-duration treasury or stablecoin yields

Returns are computed on a **per-second** basis and aggregated into a cumulative **Yield Fund** inside the `StakingRewardsVault`. This fund is the single source of truth for future sBTCD exchange-rate increases.

### Weekly APY Calculation

* Let rtr\_trt​ be per-second net yield rate after fees and safety buffers.
* **7D realized yield:** Y7d=∑rtΔtY\_{7d} = \sum r\_t \Delta tY7d​=∑rt​Δt over the last 604,800 seconds.
* **Displayed Weekly APY (annualized):**

  \[FORMULA IMAGE]
* UI shows **point-in-time**, **7-day**, and **30-day** APY; negative weeks display as such. Governance controls minor smoothing (e.g., capped week-to-week change) to prevent MEV or timestamp gaming. **Target user share = 75%** of net yield while the remainder supports ops and reserve.

### Drip Distribution

* Rewards are **streamed** from the Yield Fund to sBTCD holders via a **non-rebase exchange-rate increase** (no transfers).
* Mechanism: an **index (“accYieldPerShare”)** tracks cumulative claim per sBTCD since inception. On each update (block-time or hourly), the contract:
  1. Reads incremental net yield;
  2. Allocates **user share** (e.g., 75%) to the index;
  3. Leaves protocol share for operations/reserve.
* The drip cadence is frequent (per-block / per-hour) to keep exchange-rate growth smooth while mitigating arbitrage around discrete “harvests.”

### Exchange Rate Update

* Define **exchange rate** ξ=BTCD in VaultsBTCD Supply\xi = \frac{\text{BTCD in Vault}}{\text{sBTCD Supply}}ξ=sBTCD SupplyBTCD in Vault​.
* New yield credits **mint BTCD** into the vault (or claim as BTCD-equivalent), so ξ\xiξ **monotonically increases**; sBTCD supply is unchanged unless stake/unstake occurs.
* On stake: user deposits BTCD, receives BTCDξ\frac{\text{BTCD}}{\xi}ξBTCD​ sBTCD.
* On initiate-unstake: user burns sBTCD, enters **7-day** cool-down; at completion, user withdraws BTCD at the then-current ξ\xiξ. No rewards accrue to the exited balance during the cool-down.

### User Experience

* **Passive Holders** — Hold sBTCD; the **exchange rate climbs automatically** as yield streams. No manual claiming, no dilution, no extra tokens.
* **DeFi Composability** — Lending, looping, and vaults read ξ\xiξ on-chain, so strategies naturally earn the streamed yield. (Looping sBTCD enables best-in-class BTC APY when borrow costs are below protocol yield.)

**Activation Timing** — sBTCD staking goes live **immediately after the points rewards program ends**, ensuring a smooth transition from the initial incentive phase to ongoing yield accrual. (Points conclude → stake BTCD → receive sBTCD → accrue via exchange-rate increases.)