Understanding DVDX Staking: Rewards and Debt Pool Risk

3 min readOct 31


As our token migration is completed and the launch of the core protocol becomes imminent, this article aims to offer high-level guidelines on staking and provide insights for first-time stakers.

Staking DVDX allows anyone to earn rewards by contributing collateral to the Derived protocol. However, there are some important things you should know before you make the decision to contribute in this way.

  • You receive two kinds of rewards for staking DVDX: USDx fees generated on Exchanging between synthetic assets, and DVDX inflationary rewards.
  • These rewards must be manually claimed in the one transaction each fee period (i.e. once a week) or they will be returned to the pool and redistributed to other stakers.
  • The details about fee period closing time will be released closure to the launch. Each fee period, you can claim the rewards you earned for staking in the previous week.
  • Before you can claim rewards, you need to ensure your Collateralization Ratio is 500% or above. If your collateralization ratio is below 500%, you can either add more DVDX to your wallet or you can burn USDx to help reduce its supply.

Debt Pool Risk — Why Staking Rewards Don’t Come for Free:

When you stake, by minting USDx you claim a portion of the debt pool. The debt pool represents the total value of all Synths in the system. To take an extreme example, if a majority of Synth holders are holding dbtc while BTC pumps, then the size of the debt pool will increase significantly.

If you take the USDx you’ve minted and start trading on Derived Exchange, be aware that you risk decreasing the value of your Synth holdings, which can cause you to end up with an insufficient quantity of USDx to burn to cover your outstanding debt. To remedy this, you will need to add more USDx to your wallet to burn to meet the target C-Ratio and pay the debt you owe to the system.

Whenever you want to un-stake your DVDX, you’ll need to wipe out your debt completely by burning USDx. If you are below the C-Ratio, you can either add more DVDX to your wallet to reach the target ratio or you can burn USDx to reduce the amount of DVDX you owe the system.

DVDX staking rewards (not USDx fees) have an escrow period of one year before they can be vested. This just means that they are locked and can’t be transferred during that time. We will fine tune the rewards escrow duration as the protocol matures.

To summarize, There are some important parameters that you should be familiarized before you start staking. Some of them are listed below:

Fee period duration: 1 week

Liquidation delay: 24 Hours

Liquidation Ratio: 150%

Escrow duration: 1 year (Vesting of DVDX staking rewards)

Minimum Stake time: 1 Day

Stay tuned for more updates and detailed instructions as we approach the launch. If you have any questions or need assistance, please don’t hesitate to reach out to our Telegram or Discord channels.

Thank you for being part of our journey.

About Derived Finance

Derived is a Decentralized platform giving users access to trade Stocks, Commodities, Forex, or Crypto on a single platform. Derived offers several unique features such as No slippage DEX, Leveraged minting, Hybrid tokens, and Binary options.

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