The Sigmadex protocol utilizes a unique Monetary Policy that is enhanced with a reward/penalty system. This policy is engineered to provide maximum liquidity for its users while strengthening the overall ecosystem.

To get started, a user would stake their native Sigmadex tokens on the platform along with a secondary token for a predetermined period of time injecting liquidity into the market. From there, a number of outcomes can occur regarding the penalties and rewards the stake can experience.

Below is an info-graphic illustrating how over time, penalties and rewards are distributed variably.

## Examples

Below we explore examples of how a user’s stake can be affected by the penalty and reward system on Sigmadex on opposite ends of the distribution scale.

Scenarios that fall in between the two have rewards and penalties distributed according to the liquidity graph.

The longer the duration of the stake, the higher the APY earned. The shorter the duration of the stake, the lower the APY earned.

Penalties for early withdrawal of stake are higher the earlier the withdrawal occurs and become lower as time progresses.

### Scenario 1

Bob decides to stake their tokens for 365 days without unlocking their stake prematurely.

• Bob receives the maximum APY reward + an appropriate bonus which comes from people who removed liquidity  and incurs no penalties for premature withdrawal.

Based on the liquidity graph, the stake would receive the maximum APY rate and no penalty. He would have the ability to call the restake function to renew the contract after the 365 days is up or block 5,236,666 is mined 3.154e+7/6. Restaking the contract will increase the next terms APY rate by multiplying the last terms APY rate li with the interestMultipler function.

### Scenario 2

Arthur decides to stake his tokens for 365 days but wishes to unlock his tokens at on day 182 of a 365 day stake.

• Arthur receives no reward and incurs a penalty relative to the time remaining on the contract which follows the formula:

$$f = (p+i)-n^1$$

$$n = i(x)\frac{(1 - 0.99^{t-l})}{(1 - 0.99^{-l})}$$

Variable Value Description
t 182 Days into the Contract
l 365 Stake Length
i 100 Principal Amount
x 60 Maximum Penalty Rate in Percent

### Scenario 3

Sally decides to stake her tokens for 365 days but wishes to unlock their tokens after 1 day as she forgets she needs her capital to pay some bills.

• She would receive no reward and incurs the maximum penalty for calling the withdraw function before the blocktime has reached Current Blocktime + 3.154e+7

Based on the standard penalty formula, removing the liquidity early would receive no APY rewards and incur the maximum penalty possible.

## Role of the Sigmadex Native Token in Penalties

When staked liquidity is added on Sigmadex the collateralization is derived via two components: