In a nutshell: The reward calculator for the early adopters drop is live, allowing the community to check their eligibility and get an estimate of how many $PEAQ tokens they could receive.

Who said math isn’t fun?

As peaq’s launch gets ever closer, it’s time for another update on the early adopters drop. In fact, it’s time for more than just an update. It’s time for some hard math.

The reward calculator for the early adopters drop is live. With the calculator, you can check whether you are eligible and get a rough estimate of how much $PEAQ you could get. All you need to do is open the calculator and paste in your krest address.  

But first, a big thank you to the entire community for your patience and understanding. And thank you to everyone participating in the early adopters drop and contributing to the testing and usage of the network. Your contributions have led to important learnings and a deeper understanding of certain types of network behavior. The community’s involvement provided a chance to trial krest’s working mechanisms and core functions, confirm its compatibility with different wallets, and otherwise stress-test the network.  

And now, without further ado, to the calculator: 

https://krestcalculator.com/

Important note: The calculator’s outputs are based on data available up to October 27th, 2024, and only cover phase 1 of the early adopters drop. The timer will continue to run until the $PEAQ listing, and the calculator will be updated with the latest data right before the launch. Please be aware that the calculator’s estimates aren’t final and may change with new information.

But how exactly does the reward distribution work? What’s the nitty-gritty math behind this beautiful, shiny calculator? Let’s dive in for a closer look:

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Phase 1 

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Eligibility criteria

To qualify for phase 1 of the early adopters drop, you need to hold at least 2,000 $KREST tokens in a non-custodial wallet during the drop's snapshot period and on the day of peaq's launch. By doing so, you are helping with testing the network and its various key functionalities, including the core token mechanisms and functions, as well as the supporting tools such as integrated wallets.

Note: It will be mandatory for all participants to complete a KYC process in order to claim their rewards. The KYC process will take place before phase 2. Once a participant has completed the process, they will be able to connect multiple wallets to their KYCed account.

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Snapshot phase

The snapshot phase for the drop started on August 3rd, 2023. Since then, daily snapshots have been taken, recording: 

• The total amount of $KREST tokens held across all eligible wallets
• The individual $KREST balance of each eligible holder

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The math behind phase 1 rewards

The above two figures — the total amount of $KREST and the individual holdings — will determine the individual rewards. Here is how that will work. 

Each eligible participant’s cumulative $KREST total (i.e. how much $KREST you held across all snapshots) will be divided by the the cumulative $KREST total across all participants (i.e. how much $KREST was held total in all eligible wallets across all snapshots). The result, as the math-savvy among you already guessed, is the individual share of $KREST held over the snapshot period. 

From there, multiplying the total $PEAQ allocation by each participant’s share gives you the respective individual reward. This calculation ensures that those who held the most $KREST for the longest time get the biggest rewards in $PEAQ.

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Reward Distribution Breakdown

The total amount of tokens allocated for phase 1 is 42,000,000 $PEAQ.

Unfortunately, the following paragraph in the previous update was poorly formulated and leaves room for misinterpretation. Below is a detailed clarification of what it was supposed to mean: 

“Another piece of great news is that the allocation for the rewards is going up. The original drop was to bring the early adopters 1% of the total $PEAQ supply, or 42,000,000 $PEAQ tokens.  Now, this figure is growing by as much as another 2.5x to allocate a total of 105,000,000 tokens, or 2.50% of total $PEAQ supply, to the early adopters in the community. Out of these, 2% of the total $PEAQ supply will go towards reward distribution. As for the remaining 0.5%, peaqonauts will be able to receive them if opting to provide liquidity for $PEAQ with their $KREST tokens.”

• “Now, this figure is growing by as much as another 2.5x to allocate a total of 105,000,000 tokens, or 2.50% of total $PEAQ supply”
  This means that an extra 1.5% of the $PEAQ supply (equivalent to 63 million tokens) will be added, putting the total allocation across both phases at 105 million tokens, or 2.5% of the total supply. This additional allocation is meant specifically for phase 2, not phase 1. Phase 1’s original 1% allocation remains the same.
• “Out of these, 2% of the total $PEAQ supply will go towards reward distribution. As for the remaining 0.5%, peaqonauts will be able to receive them if opting to provide liquidity for $PEAQ with their $KREST tokens.”
  “Reward distribution” refers to the combined allocation for both phases. Each phase will receive 1% of the total $PEAQ supply. Phase 1 remains at 1%, as originally communicated. Phase 2 will have two steps and two reward pools attached to it. Reward pool #1 will receive 1% and will focus on providing liquidity to designated $PEAQ-stablecoin pair(s). Reward pool #2 will hold the remaining 0.5% of the total $PEAQ supply and will focus on staking $KREST and providing liquidity to the $PEAQ/$KREST pair.

Hopefully, this clears up any misunderstanding. The suboptimal wording was very unfortunate, apologies for the confusion caused.

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Wallet disqualification

In the coming weeks, wallets will be analyzed for disqualification. In the case that wallets are disqualified, the rewards of those disqualified wallets will move to reward pool #1 of phase 2, where they can be earned by qualified participants. This is a necessary step to achieve fair and healthy reward distributions with the best long-term interests of the network in mind.

Note: If regulations or sanctions in excluded countries change before phase 2, wallets from those countries that were previously disqualified may retroactively become eligible.

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Preparation period

Originally, a vesting period was considered. However, following community feedback, there will now only be a 3-month holding period (or cliff) after peaq's launch:

• During the Cliff: To qualify for 100% of your potential rewards, the average amount of $KREST tokens you hold during the 3-month cliff needs to equal the average amount of $KREST tokens you held during phase 1. This average will be available on a future version of the calculator. You are free to hold more $KREST, but they won’t grant you more rewards.
• Rewards Adjustment: If your $KREST average during the 3-month cliff is lower than the average you held during phase 1, your rewards will be adjusted proportionately. Please note that the exact amount of $KREST tokens you hold at any specific point during the 3-month cliff can vary as long as the average you hold during those 3 months is not lower than the average you held during phase 1.

This 3-month preparation period is slated for finalizing the infrastructure that will allow participants to smoothly move into phase 2, where they can earn additional rewards. 

After the 3-month period, all participants will receive their rewards from phase 1. However, those of you who would like even more rewards can proceed into phase 2.

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Phase 2

To participate in phase 2, you’ll need to take a few additional steps that will help test various services that will be launched on the network as well as set the foundation for the Machine DeFi ecosystem on peaq. 

Please note that although there are two separate reward pools in phase 2, it is mandatory for participants to take part in all steps to be eligible for any phase 2 rewards. Here’s what’s required.

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Reward Pool #1: Machine DeFi Foundation

• Allocation: 1% of the total $PEAQ supply (42 million $PEAQ).
• Eligibility: Participants need to supply liquidity to designated $PEAQ-stablecoin pair(s). By doing so, they will be helping to set the foundation of the Machine DeFi ecosystem on peaq, with such liquidity pools being a crucial component that will enable its rise and operations. While they can choose exactly how much liquidity to provide, it must be at least 5% of their phase 1 $PEAQ drop, and should not exceed 200% of their phase 1 $PEAQ drop. Of course, participants are free to provide even more liquidity to the designated pair(s), but anything over 200% of their phase 1 drop will not be taken into consideration when calculating their phase 2 rewards. This cap helps prevent dilution for other participants.
• Liquidity pairs: The exact eligible $PEAQ-stablecoin pair(s) will be announced at a later date. 
• Duration: Similar to the amount of liquidity, participants also have the flexibility of choosing for how long they would like to provide liquidity. The minimum is 10 days, the maximum is the entire length of phase 2, which is 6 months. 
• Reward Calculation: An automated point system will track each participant’s liquidity contribution and holding duration, awarding points based on both volume and time. Similar to phase 1, a individual participant’s points relative to the total points of all participants (as opposed to the entirety of liquidity pool contributions including those not participating in the drop) will determine their share of rewards from pool #1.
• Reward Distribution: Initially 1% of the total $PEAQ supply (42 million $PEAQ) is dedicated to reward pool #1, however the size of the reward pool and its distribution could change based on:
  • Disqualified or Unclaimed Tokens: Unclaimed or disqualified $PEAQ from phase 1 (such as those that would have gone to the wallets of investors, grantees, early adopters and other disqualified accounts; the focus is on the community, after all) will roll over into pool #1 of phase 2, increasing its size.
  • Participation Rate: How much claimed $PEAQ from phase 1 transitions into phase 2 will impact pool #1 distribution. If fewer dropped $PEAQ transitions, a smaller percentage of the pool will be distributed.

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Reward Pool #2: Bridge test and krest security

• Allocation: 0.5% of the total $PEAQ supply (21 million $PEAQ).
• Eligibility: Participants need to complete two steps:
  • Providing Liquidity: To qualify, participants need to contribute exactly 5% of their claimed $PEAQ from phase 1 (and an equivalent amount of $KREST) to the $PEAQ/$KREST liquidity pair. By doing so, they will help to test the bridge between peaq and krest, which is a crucial step towards linking the Machine Economy on peaq with the wider Web3 via the underlying protocol. In order to complete this step, no additional tokens are needed, participants already own the $KREST from phase 1 and will receive dropped $PEAQ. The exact amount to be provided to the liquidity pool will be available on the calculator with further updates.
  • Staking: All remaining $KREST from phase 1 must be staked with collators to secure the network. By doing this, the participants are contributing to making krest more secure.
• Duration: Participants must provide liquidity to the $PEAQ/$KREST pool for the entire 6-month period. The same goes for staking $KREST. Removing liquidity or unstaking early will disqualify the participant from all rewards in phase 2 (from both reward pool #1  and reward pool #2). However, to accommodate for the possibility that a collator goes offline for technical reasons or that a participant needs to restake their $KREST with a different collator, there will be a tolerance range of 9 days total (5% of the required 6 months) during which the participants’ $KREST can be unstaked. This will provide participants with the necessary flexibility to move their staked $KREST to different collators if necessary. Disqualified rewards from participants who unstake or remove their liquidity early will be redirected towards future ecosystem campaigns.
• Reward Calculation: Rewards are based on each participant’s share of the total liquidity provided. However, unlike reward pool #1, it is not a dynamic point system where participants have the flexibility to choose how much liquidity they want to supply and for how long. As mentioned above, in this reward pool it is required for participants to supply exactly 5% of their dropped $PEAQ from phase 1 (and the equivalent amount of $KREST) to the $PEAQ/$KREST liquidity pair for exactly 6 months (the entire duration of phase 2). If participants decide to go above the 5%, it will not result in a larger share of reward pool #2. Don’t worry, the phase 2 calculator will help you figure out exactly how much you need to provide. 
• Reward Distribution: Unlike reward pool #1, the size of rewards pool #2 stays the same. However, the distribution of reward pool #2 (similar to reward pool #1) depends on how much of the dropped $PEAQ is added to the pool. For example, if only 90% of the claimed $PEAQ from phase 1 moves into phase 2, then only 90% of pool #2 rewards will be distributed.

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Bringing It All Together

Although rewards are split into separate pools, participants need to complete all steps to become eligible for the reward pools, meaning you need to participate both in pools #1 and #2. If participants miss an eligibility criteria of either reward pool, they disqualify for all of their phase 2 rewards. This means the minimum a participant has to do to become eligible for any rewards in phase 2 is:

• supply 5% of their dropped $PEAQ and the equivalent of $KREST into the $PEAQ/$KREST liquidity pair
• stake the rest of their $KREST 
• supply a minimum of 5% of their claimed $PEAQ (and the equivalent of the designated stablecoin) into the $PEAQ-stablecoin liquidity pair(s) for a minimum of 10 days 

In order to maximize their earnings from phase 2, participants can increase the amount of liquidity they provide to the $PEAQ-stablecoin pair(s) by as much as 200% of their dropped $PEAQ and supply that for up to 6 months. 

Since there are a couple of steps and multiple reward pools in phase 2, let's take a look at 2 scenario examples of how all moving parts could come together. 

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Scenario 1: 100% of tokens qualify for distribution in phase 1

• Phase 1 rewards distributed: 42 million $PEAQ
• Phase 2 rewards: 
  • Reward pool #1 ($PEAQ/Stablecoin): 42 million $PEAQ 
  • Reward pool #2 ($PEAQ/$KREST): 21 million $PEAQ 
  • Phase 2 total: 63 million $PEAQ

In this scenario, with no tokens disqualified, the phase 2 reward pools remain unchanged at a combined 63 million $PEAQ.

The amount of dropped $PEAQ that moves into liquidity in phase 2 will directly determine how much of the reward pools are distributed. Here’s how different participation levels affect the distribution:

• If 90% of phase 1 (37.8 million of the full 42 million) $PEAQ enters phase 2
  → Then 90% of reward pools #1 and #2 (56,7 million of the full 63 million $PEAQ) will be distributed among eligible participants.
• If 75% of phase 1 (31.5 million of the 42 million) $PEAQ enters phase 2→ Then 75% of reward pools #1 and #2 (47.25 million of the full 63 million $PEAQ) will be distributed among eligible participants.

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Scenario 2: 75% of tokens qualify for distribution in phase 1

With 25% of tokens disqualified, the disqualified $PEAQ moves into reward pool #1 of phase 2 (the $PEAQ-stablecoin reward pool), increasing the total phase 2 rewards to 73.5 million $PEAQ. Here’s what that would look like:

• Phase 1 rewards: 31.5 million $PEAQ (75% of 42 million $PEAQ)
• Phase 2 rewards:
  • Reward pool #1($PEAQ-Stablecoin): 52.5 million $PEAQ (the initial 42 million $PEAQ + 10.5 million $PEAQ moving in from phase 1)
  • Reward pool #2 ($PEAQ/$KREST): 21 million $PEAQ 
  • Phase 2 total: 73.5 million $PEAQ

The amount of dropped $PEAQ that moves into liquidity in phase 2 will directly determine how much of the reward pools are distributed. Here’s how different participation levels affect the distribution:

• If 90% of phase 1 (28.35 million out of 31.5 million) $PEAQ enters phase 2→ Then 90% of reward pools #1 and #2 (66.15 million out of 73.5 million $PEAQ) will be distributed among eligible participants.
• If 75% of phase 1 (23.625 million out of 31.5 million) $PEAQ enters phase 2→ Then 75% of reward pools #1 and #2 (55.125 million out of 73.5 million $PEAQ) will be distributed among eligible participants.

With a 25% wallet disqualification in phase 1, the reward pool in phase 2 grows, creating a potential reward multiplier of 2.33x for phase 2. This multiplier assumes consistent proportional behavior among participants. However, keep in mind you could further increase your rewards by maximizing your liquidity contribution up to 2x your dropped $PEAQ amount.

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Liquidity 101 for DePIN enthusiasts

That was a handful, granted, but stay with us — there’s a few more things to go through. Let’s start with the good news: The figures we just went through don’t account for another kind of reward — those that you’ll get for providing liquidity to the designated liquidity pair(s). If you’re a seasoned crypto enthusiast, you know how that works, but for those just joining in, here’s a quick breakdown.

Please note that this is general information on how liquidity pools function. It is not meant as advice on how to utilize your tokens.

On a decentralized exchange, you aren’t exactly trading against a market maker. What happens instead is that users bring their tokens together into a liquidity pool. Each pool is for a specific token pair and is made up of these two tokens in the ratio determined by their exchange rate. So if one token trades 1:1 with the other token, you would need to provide equal amounts of these two tokens to open a position in this pool.

Now, whenever somebody uses this pool to buy either of the two tokens, they would pay a small fee to the liquidity providers for enabling them to do so. These fees are split between everyone in the pool based on the size of their respective position to the total. For that reason, your rewards as a liquidity provider will not be limited to those outlined above, you will also get a share in the pool’s fees.

However, there is another thing to be aware of. As we all know, the price of digital assets tends to fluctuate over time. For that reason, the proportion between assets in any given liquidity pool also changes over time. What this means is that the number of tokens that make up your share in the pool fluctuate in line with the market behavior. This discrepancy is known as impermanent loss; “impermanent” means that it hasn’t been realized yet. However, any impermanent loss becomes permanent when you exit a liquidity pool (i.e. pull out your share), so you may end up with more of one token and less of the other that you initially supplied, or vice versa. Additionally, the liquidity mining rewards are obviously contingent on the pool’s actual use.

And with that, we are through. This is a lot to take in, and the update definitely adds some complexity to the process — but the potential for community rewards is great, and there’s a lot to get excited about. So stay put, peaqonauts, and brace for the launch — the DePIN revolution is about to kick off.    

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On krest, DePINs test

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