# Staking

## What is staking?

Staking is the primary value accrual strategy of Divine Creatures DAO.
Stakers stake their EGIS tokens on Divine Creatures DAO to earn rebase rewards. The rebase rewards come from the proceed from bond sales, and can vary based on the number of EGIS staked in the protocol and the reward rate set by monetary policy.
Staking is passive, long-term strategy.

## What is a rebase?

When you stake, you lock EGIS and receive an equal amount of aEGIS. Your aEGIS balance rebases up automatically at the end of every epoch. aEGIS is transferable and therefore composable with other DeFi protocols.
When you unstake, you burn aEGIS and receive an equal amount of EGIS tokens. Unstaking means the user will forfeit the upcoming rebase reward. Note that the forfeited reward is only applicable to the unstaked amount; the remaining staked EGIS (if any) will continue to receive rebase rewards.

## What is reward yield?

Reward yield is the percentage by which your staked EGIS balance increases on the next epoch. It is also known as rebase rate. You can find this number on the Wonderland staking page.

## What is APY?

APY stands for annual percentage yield. It measures the real rate of return on your principal by taking into account the effect of compounding interest. In the case of Wonderland, your staked EGIS represents your principal, and the compound interest is added periodically on every epoch (8 hours) thanks to the rebase mechanism.
One interesting fact about APY is that your balance will grow not linearly but exponentially over time! Assuming a daily compound interest of 2%, if you start with a balance of 1 EGIS on day 1, after a year, your balance will grow to about 1377.

## Why does the price of EGIS become irrelevant in long term?

As illustrated above, your EGIS balance will grow exponentially over time thanks to the power of compounding. Let's say you buy a EGIS for $400 now and the market decides that in 1 year time, the intrinsic value of EGIS will be$2. Assuming a daily compound interest rate of 2%, your balance would grow to about 1377 EGIS by the end of the year, which is worth around $2754. That is a cool$2354 profit! By now, you should understand that you are paying a premium for EGIS now in exchange for a long-term benefit. Thus, you should have a long time horizon to allow your EGIS balance to grow exponentially and make this a worthwhile investment.

## What will be EGIS intrinsic value in the future?

There is no clear answer for this, but the intrinsic value can be determined by the treasury performance. For example, if the treasury could guarantee to back every EGIS with 100 FTM, the intrinsic value will be 100 FTM. It can also be decided by the future DAO. For example, if the DAO decides to raise the price floor of EGIS, its intrinsic value will rise accordingly.

## How is the APY calculated?

The APY is calculated from the reward yield (a.k.a rebase rate) using the following equation:
$APY = ( 1 + rewardRate)^{1095}$
It raises to the power of 1095 because a rebase happens 3 times daily. Consider there are 365 days in a year, this would give a rebase frequency of 365 * 3 = 1095.
The number of EGIS distributed to the staking contract is calculated from EGIS total supply using the following equation:
$EGIS_{distributed} = EGIS_ {totalStaked} \times rewardRate$
Note that the reward rate is subject to change by the protocol.

## How do NFTs affect my staking APY?

God Tier and Deity Tier NFTs carry staking boosts. That means that your individual reward rate is increased by sum of the staking boosts on your NFTs with the cap of 25%. For example, if base rate per rebase is 1.0% and you have two God NFTs, your daily rewardRate is 1.0%*(1+10%), i.e. 1.0%*(1.1) = 1.1%. This translates to base APY of 4,001,871% and boosted APY of 11,481,026%.
$rewardRate = baseRate\times(1+\sum NFT stakingBoosts)$

## How does the protocol manage to maintain the high staking APY?

Let’s say the protocol targets an APY of 100,000%. This would translate to a rebase rate of about 0.6328%, or a daily growth of about 2%. Please refer to the equation above to learn how APY is calculated from the rebase rate.
If there are 100,000 EGIS tokens staked right now, the protocol would need to mint an additional 2,000 EGIS to achieve this daily growth. This is achievable if the protocol can bring in at least 200,000 FTM daily from bond sales (assuming 1 EGIS = 100 FTM). If the protocol fails to achieve this, the APY of 100,000% cannot be guaranteed.

## Do I have to unstake and stake EGIS on every epoch to get my rebase rewards?

No. Once you have staked EGIS with Divine DAO app, your staked EGIS (aEGIS) balance will auto-compound on every epoch. That increase in balance represents your rebase rewards.

## How do I track my rebase rewards?

You can track your rebase rewards by calculating the increase in your staked EGIS balance.
1. Record down the Current Index value on the staking page when you first stake your EGIS. Let's call this the Start Index.
2. After staking for some time, if you want to determine by how much your balance has increased, check the Current Index value again. Let's call this the End Index.
3. By dividing the End Index by Start Index, you would get the ratio by which your staked EGIS balance has increased.
$ratio = endIndex / startIndex$