> For the complete documentation index, see [llms.txt](https://token.metasignals.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://token.metasignals.io/tokenomics/vote-escrow-governance/reward-distribution.md).

# Reward Distribution

{% hint style="info" %}
The values and parameters on this page are preliminary and subject to change before launch.
{% endhint %}

This page explains how staking rewards are distributed among stakers and how each individual share is calculated.

## Two Distribution Factors

The share of daily rewards depends on two factors:

<table><thead><tr><th width="275.5999755859375">Factor</th><th>Description</th></tr></thead><tbody><tr><td><strong>Staked Amount</strong></td><td>Number of MSIG tokens locked</td></tr><tr><td><strong>Multiplier</strong></td><td>Value based on lock duration (0.083x to 2.0x)</td></tr></tbody></table>

{% hint style="info" %}
The effective stake combines these two factors. A longer lock results in a higher multiplier, leading to a larger share of rewards even with the same staked amount as a position with a shorter lock.
{% endhint %}

The system computes effective stake, determines each position's share of the total pool, and distributes rewards proportionally each day.

## How Distribution Works

The effective stake is defined as the number of staked tokens multiplied by the vote-escrow multiplier:

$$
\text{effective\_stake}\_i = \text{staked}\_i \times \text{multiplier}\_i
$$

### Reward Share Calculation

The reward share is defined as effective stake divided by the total effective stake of all stakers.

$$
\text{reward\_share}\_i = \frac{\text{staked}\_i \times \text{multiplier}*i}{\sum*{\text{all stakers}} (\text{staked}
\times \text{multiplier})}
$$

### Daily Reward Calculation

The daily reward is calculated as the individual reward share multiplied by the total daily reward pool.

$$
\text{daily\_reward}\_i = \text{daily\_pool} \times \text{reward\_share}\_i
$$

### APY Estimation

The APY (Annual Percentage Yield) projects the daily reward rate over a full year.

$$
\text{APY}\_i = \frac{\text{daily\_reward}\_i \times 365}{\text{staked}\_i} \times 100%
$$

**Where:**

* `staked_i` = staked MSIG token amount
* `multiplier_i` = vote-escrow multiplier (0.083x to 2.0x based on lock duration)
* `effective_stake_i` = weighted stake contribution to the pool
* `reward_share_i` = proportion of the daily reward pool (value between 0 and 1)
* `daily_pool` = total daily rewards available (see [Staking Rewards](/tokenomics/vote-escrow-governance/staking-rewards.md))
* `daily_reward_i` = MSIG tokens received per day
* `APY_i` = estimated annual percentage yield

### Practical Examples

> **Example 1: Basic Reward Calculation**
>
> * Staked: **10,000 MSIG** with 1-year lock (1.0x multiplier)
> * Daily pool: **30,000 MSIG**
> * Total effective stake: **12,000,000**
>
> $$
> \text{effective\_stake} = 10{,}000 \times 1.0 = 10{,}000
> $$
>
> $$
> \text{reward\_share} = \frac{10{,}000}{12{,}000{,}000} = 0.00083 \text{ (0.08%)}
> $$
>
> $$
> \text{daily\_reward} = 30{,}000 \times 0.00083 = 25 \text{ MSIG/day}
> $$
>
> $$
> \text{APY} = \frac{25 \times 365}{10{,}000} \times 100% = 91%
> $$

> **Example 2: Multiplier Impact Comparison**
>
> * User 1: **10,000 MSIG** with 2-year lock (2.0x multiplier)
> * User 2: **10,000 MSIG** with 1-month lock (0.083x multiplier)
> * Daily pool: **30,000 MSIG**
> * Total effective stake: **12,000,000**
>
> $$
> \text{effective\_stake}\_{\text{user1}} = 10{,}000 \times 2.0 = 20{,}000
> $$
>
> $$
> \text{effective\_stake}\_{\text{user2}} = 10{,}000 \times 0.083 = 830
> $$
>
> $$
> \text{reward\_share}\_{\text{user1}} = \frac{20{,}000}{12{,}000{,}000} = 0.00167 \text{ (0.17%)}
> $$
>
> $$
> \text{reward\_share}\_{\text{user2}} = \frac{830}{12{,}000{,}000} = 0.00007 \text{ (0.007%)}
> $$
>
> * User 1: 30,000 × 0.00167 = **50 MSIG/day**
> * User 2: 30,000 × 0.00007 = **2 MSIG/day**
>
> With the same staked amount, User 1 receives **24x more rewards** due to their longer lock.

{% hint style="warning" %}
**APY Disclaimer**: No specific APYs are guaranteed. Actual reward rates depend on the total staked amount, treasury balance, and individual lock duration. Any examples shown are for illustrative purposes only.
{% endhint %}

### Auto-Compounding

The staking system includes an optional **auto-compound** feature. When enabled, rewards are automatically restaked at the current lock duration. This causes the effective stake to grow over time, and future rewards are calculated based on a larger balance.

**Example**: Starting with 10,000 MSIG and earning a 0.25% daily reward rate:

| Day | Staked Balance | Daily Reward | New Balance |
| --- | -------------- | ------------ | ----------- |
| 1   | 10,000         | 25           | 10,025      |
| 2   | 10,025         | 25           | 10,050      |
| 3   | 10,050         | 25           | 10,075      |
| ... | ...            | ...          | ...         |
| 30  | \~10,753       | \~27         | \~10,780    |

With compounding, the staked balance grows at an accelerated rate compared with non-compounded rewards, because each reward accrual increases the principal on which subsequent rewards are calculated.