SPN Rewards & Weighted Logarithmic Distribution

All SPN stakers, regardless of their user level, are eligible to participate in the SPN token rewards distribution. The distribution follows three main rules:

1. Weighted Distribution: Daily rewards are distributed to users based on a weighted split. Each user's weight is determined by their staking score multiplied by a weight adjuster linked to their user level (ranging from 1.1 to 1.5).

The portion of rewards each staker receives is calculated as a fraction of their staking score over the total staking score. For each staker, it can be represented as:

1. Logarithmic Distribution: Rewards are distributed following a gradually decreasing curve, which theoretically continues indefinitely until the distribution cost surpasses the total value of the rewards.

2. Maximum APR: A maximum Annual Percentage Rate (APR) of 100% is enforced at the smart contract level. This prevents over-incentivization and ensures that no small group of stakers receives disproportionately high rewards.

Please refer to the table below explaining weighted rewards distribution using a hypothetical example model with 8 users splitting rewards budget.

User ID	Staked tokens	Tier	Weighed stake	Rewards received
151731	927,138	4	1,297,993	21,375
208481	985,013	4	1,379,018	22,709
907861	473,539	2	568,247	9,358
791039	135,176	1	148,694	2,449
614643	761,497	4	1,066,096	17,556
715637	1,000,000	5	1,500,000	24,702
716264	100,000	1	110,000	1,811
300871	300,431	2	360,517	5,937

Sapiens allocates 21.50% of its Total Token Supply (TTS) for rewards distribution. The chart below illustrate the simulated size of SPN rewards drops over time, along with the average APR for all ecosystem users.

Simulation demonstrates that the Sapiens ecosystem can sustain competitive staking APR levels with only 2% of the total token supply. This conservative usage leaves 19.5% of the supply in reserve for additional rewards, ensuring higher APR levels over the long term. These substantial reserves allow for dedicated airdrop campaigns, financing grants, strategic partnerships, and other lucrative incentive models, ensuring the ecosystem remains attractive and rewarding for participants.

Importantly, Sapiens ensures that the value of released rewards does not exceed the income generated by the protocol. This approach fosters a positive-sum economy and supports long-term value accrual - please refer to the chart below