# Understanding Governance Mining

An overview of the KDX GM Program

Understanding the dynamics of KDX Staking is crucial for users who really want to benefit from the full potential of eckoDAO.

KDX Staking serves three purposes:

*1.**Empowering users***:**by increasing their voting power in a new and revolutionary way that values long-term holders over whales;*2.***Incentivising governance participation:***.**3.**Deflation of KDX’s overall supply***:**by burning all the penalties coming from early unstaking. Which relatively improves long-term participant voting power.

A screencap of the KDX front end from our DevNet

*The KDX Staking tool is one of the few simple and straightforward smart contracts that distribute rewards in the platform’s native token to incentivise users to accrue voting power. This allows users to manually compound their rewards and increase their voting power based on locked time*.

- You can compound rewards on your KDX staked amount. Rewards re-staking is available once a week.

*The penalty structure of the KDX Staking tool is designed to achieve two objectives: to encourage long-term governance participation and to prevent manipulation and spam of the smart contract involved.*

- If you unstake during the first 72 hours, you will incur a flat 3% penalty on your staked amount
- If you withdraw your rewards during the first 60 days, you will incur in a penalty. It is important to note that the penalty will only affect your accrued governance rewards; your initial capital will not be affected.
- If you stake more KDX, your waiting time will simply increase proportionally.

The Entire amount of KDX yielded from penalties will be burned, thus reducing the overall supply, and increasing proportional ownership.

The following section gives a detailed explanation of all the associated math behind the Kaddex Staking Tool:

*If you stake your KDX, you receive 0.05% of all swap fees across Kaddex*

*The staking algorithm used for Kaddex*

**Variables:**

**r**denotes the staking rewards;**v**is the daily swap volume (in USD);**a**denotes the staked amount (in USD);**d**denotes the number of days that**a**has been kept staked;**T**is the total amount staked in the pool (in USD).

KDX Penalty formula

**Variables:**

**P**denotes the penalty amount on the first 72 hours;**a**denotes the staked amount.

*If you withdraw your rewards during the first 60 days, you will incur an exponentially time-decreasing penalty on your governance mining rewards.*

60 day window penalty formula

**Variables**:

**p**denotes the penalty proportion on rewards accumulated on the first 60 days;**“60”**is the minimum amount of days required to have no penalties;**d**is the number of days the user has kept their KDX staked;**“0.66”**is an arbitrary coefficient used to model the penalty-curve efficiently.

*If you add more KDX to your stake, your waiting time will proportionally increase as a function of the new amount being staked and the one already staking.*

**Variables**

**w**denotes waiting time adjustment when adding more stake;**r**is the previous waiting time (user position in the penalty curve);**p**is the previous staked amount;**n**is the newly staked amount.

Last modified 6mo ago