The Updated Rewards Allocation Between tBTC and PRE Stakers, Explained

Threshold Network -

Threshold DAO recently ratified a proposal to change the way rewards are split between tBTC and Proxy Re-Encryption (PRE) stakers. Previously, a majority of rewards have been allocated to Threshold’s first product, PRE. As a result of this proposal, rewards will now be rebalanced towards tBTC over time to support the full rollout of the decentralized bridge. A schedule detailing what will change and when can be found here.

A total target APY of 15% is currently divided across tBTC and PRE nodes. The shift in the rewards split is structured so that tBTC’s share of the rewards increases by 12.5% each month, while the share allocated to PRE stakers declines by the same amount.

Here is an overview of the broad parameters of the rewards split:

From February 2023, 75% of Threshold Network rewards will go to tBTC nodes.

The change in the rewards split is planned to coincide with tBTC v2’s ongoing release schedule, including the launch of tBTC v2’s quick minting functionality. If you are interested in earning rewards for the entire month of October, the deadline to set up a tBTC v2 node is October 17th.

Background

The rewards split decision was an undertaking of the entire Threshold community. The schedule was initially proposed by Will and Arjun, Threshold DAO contributors, in August. Their post served as a DAO-wide call for commentary that resulted in updates based on community feedback.

Most decisions related to tBTC v2 take place via on- and off-chain full DAO ratifications. But since this particular decision pertained to the way dApp staking rewards are distributed, it was put before the Threshold Network Council as stipulated by Threshold Network’s DAO design proposal. The Council is an elected group consisting of four Keep community members, four NuCypher community members, and one neutral appointee – that comprises one of the three pillars of Threshold’s governance. Passing the proposal required six of the nine members of the council to ratify in support.

Additional news and updates around the launch of tBTC v2 will be shared here over the coming weeks and months. To stay up to date with the latest news about tBTC, join our Discord.