Penalty Distribution

Last Update: 3/27/2025

Hydra Swap’s withdrawal penalty system is intentionally designed to benefit the ecosystem, strengthen long-term value, and reward committed stakers. When users opt for immediate unstaking, a 25% penalty is applied to their total balance. This penalty is then strategically redistributed across three key pillars of the protocol. Distribution Breakdown

1. Staking Pool — 60% The largest portion of the penalty is recycled directly into the staking rewards pool. This boosts the yield for remaining stakers, rewarding long-term participation and reinforcing platform stability. - Enhances reward potential - Encourages ongoing staking behavior - Creates a flywheel effect for loyal token holders

2. Token Burn — 20% In alignment with Hydra Swap’s deflationary model, 20% of the penalty is permanently burned on a weekly basis. - Reduces total token supply - Introduces scarcity into the tokenomics - Supports long-term price appreciation

3. Treasury — 20% The final portion is directed to the Hydra Swap Treasury, providing critical funding for: - Development - Ecosystem growth - Security, maintenance, and innovation initiatives Smooth Distribution Mechanism To maintain stability in staking yields, all penalty-generated rewards are drip-distributed to the staking pool over a 30-day cycle, using a per-second distribution model. This creates: -Predictable, stable APYs - A buffer against black swan events - A reward surge during high volatility or mass exits Hydra Swap’s penalty distribution model ensures that short-term withdrawals don’t destabilize the platform—instead, they strengthen it. By rewarding long-term participants and reinforcing deflationary mechanisms, the staking economy becomes more sustainable, resilient, and attractive to investors.