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Reward Distribution

Reward Distribution

SoulPeg employs a dual-mechanism approach for distributing yields to participants. The protocol generates sustainable yields through Venus Protocol integration while maintaining the flexibility for additional governance-controlled rewards.

Dual Yield Sources

1. Venus Protocol Yields (Primary)

The protocol automatically generates yields by depositing user USDC into Venus Protocol:

  • Gross Yield: Venus Protocol's current lending APY (variable, ~7-8%)
  • Protocol Fee: 7% of generated yield retained as protocol revenue
  • Net User Yield: 93% of Venus yield distributed to stakers

Example: If Venus yields 7.23% APY, users receive 6.72% APY after the 7% protocol fee.

2. Governance-Minted Rewards (Supplementary)

Additional rewards can be minted via the rewardMint() function, restricted to the protocol owner (multisig). This enables:

  • Bonus reward campaigns
  • Early staker incentives
  • Community rewards
  • Strategic partnership distributions

Yield Distribution Formula

User APY = (Venus APY × 0.93) + Governance Rewards APY

Where:

  • Venus APY is dynamically determined by Venus Protocol's lending rates
  • Governance Rewards APY varies based on protocol decisions

Lock Inheritance

All rewards (both yield-based and governance-minted) inherit the recipient's lock state:

  • If the address is locked: rewards are subject to the same unlockAt timer
  • If the address is new or never locked: a 1-second dummy lock is applied, requiring manual unlock

This ensures all rewards maintain the soulbound nature of sUSDC.

Transparent Yield Tracking

On-Chain Verification

Users can verify yields through:

  • Venus Protocol's public supplyRatePerBlock() function
  • Protocol fee percentage (7%) displayed in UI
  • Event logs for all reward distributions

Frontend Display

The UI shows:

  • Current Venus APY (gross)
  • Protocol fee percentage
  • Net user APY (after fees)
  • Additional governance rewards (if any)

No "Claim" Function

There is no user-initiated claim process. All rewards are pushed directly to user wallets by the protocol, either through:

  • Periodic yield distribution from Venus earnings
  • Direct governance reward minting

This minimizes gas costs and eliminates claim front-running vulnerabilities.

Monitoring and Transparency

All reward distributions emit events:

  • RewardsDistributed(address,uint256) for tracking distributions
  • On-chain analytics tools can aggregate total yields
  • Dashboards display real-time and historical reward data

Fee Structure Transparency

The 7% protocol fee on Venus yields is:

  • Hardcoded in the frontend for transparency
  • Used for protocol development and operations
  • Clearly disclosed to all users
  • Verifiable by comparing Venus rates with distributed yields

Summary

SoulPeg's reward model combines automated Venus Protocol yields with governance flexibility. The transparent 7% protocol fee ensures sustainable development while users enjoy 93% of generated yields. This hybrid approach provides predictable base yields with the potential for additional rewards, all while maintaining the protocol's soulbound token mechanics.