The SX token can be used for governance to directly impact the direction of the protocol. In order to participate in governance votes, token holders must first stake (i.e. lock up) their tokens. This protects SportX governance by preventing users from buying SX tokens solely to vote on a specific proposal and then selling immediately after the vote. With staking, SX token holders that wish to participate in governance must have definitive “skin in the game”.
Staking is the act of locking up tokens for a period of time. Tokens that are staked remain in the user’s control, but they can no longer be transferred (until they are unstaked). By staking tokens, the circulating supply of the token is temporarily reduced, which also has the beneficial effect of increasing scarcity. However, stakers lose liquidity, which exposes them to risk.
To encourage governance and staking participation upon launch, 5.00% of the total SX token supply (50,000,000) will be placed into a special SX Token Staking Contract for SX token stakers to earn. These tokens will be distributed proportionally to stakers at the end of each day at a rate of 0.10% of the total remaining balance each day:
The SportX protocol currently charges bettors 4.00% on net profit of winning bets, stakers will also be entitled to eventually claim a percentage of this fee pool. This percentage is initially set to 0% of the total protocol fee pool (subject to change by governance vote), meaning all DAI and ETH exchange fees are initially collected in the community treasury (which is controlled by SX token holders).
Over time, as the SX token staking rewards becomes progressively smaller, the protocol fees should grow substantially larger to adequately compensate stakers. It’s important to note that stakers are also able to vote to change any of the parameters of the SX Token Staking Contract and the protocol fee pool through the SportX governance system.