Reward Mechanics

This section explains how XDC liquid staking rewards are generated and distributed under V3. The model is NAV-based: rewards are not handed out via a manual claim flow; they are…

This section explains how XDC liquid staking rewards are generated and distributed under V3. The model is NAV-based: rewards are not handed out via a manual claim flow; they are embedded in the psXDC vault share price.

Reward Source

StakeXDC generates yield through XDC Network masternode operations. Validators participate in the XDPoS consensus process and receive protocol rewards derived from block production and network activity.

Unlike ETH-based liquid staking protocols, XDC Network does not implement punitive principal-slashing mechanisms comparable to Ethereum Casper. XDC's slashing instead penalizes downtime: a masternode that fails to sign any block during one full epoch (900 blocks, ~30 minutes) is excluded from block production for the next 4 epochs (~2 hours) and forfeits rewards during that window. Validator penalties are therefore limited to operational demotion and reward impacts, without destruction of the underlying staked capital. This creates a materially lower staking risk profile for institutional partners and end users.

Why Use StakeXDC vs. Direct Staking

Direct XDC staking requires running a masternode (10M XDC minimum, infrastructure management, uptime obligations). StakeXDC removes all of these barriers:

	Direct Staking	StakeXDC V3
Minimum	10,000,000 XDC	None
Infrastructure	Run and maintain a masternode	Fully managed
Liquidity	Locked until unstake	Liquid (psXDC is ERC-4626, transferable, tradeable)
Principal-stake slashing	None (XDC model)	None (XDC model)
Reward rate	Depends on your node's uptime	Pooled across optimized validators
Composability	None	psXDC usable as ERC-4626 collateral in DeFi
Withdrawal UX	Wait the network unstake delay	Instant when buffer allows; FIFO queue otherwise

How rewards reach holders

XDC validators
      │ block rewards
      ▼
PrimeStakedXDC_V3_2 vault
      │ totalAssets += rewards
      │ totalShares  unchanged
      ▼
exchange rate (totalAssets / totalShares) ↑
      │
      ▼
every psXDC share is worth more XDC

Aspect	Detail
Source	XDC Network masternode block rewards
Accrual mechanism	The operations team distributes the period's masternode rewards into the vault (`distributeRewards`, roughly monthly, sized to the 5.5% target on average TVL) → `totalAssets` rises → exchange rate rises for every holder
User claiming	None; value is already inside each share
Settlement event	When the user redeems shares (instant or queued), the higher rate translates directly into more XDC returned
On-chain verifiability	Yes. Every distribution is a public transaction on the vault and the exchange rate is a public view

There is no per-user claim flow for the base reward layer — it was removed when V3 replaced the time-based APY model with the share-based NAV model. The V2 notifyRewardAmount + claim cycle is replaced by a single operations-manager distributeRewards() call per period that raises the share price for every holder.

Calculation

Parameter	Detail
Gross APY	Determined by XDC Network masternode economics (network staking ratio, validator performance, operator throughput)
Protocol fee	Percentage of gross validator rewards retained by the protocol (exact figure available under partner due diligence)
Net user APY	~5.5% net (variable; depends on the above)
Distribution basis	Pro-rata over psXDC shares automatically through share price, not at claim time

Net APY is variable and depends on:

Network staking ratio. Total XDC staked across the network affects per-validator rewards.
Validator performance. Uptime and block production efficiency for the operators the vault is delegating to.
Protocol fee. Retained percentage before reward XDC is reflected in totalAssets.

Key Parameters for Partners

Parameter	Detail
Reward asset (base layer)	XDC, accruing as share-price appreciation of psXDC
Distribution frequency (base)	Roughly monthly `distributeRewards` steps in the share price
Claim flow (base)	None. Rewards are realized on redemption
On-chain verifiability	Yes, both layers emit events indexed by the public subgraphs
Principal-stake slashing	None. XDC penalizes downtime via ~2h exclusion + missed rewards, never burns principal

Loss Reporting

Validator outcomes can be reported via reportValidatorLoss(operator, assets) (gated by RISK_MANAGER_ROLE). The function is bounded by:

maxLossBpsPerReport: cap per individual report.
maxDailyLossBps: cap over a rolling 24h window.

Both caps are themselves governed by delayed governance: changes are scheduled, wait for governanceDelay, then execute. Reports emit the attributed operator (outstandingValidatorPrincipalByOperator is updated atomically). This bounds the blast radius of any single risk-management call.

Transparency & Verification

Every reward event is logged on the XDC blockchain.
Exchange rate is a deterministic function of totalAssets and totalShares, auditable at any block.
Historical exchange-rate data is available via the public subgraph for forecasting and reporting.
psXDC v3 supply and total assets are verifiable on-chain at any time on XDCScan.

→ Liquidity Model → Risk & Compliance → How Rewards Work (user-facing)