Horizon Protocol offers multiple avenues for staking and earning rewards, primarily through two methods: Minting and Earning. Minting involves creating zUSD by using HZN as collateral, and rewards are earned based on the amount of debt held. Minting is the primary staking approach and receives the majority of rewards distributed by Horizon Protocol. Earning, on the other hand, provides diverse opportunities for yield through liquidity provision,LP token staking and yield aggregator.
Staking rewards adhere to system rules (subject to change as the system evolves) and are sourced from the token's inflationary policy, trading fees, and any other applicable system incentives.
There are two components to rewards in the Horizon Protocol ecosystem: HZN and zUSD debt forgiveness .
HZN rewards are determined by the . This policy was initiated with the launch of Horizon stake, and it continues to supply all rewards within the Horizon Protocol ecosystem, including Horizon Stake and the rewards for LP staking pools which located in the dashboard. . The majority of rewards are allocated to HZN stakers who mint zUSD in Horizon Stake..
As an HZN staker, your rewards are calculated based on the amount of debt shares you hold. When you mint new zUSD on Horizon Protocol, the protocol generates your debt. At the same time, debt shares are issued proportionally to the amount of zUSD minted, reflecting your share in the debt pool as a percentage. For example, if you hold 50% of all the shares while the global debt pool is $100, your share means you owe $50. Conversely, if the global debt pool shrinks to $50, your share now represents a debt of $25.
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Additionally, zUSD transaction fee rewards are generated from trading activities. Each trading transaction incurs a fee (ranging from 0.02% to 0.50%), and the sum of all fees is distributed weekly to HZN stakers as zUSD debt forgiveness. The distribution is proportional to each individual staker's debt share,similar to how HZN rewards are allocated.
Horizon Protocol shares revenue generated through trade fees on the Horizon Spot Exchange and Horizon Perpetual Futures with stakers. The revenue is allocated to stakers, providing each participant with a percentage of the total earnings every week. This allocation is distributed in the form of 'zUSD debt forgiven,' which seamlessly integrates with the weekly HZN rewards. The distribution is determined by the staker's proportional share of debt in the global debt market.
The process involves the ongoing burning of an equivalent amount of zUSD. Results for stakers remain consistent due to their perpetual ownership percentage of the debt pool. Instead of direct distribution trading fee, the “zUSD debt forgiven” are systematically burned in a weekly basis as debt forgiveness, effectively reducing the overall debt ratio for all participants. The zUSD derived from the burned trading fee can be reintroduced into the global debt pool through the minting process.
This method streamlines the process, eliminating the need for active weekly claims from stakers. Even passive stakers who miss the weekly HZN reward seamlessly receive their 'debt forgiveness’ rewards.
Furthermore, the burning mechanism enables a single smart contract to be invoked, consuming the total 'debt forgiveness' from the global debt pool. This innovative approach opens the door for cross-chain protocols, offering the potential to track the amount of 'debt forgiveness ' burnt across all chains through the use of the Token.
