FILLiquid Reward Mechanism -FIT
Last updated
Last updated
Filecoin Stakers earn rewards by holding FIT tokens
About FIT
FIT is Filliquid's reward token—an ERC20 token deployed on FEVM. Filecoin Stakers hold FIT tokens to earn rewards.
When a Filecoin Staker deposits FIL into the pool, they receive a proportionate amount of FIT tokens in return, based on the current price of FIT. As Storage Providers (SPs) accrue interest by borrowing FIL, the price of FIT increases.
Filecoin Stakers can redeem FIT back to FIL when they choose to withdraw. FIT can be transferred to other wallets, traded on secondary markets, and used in other DeFi protocols.
The amount of FIL that can be redeemed with 1 FIT token is calculated by dividing the total accrued assets in the pool by the circulating supply of FIT tokens. Therefore, the price of FIT increases every block.
The FIT price is computed as:
Where:
Total FIL liquidity = accumulated amount of FIL staked - accumulated amount of FIL redeemed + accumulated interest – redemption fee
Total FIT outstanding = accumulated amount of FIT minted by the smart contract - accumulated amount of FIT burnt
Basic Example:
FIT Price: Let’s imagine a simple scenario where the current price of FIT is 1 FIL. So 1 FIT = 1 FIL.
Filecoin Staker Deposits: A Filecoin Staker deposits 1 FIL into FILLiquid and receives 1 FIT.
SP Borrows and Accrues Interest: As SPs borrow and (over time) accrue interest, the pool's total assets increase.
Value Increase: The FIT price increases as more total assets are earned by the pool. If the FIT value increases by 5%, 1 FIT is now worth 1.05 FIL.
Withdrawal: The Filecoin Staker can withdraw 1.05 FIL by redeeming 1 FIT.
Rewards come from the interest accrued by SPs who borrow FIL from FILLiquid. The expected interest received from SPs is split proportionately among FIT holders and is automatically compounded in FILLiquid.
From an economic perspective, FILLiquid implements an accrual basis accounting method. In other words, it counts interest owed from SPs as part of its total assets before any payments are made. As a result, FILLiquid Filecoin Stakers earn rewards every block.
Assume an SP borrowed FIL from the pool at an interest rate of 15%.
Only borrowed FIL generates rewards. The proportion of borrowed FIL to total FIL liquidity in the pool is referred to as the pool’s utilization rate.
Utilization rate is computed as:
The reward distributed to FIL Stakers is computed as:
A portion of the 1% redemption fee is stored in contingency pool used to address bad debt losses and another portion of the transaction fees will be used to burn the FIG Governance Token.
FIL Stakers can check the FIL value of their FIT holdings by connecting their wallet to FILLiquid or visiting the wallet/multisig page of a particular address.
FIT returns are shown in the "Tokens" section.
