3. Staking Model and vePACT

3.1 - Staking Overview

To incentivize long-term holding, $PACT holders can stake their tokens in a staking contract and receive vePACT, a synthetic and non-transferable token that serves as proof of stake with governance and utility benefits. When $PACT is locked, a fixed amount of vePACT is initially credited to the staker’s wallet. This vePACT balance increases by a set percentage each month, up to 12 months, after which no additional vePACT is accrued. While the initial monthly increase rate will be 0%, a governance proposal will be introduced post-launch to set this rate at 8% per month. Unlocking staked $PACT requires a 30-day waiting period after submitting an unlock request.

All governance parameters, including unlock periods, vePACT accrual rates, and other staking-related configurations, are fully adjustable through governance proposals. Any initial parameters set at launch are intended as starting points and can be modified as the ecosystem evolves, ensuring flexibility and adaptability to the community’s needs. This dynamic structure rewards longer-term stakers with enhanced governance power while maintaining room for future refinements.

3.2 - vePACT—Governance and Utility 

The vePACT token allows stakers to:

• Have governance influence: vePACT grants stakers the ability to vote on proposals, reinforcing their role in protocol decision-making.

• Claim staking rewards: Half of protocol fees (after covering operational expenses) can be claimed as a staking reward by vePACT holders. 

3.3 - Staking rewards

Half of protocol fees, after covering operational expenses, will be available to claim as a staking reward by vePACT holders in order to compensate them for long term staking.

Rewards will accrue to vePACT token holders in real time according to the relative amount of vePACT they have. Our website will publish the number of transactions, fees that have been generated, and the current reserve holdings that can be claimed. vePACT holders will be able to trigger a distribution on the website at any time.

3.4 - Reporting

The PACT Foundation will publish a quarterly earnings and expenses report.