After receiving extensive feedback, these are the invariants of the design I’m promoting in this proposal.
1. Penalty when claiming rewards
The claim-time penalty to decrease linearly across the available lock range:
claim penalty rate = 50% × (MAXTIME − commitment) / (MAXTIME − MINTIME)
This gives:
| Lock/Claim | Penalty |
|---|---|
| Instant claim | 50% |
| MINTIME lock (4 weeks) | 50% |
| Intermediate lock | Proportionally smaller |
| MAXTIME lock (1 year) | 0% |
| Infinite lock | 0% |
The net amount remaining after this penalty is deposited into a new veDUST.
For additions to an existing decaying veDUST, the calculation should use its actual remaining duration. Infinite lock additions receive no claim-time penalty.
The clamp should start at the same rate as the instant claim to prevent any bypass attempt where someone chooses the minimum lock, immediately exits, and, combined with the changes to the early exit penalty shifting to raw duration calculations, receives more than the 50% instant-claim option.
2. Penalty for exiting a lock early
The early-exit percentage should now depend only on the lock’s remaining duration:
exit penalty rate = 75% × remaining duration / MAXTIME
exit penalty amount = locked amount × exit penalty rate
Therefore:
- A newly created MAXTIME lock starts at 75% exit penalty.
- A newly created 6-months lock starts at 37.5% exit penalty.
- A newly created MINTIME lock starts at 6.25% exit penalty.
- The percentage decreases as its remaining duration decreases.
- An expired lock has no exit penalty.
- An infinite lock has a 75% exit penalty.
The percentage calculation does not depend on the amount locked or on effective start of a lock, but only to its remaining duration.
Important
The maximum early exit penalty should stay above 50% as a hard invariant to avoid the attack vector of a user locking their DUST indefinitely, claiming revenue or voting on a proposal at maximum power, followed by an early exit with the same penalty (50%) as if they had never locked to vote or receive the revenue. Naturally, creating a lock and benefiting from its perks only to exit later should incur a greater penalty than locking for a shorter duration to begin with or choosing the instant claim.
Minimum-lock example
For a claim of 1,000 DUST into a four-week lock:
- The claim-time penalty is 500 DUST.
- The remaining 500 DUST enters the lock.
- An immediate exit charges approximately:
500 × 75% × 28 / 365 = ~28.77 DUST - The user receives approximately 471.23 DUST.
Instant claim penalty will always be a better deal than locking only to early exit later.
The combination of the haircut on the claim itself and the new early exit penalty, which accounts only for the current duration against the maximum time, applies only a small early exit penalty to a position that has already received a haircut by being locked for a month.
✦ The claim clamp and the early exit penalty should be designed in relation to each other. Any misconfiguration or design oversight in either can open opportunities for a user to game the system, exit for a lower penalty, or receive benefits from a lock that are disproportionate to the penalty they pay afterward for exiting.