When YDF is unstaked, the related NFT is burned and the principal balance is returned to the owner's wallet. If the staking lockup period has not expired, then the principal balance returned will be subject to penalties described below.
APRs for new stakes have and will continue to be lowered as needed to maintain sustainability, therefore, it is extremely important for anyone choosing to unstake their YDF to take into consideration their stake's APR and the APRs that are currently available for new stakes.
Early unstake penalty: For stakers with lockup periods, we allow you to unstake your YDF or liquidity early before the lockup period ends, but you will pay a penalty proportional to the lockup period time frame and the length of time you already staked.
Selecting a longer lockup period when staking either your YDF or liquidity provides higher APRs on the yield you earn, but we understand there are situations where one might need the capital before a lockup period has completed for whatever reason. We allow you to unstake at any time regardless of whether you're in a lockup period or not, but if you have not staked the full lockup period length of time you will be subject to a principal penalty that's directly and linearly proportional to your lockup time and the length of time you've currently staked.
(stakedPrincipal * lengthOfTimeStaked) / stakeLockupLengthOfTime
John stakes 100 YDF with a 120 day lockup period earning 100% APR.
After 60 days, John needs capital to pay bills and opts to unstake his staked YDF. When John unstakes his 100% APR earned yield over the 60 days will begin vesting (see YDF Yield Vesting), but he will only receive 50 YDF from his principal back because he only staked his tokens for 50% of the lockup period.
The below table shows the outcome of various unstaking scenarios based on the above example where John stakes 100 YDF with a 120 day lockup period at 100% APR.
The YDF component of any capital that is sacrificed by an early claimer will be burned. Just like with the decay tax, this helps the protocol offset emissions by reducing the available supply of YDF. If the sacrificed capital was part of an LP position, then either:
- 1.YDF is burned and the ETH is sent to the treasury to be paid as Non-YDF Staking Rewards or
- 2.LP Position is transferred to a Protocol owned address and becomes protocol owned liquidity