$KARRAT Allocation for Scalable Node Staking Rewards (Resubmission)

KIP Title: $KARRAT Allocation for Scalable Node Staking Rewards (Resubmission) Author: AMGI Studios KIP Type: Non-Constitutional (Funding)

MAIN RESUBMISSION REVISION NOTES

My Pet Hooligan NFTs: Resiliency Node staking rewards are possible because staked $KARRAT tokens provide a real, verifiable service, securing the Resiliency Node network. This “work” is the legal and functional basis for sharing sequencer revenue.

MPH NFTs were originally included as a special key to give holders access to stake $KARRAT toward Resiliency Nodes, ensuring MPH holders could participate. However, MPH NFTs themselves do not perform the network’s work or provide security, so they cannot legally generate additional earning power tied to sequencer revenue.

Based on community feedback, and to avoid creating a barrier for those who want to stake $KARRAT but do not hold an MPH NFT, this revised proposal removes the MPH NFT requirement entirely. This ensures the opportunity is open to all $KARRAT holders while keeping the program fair, sustainable, and compliant.

Removing Staked $KARRAT: This resubmission considers community feedback regarding penalties for unlocking staked $KARRAT. There will be no restriction on unlocking at any time; however, a penalty will apply, with the rate decreasing the longer tokens remain staked. Exact penalty structures will be proposed closer to go-live and discussed with the community before implementation.

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Summary

This KIP proposes an allocation of 20,000,000 $KARRAT from the KARRATco Treasury to fund a 12-month staking rewards program for participants locking $KARRAT into StudioChain Resiliency Nodes. The program introduces a scalable, community-driven APY model, where rewards increase with total network participation, reaching a maximum 20% APY if 100,000,000 $KARRAT is staked.

The more the community collectively contributes to securing the Resiliency Node network, the greater the rewards unlocked for all. Any portion of the 20,000,000 $KARRAT that is not distributed over the 12-month period will be returned to the KARRATco Treasury.

Abstract

As StudioChain approaches mainnet launch, the KARRATco DAO has an opportunity to bootstrap decentralized network security and incentivize participation through a community-aligned staking rewards model. This proposal requests 20,000,000 $KARRAT to fund a 12-month program supporting and bootstrapping StudioChain’s Resiliency Node layer.

Rather than issuing fixed rates, this program adopts a simple scalable model where APY rises in proportion to the total $KARRAT staked, capped at 20% if the community stakes the full 100,000,000 $KARRAT available. This mechanism gives the community direct influence over the program’s output.

If less than the full amount is staked, only a corresponding portion of the rewards will be distributed. Any unused funds will revert to the DAO after the program ends.

Motivation

StudioChain is a next-generation L2 tailored for high-performance applications in gaming, AI, and entertainment. Its security and decentralization rest on the success of its Resiliency Node network.

At launch, it is likely that StudioChain will not yet produce meaningful sequencer revenue. Rather than delay community participation or risk insufficient security, this KIP proposes a time-bound staking rewards program to bootstrap early staking for security, aligned with StudioChain’s community-centric ethos.

The scalable APY design puts control in the hands of KARRAT holders. The more they collectively lock into the network, the greater the collective reward. This design aligns incentives, ensures a fair and transparent mechanism, and minimizes unnecessary emissions.

Rationale

The previous fixed 20% APY model has been enhanced into a community-driven scaling mechanism. This approach incentivizes early participation while protecting DAO resources. By which the APY grows linearly up to 20% based on the total KARRAT staked (max 100M), participants are rewarded proportionally based on actual engagement and contribution to network security.

This model is an extension of StudioChain’s broader staking logic: community ownership, pooled security, and scalable opportunity. It ensures that rewards are proportional to effort and stake, and that incentives are earned for providing a critical function to StudioChain, and are not just given.

Specification

Requested Allocation: 20,000,000 $KARRAT from the KARRATco Treasury Program Duration: 12 months from StudioChain mainnet launch

Reward Model:

• Scaled APY model up to 20%
• Full 20,000,000 $KARRAT will be emitted only if 100,000,000 $KARRAT is staked
• Rewards distributed proportionally based on each participant’s share of total staked KARRAT across all Resiliency Nodes

Eligibility Criteria:

• Locking $KARRAT into a Resiliency Node (individually or via pooled mechanism)

Lock-Up & Unstaking:

• After staking $KARRAT into a Resiliency Node, tokens are locked for the first 6 months
• Anybody at any time will be able to remove their staked KARRAT.
• In order to remove your stake, there will be a penalty that will be applied to do so. There will likely be a higher percentage during the first 6 months, which will reduce as we enter months 7-12.

Unused Rewards: Any portion of the 20,000,000 $KARRAT not distributed by the end of the 12-month period will be returned to the KARRATco Treasury.

Implementation

Treasury Allocation

• 20,000,000 $KARRAT will be allocated to a dedicated staking reward contract

Reward Distribution Contract

• Smart contract will include logic to scale emissions based on total $KARRAT staked
• Max cap: 100,000,000 KARRAT Staked/Locked = 20% APY

Reward Emissions

• Emissions will be distributed at regular intervals (e.g., monthly) over 12 months
• No cliff, vesting, or lock-up on rewards
• No compounding on rewards

Lock & Unstake Logic

• Initial 6-month lock period on staked KARRAT, unlocks would be subject to a penalty.

Transparency & Reversion

• Emissions and staking activity will be publicly viewable on-chain
• Any unused KARRAT at the end of the program will be sent back to the KARRATco Treasury

Implementation Costs

KARRAT Foundation will cover development, deployment, and audit costs. No additional funding is requested from the Treasury beyond the 20M KARRAT reward pool

Timeline & Cost

• Start Date: At StudioChain mainnet launch
• Duration: 12 months
• Total Cost: 20,000,000 $KARRAT (scalable based on staking participation)
• Unused Allocation: sent back to the KARRATco Treasury

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Additional notes addressing feedback from initial submission:

This request is primarily concerned with the funding of 20,000,000 $KARRAT to bootstrap the current Node Architecture program put forward by KARRAT. Not to change or modify any of the existing architecture.

The inclusion of Hooligans as part of the staking mechanism (being an access key) was part of the architecture put forward by KARRAT for Resilience Nodes. This was based on the significant role that the MPH community plays in the ecosystem. Based on feedback from the initial proposal that it could pose a barrier. Therefore the need to have a My Pet Hooligan NFT as an access key has been removed in this resubmission.

Penalty feedback for unlocks at any point have been considered in this resubmission. The proposal is that there is no restriction on unlocks at any time, but penalties would reduce as time progresses. Penalties will be proposed closer to go-live and can be discussed with the community before implemented.

We stand by the scalable APY design. It puts control in the hands of KARRAT holders. The more they collectively contribute into the network, the greater the collective reward. This design aligns incentives, ensures a fair and transparent mechanism, and minimizes unnecessary emissions. Therefore if stake participation is low, it does not over reward a small group.

You will still be able to vote on proposals even once the tokens have been staked. So you will still have the equivalent voting power, even when your tokens are staked. We believe this is important to ensure continued participation for all in the KARRATco.