# Payout Pools ### Overview Horizon implements two dedicated payout pools designed to reward irreversible, conviction-based actions within the protocol: * **Burn-to-Earn Pool** * **Forfeit-to-Earn Pool** Both pools distribute Nova emissions to participants who permanently remove tokens from circulation or relinquish future claims. These mechanisms convert sacrifice into pro-rota rewards. Payout pools are not staking systems. They do not involve deposits, withdrawals, or redeemable principal. *** ### Pool Types #### Burn-to-Earn Pool The Burn-to-Earn Pool rewards users who permanently burn Horizon or Nova. * Tokens are irreversibly destroyed at entry * Burned value is removed from total supply * Participants receive a pro-rata share of Nova emissions allocated to the pool * Participation is non-reversible and non-transferable Burning represents a direct, permanent reduction in circulating supply and is treated as a high-conviction action. *** #### Forfeit-to-Earn Pool The Forfeit-to-Earn Pool rewards users who voluntarily forfeit future claims. Participants may forfeit: * Horizon miners * Unclaimed Nova rewards Key properties: * All forfeited inputs are denominated in USD at the time of forfeiture * Forfeited assets are sent to the Horizon Treasury * Forfeiture permanently removes the participant’s future claim on the forfeited assets * Participants receive Nova emissions based on forfeited value and time commitment Forfeiture converts unrealised or future value into immediate participation weight. *** ### Position-Based Accounting Participation in either payout pool creates a **non-transferable position** representing reward entitlement over time. Each position records: * Pool type (Burn-to-Earn or Forfeit-to-Earn) * Asset forfeited or burned * USD value at entry (for share calculation) * Effective shares * Entry timestamp and epoch * Minimum commitment period * Reward accrual status * Claimable rewards Positions: * Have no redeemable principal * Cannot be exited early * Exist solely to track accrual and claims *** ### Epoch Structure & Settlement #### Weekly Epochs Both payout pools operate on **fixed-length weekly epochs**. * Epoch duration: **7 days** * Rewards accrue continuously and pro-rata within the epoch * No rewards are claimable mid-epoch * Accrued rewards are finalized at epoch completion #### Staggered Settlement To reduce congestion and behavioural clustering, payout pools are staggered. * Each pool has an independent epoch anchor * Epoch length remains constant across pools * Settlement occurs on different fixed days Example: * Forfeit-to-Earn settles weekly * Burn-to-Earn settles weekly, offset by several days This staggering smooths reward realization without increasing complexity or risk. *** ### Reward Accrual & Distribution #### Pro-Rata Accrual Rewards accrue linearly over time based on **time-weighted effective shares**. Accrual is proportional to: * Effective shares assigned at entry * Duration active within the epoch Late entry earns proportionally less for that epoch. There is no advantage to timing entry near settlement. #### Epoch Settlement At epoch end: * Total pool emissions are finalized * Each position’s share is calculated * Rewards become claimable Unclaimed rewards remain claimable indefinitely after settlement. *** ### Commitment & Irreversibility Participation in payout pools is subject to enforced commitment periods. * Positions cannot be cancelled * Principal is never returned * No early exit is permitted * Rewards accrue only while the position is active and locked This design prevents: * Timing attacks * Capital cycling * Short-term exploitation of emission schedules *** ### Emission Source Each payout pool receives a fixed percentage of Nova emissions from the Nova Emission Pool. * Emissions are deterministic and protocol-defined * Allocation is fixed at genesis * User behaviour affects distribution, not issuance *** ### Security & Auditability Payout pools are designed for simplicity and transparency. * No elastic supply * No per-block reward logic * No oracle-dependent emissions * Deterministic epoch accounting * Fully auditable position states *** ### Summary Payout pools transform irreversible actions, burning and forfeiting, into predictable, time-weighted Nova rewards. They: * Reward conviction over speculation * Enforce commitment through irreversibility * Distribute emissions fairly and deterministically * Strengthen long-term protocol alignment Payout pools are a core component of Horizon’s incentive architecture, converting sacrifice into sustainable rewards. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://trader-li.gitbook.io/horizon-protocol/payout-pools.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. 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