> 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/staking-rewards.md).

# Staking Rewards

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

Staking rewards are the primary incentive for long-term MSIG holders who lock their tokens in the vote-escrow system. Rewards are distributed daily to stakers based on their weighted share of the total staked pool.

## Two Funding Sources

Staking rewards come from two distinct sources:

<table><thead><tr><th width="214">Source</th><th>Description</th></tr></thead><tbody><tr><td><strong>Tokenomics Reserve</strong></td><td>Initial allocation set aside specifically for staking rewards</td></tr><tr><td><strong>Circular Revenue</strong></td><td>A portion of treasury buyback activity may flow to the staking treasury over time</td></tr></tbody></table>

{% hint style="success" %}
The total MSIG supply is capped. Staking rewards are not derived from newly minted tokens.
{% endhint %}

The system blends these two sources dynamically based on treasury health, transitioning from reserve-funded to fully revenue-funded as the system matures.

## Why Blended Transition?

<figure><img src="/files/LPbGBEwxCP7g5O3Bw7ky" alt="Blended staking rewards: Tokenomics Reserve and Staking Treasury feed into three modes based on treasury value"><figcaption><p>How staking rewards blend between tokenomics reserve and circular revenue.<br>All numbers provided here are for illustrative purposes only.</p></figcaption></figure>

The blended transition mechanism exists to protect the token economy during volatile conditions:

**Black Swan Protection** Revenue can fluctuate dramatically due to market conditions, user adoption cycles, or unexpected events. Without a safety mechanism, a revenue drop would cause staking rewards to collapse.

**Predictable Rewards** Stakers need consistent, predictable reward rates to remain engaged. The tokenomics reserve acts as a buffer when circular revenue falls short, maintaining reward stability regardless of short-term revenue volatility.

The system calculates a **blend ratio** based on the staking treasury's USD value:

$$
\text{blend\_ratio} = \frac{\text{treasury\_usd} - \text{min\_threshold}}{\text{max\_threshold} - \text{min\_threshold}}
$$

**Where:**

* `treasury_usd` = Current USD value of tokens in the staking treasury
* `min_threshold` = $5,000 (below this, system uses 100% tokenomics reserve)
* `max_threshold` = $20,000 (above this, system uses 100% circular revenue)
* `blend_ratio` = Clamped between 0 and 1

### Mode Determination

<table><thead><tr><th width="181.800048828125">Staking Treasury</th><th width="181.4000244140625">Mode</th><th>Reward Source</th></tr></thead><tbody><tr><td>Below $5,000</td><td>Pure Tokenomics</td><td>100% from reserve at 50,000 MSIG/day</td></tr><tr><td>$5,000 – $20,000</td><td>Blended Transition</td><td>Linear blend of both sources</td></tr><tr><td>Above $20,000</td><td>Pure Circular</td><td>100% from treasury at 10% of treasury/day</td></tr></tbody></table>

### Daily Reward Calculation

**Tokenomics Reserve contribution** (decreases as treasury grows):

$$
\text{tokenomics\_amount} = \text{daily\_reserve\_rate} \times (1 - \text{blend\_ratio})
$$

**Circular Revenue contribution** (increases as treasury grows):

$$
\text{circular\_amount} = \text{staking\_treasury\_tokens} \times \text{release\_rate} \times \text{blend\_ratio}
$$

**Total daily rewards:**

$$
\text{daily\_rewards} = \text{tokenomics\_amount} + \text{circular\_amount}
$$

**Where:**

* `blend_ratio` = Transition factor calculated above (0 to 1)
* `daily_reserve_rate` = 50,000 MSIG/day (fixed allocation from tokenomics reserve)
* `staking_treasury_tokens` = Number of MSIG tokens currently in the staking treasury
* `release_rate` = 10% (percentage of treasury tokens released daily)
* `tokenomics_amount` = Contribution from tokenomics reserve
* `circular_amount` = Contribution from circular revenue
* `daily_rewards` = Total tokens distributed to stakers each day

## Practical Examples

> **Example 1: Treasury at $12,000 USD (Blended Mode)**
>
> * Treasury value: **$12,000** (within transition range)
> * Treasury tokens: **100,000 MSIG**
>
> $$
> \text{blend\_ratio} = \frac{12{,}000 - 5{,}000}{20{,}000 - 5{,}000} = \frac{7{,}000}{15{,}000} = 0.467
> $$
>
> $$
> \text{tokenomics\_amount} = 50{,}000 \times (1 - 0.467) = 26{,}650 \text{ MSIG}
> $$
>
> $$
> \text{circular\_amount} = 100{,}000 \times 0.10 \times 0.467 = 4{,}670 \text{ MSIG}
> $$
>
> * **Daily rewards**: 26,650 + 4,670 = **31,320 MSIG/day**

> **Example 2: Treasury at $25,000 USD (Pure Circular)**
>
> * Treasury value: **$25,000** (above $20k threshold)
> * Treasury tokens: **100,000 MSIG**
> * blend\_ratio = 1.0 (capped at maximum)
>
> $$
> \text{daily\_rewards} = 100{,}000 \times 0.10 = 10{,}000 \text{ MSIG/day}
> $$

> **Example 3: Treasury at $3,000 USD (Pure Tokenomics)**
>
> * Treasury value: **$3,000** (below $5k threshold)
> * blend\_ratio = 0 (capped at minimum)
>
> $$
> \text{daily\_rewards} = 50{,}000 \times 1.0 = 50{,}000 \text{ MSIG/day}
> $$
>
> The reserve maintains full reward output even when circular revenue is low.

{% hint style="info" %}
The blended transition ensures consistent rewards, while smoothly transitioning to a fully revenue-backed system as the system matures. All numbers provided here are for illustrative purposes only.
{% endhint %}