Overview of Velix LSD mechanism

LSD Issuance (veSTRK)

In the Velix LSD mechanism, users have the ability to stake their STRK tokens to receive veSTRK. This acts as proof of stake and provides liquidity, as users can continue to benefit from their staked STRK by earning rewards.

Reward Distribution

Rewards in the Velix LSD mechanism are distributed to holders of veSTRK. The returns users receive are commensurate with the amount of veSTRK they hold, incentivizing further participation in the ecosystem.

Detailed Technical Overview

Interaction with veSTRK Vault Contract

To participate in the reward system and governance on Layer 2, users must interact with the veSTRK vault contract. By submitting STRK tokens to this contract, they receive veSTRK in return, which grants them a vested interest in the platform, along with governance rights and potential yield.

Reward Distributor Contract and Protocol Treasury

The reward distributor contract is responsible for managing the flow of rewards within the Velix mechanism. It channels 10% of veSTRK rewards to the protocol treasury, which underpins the financial stability and sustainability of the Metis ecosystem.

User Actions on Layer 2

On Layer 2 of the Velix mechanism, users can choose to stake their STRK in exchange for veSTRK or unstake veSTRK to reclaim their STRK. This flexibility allows users to optimize their participation and rewards strategy.

Receiving STRK after the Challenge Period

This period acts as a security measure, ensuring the verification of Layer 2 transactions before they are finalized on Layer 1, safeguarding the integrity of the transaction process.