Security Module Staking DIKO holders have the option to stake their DIKO which converts their DIKO to stDIKO for the duration of the stake. They can always convert back and reclaim their original DIKO. stDIKO gives you a voting weight that can be used to vote on governance proposals.
The Security Module serves as a backstop to the protocol. Should a hack or exploit ever create ‘bad debt’ then up to 30% of DIKO tokens staked in the Security Module can be taken to be sold to cover this loss. Staking DIKO in the Security Module comes with the risk of losing up to 30% of your DIKO. In a way, stDIKO holders are providing a type of insurance against protocol losses. The decision to sell DIKO tokens from the Security Module is made through Governance, ensuring that the process follows the same consensus mechanism present throughout the protocol.
By participating in the Security Module by staking stDIKO, a user will be able to receive its fair share of proportionate protocol rewards. These rewards are automatically compounded through a relative price increase of stDIKO vs DIKO. When unstaking, users receive more DIKO than they initially staked, representing the accumulated yield and rewards:
stDIKO/DIKO = (DIKO staked + Rewards accumulated) / DIKO staked
stDIKO is constructed so that it can receive yield from multiple sources. At protocol launch, stDIKO receives rewards from standard protocol emissions. One of the main sources of protocol revenue comes in the form of the stability fee on USDA loans. We have included the option for the Arkadiko DAO to route a percentage of these stability fees to the stDIKO reward pools, effectively adding another source of yield for stakers in the Security Module.
After staking your DIKO, you receive stDIKO in your wallet. To unstake the stDIKO, you need to go through a cooldown window of 1440 blocks (approximately 10 days). After these 1440 blocks, you have a window of 288 blocks (~ 2 days) to burn your stDIKO and redeem DIKO.
- 1.You start the cooldown which is 1440 blocks (~ 10 days)
- 2.After the 10 days, you have 288 blocks (two days) to redeem
- 3.If you fail to redeem within those two days, you need to start the cooldown again