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Protocol economics

Reward Vesting Present Value and Haircut

A reward allocation that unlocks gradually is not economically identical to the same number of immediately transferable tokens. This model divides a promised allocation into equal tranches, assigns an explicit unlock date to each and discounts its assumed value separately. A price haircut is kept distinct from the time discount so that two different valuation judgments remain visible in the output.

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Formula and accounting assumptions

For each tranche, unlock days equal days until the first unlock plus its position in the schedule multiplied by the spacing between unlocks. Tranche value is tokens per tranche × constant assumed token price × (1 − price haircut). Divide that value by (1 + annual effective discount rate)^(unlock days ÷ 365), then sum the tranche present values. No tokens unlock before the first entered date in this schedule.

Worked hypothetical example

Imagine 200 reward tokens valued at $1, released in two equal tranches after one and two years. With no price haircut and a 10% annual discount rate, present value is $100 ÷ 1.10 plus $100 ÷ 1.21, approximately $173.55. If the discount rate is instead zero and the price haircut is 25%, total value becomes $150. The examples show that timing and the valuation haircut affect the result through separate, inspectable parts of the calculation.

Interpret the scenarios and limits

The schedule is an equal-tranche assumption, not a reading of a live vesting contract. Unlocking may not imply a successful claim, market liquidity or unrestricted transfer. Actual cliffs, continuous vesting, revocation and forfeiture rules can differ. A constant token price is a simplifying valuation input rather than a prediction. The model does not assign an unsupported probability of payment or silently compound unvested rewards. Inspect the dated tranche rows before relying on the aggregate present value in a budget.

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