How are rewards paid out?

Back End Smart Contract Diagram
Back End Smart Contract Diagram

Users can receive the following rewards by staking their PAYD into the rewards pool:

Validator Rewards

The ETH staked by the cache users on the platform are staked into the ETH2 validators. Staking is the act of depositing 32 ETH to activate validator software. As a validator is responsible for storing data, processing transactions, and adding new blocks to the blockchain. This will keep Ethereum secure for everyone and mint new ETH in the process. This ETH is then paid out to the rewards pool users proportionally per their share of the pool.

EVM Staking Rewards

ETH2 Staking rewards are paid for validating transactions. Once the rewards becomes available after the Merge, is deposited into the Rewards Pool ETH. 

EVM Mining Rewards

ETH2 Mining is the Proof of Stake Mining. The mining rewards is given when your validator is randomly selected for proposing a block.  Once it becomes available after the Merge, is deposited into the Rewards Pool ETH. 

Liquidation Rewards

PAYD is overcollateralized by ETH in the cache. In normal operations, when caches are liquidated the rewards pool users will gain the liquidation rewards from the extra collateral put up by the cache users when issuing PAYD, up to 15%. The platform checks for liquidations every 3 hours or when price changes by 0.5%.

The PAYD staked in the rewards pool will be proportionally burnt whenever a liquidation event occurs, and requires top up to continue earning any rewards.


Rewards Pool staked PAYD is offset against Cache #4 Liquidated PAYD Issued Debt.

Rewards Pool staked PAYD
Rewards Pool staked PAYD Chart

Rewards Pool PAYD offset

Rewards Earnings Table
Rewards Earnings Table

Earnings/Loss Table
Earnings/Losses of Caches from Rewards Pool after liquidation

Liquidated Caches will lose their ETH collateral when the value of ETH falls, this encourages them to borrow prudently and not over leverage. The above table explores the gains and losses from liquidation of the various Caches. 

Cache #1 earns 60, Cache #2 earns 101, Cache #3 earns 121 and Cache #5 earns 242.

Cache #4 loses 10,000 in ETH, and gains 9,245 of PAYD issued debt written off and earns 181 PAYD from Staking PAYD in Rewards Pool, the Net Loss is $574 before considering liquidation deposit of 200 PAYD which is confiscated to cover gas fees. The rest of the Caches earns liquidation rewards based on their Staked PAYD proportional to the total Staked PAYD in Rewards Pool. 

Net Earnings or Losses from Liquidation
Chart 2: Net Earnings or Losses from Liquidation

A liquidated Cache that has participated from the Rewards Pool PAYD staking also earns rewards in ETH from their own Cache’s liquidation, that helps to reduce their loss from liquidation. 

An example of a Liquidated Cache of 2 ETH @ $3,000 per ETH and 5,500 PAYD:

  • A liquidated Cache with an IRR of 109.09%.
  • 2 ETH less (0.5% liquidation fee) or 0.01 ETH, 1.99 ETH gets distributed to the Rewards Pool. 1.99 ETH = $5,970 (@ ETH = $3,000)
  • 5,500 PAYD is burnt, while 1.99 ETH is worth $5,970. Hence the Liquidation rewards earned is $470. is complying with regulatory requirements and is in the midst of a licence application with the Monetary Authority of Singapore. Please note that during this period, our documentation may change and be refined over time.